<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 26, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE NEW YORK RESTAURANT GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 5812 58-2350980
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
1114 FIRST AVENUE
NEW YORK, NY 10021
(212) 838-2061
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ALAN N. STILLMAN
CHIEF EXECUTIVE OFFICER
1114 FIRST AVENUE
NEW YORK, NY 10021
(212) 838-2061
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
JAMES WESTRA, ESQUIRE THOMAS E. MOLNER, ESQUIRE
HUTCHINS, WHEELER & DITTMAR KRAMER LEVIN NAFTALIS & FRANKEL LLP
A Professional Corporation 919 Third Avenue
101 Federal Street New York, NY 10022
Boston, MA 02110 (212) 715-9100
(617) 951-6600
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / / 333-________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED PRICE(1) FEE
<S> <C> <C>
Common Stock, $.01 par value per share...................................... $35,000,000 $9,730
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY CHANGE. THE NEW YORK
RESTAURANT GROUP, INC. AND THE UNDERWRITERS MAY NOT SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 26, 1999
PROSPECTUS
, 1999
SHARES
[LOGO]
THE NEW YORK RESTAURANT GROUP, INC.
COMMON STOCK
------------------
This is our initial public offering, and no public market currently exists
for our shares. The offering price may not reflect the market price for our
shares. We are offering shares in this offering. We anticipate that the
initial public offering price will be between $ and $ per share.
We have applied for approval for quotation on the Nasdaq National Market
under the symbol "NYRG" for the shares we are offering.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF FACTORS THAT YOU
SHOULD CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD WITH THIS
PROSPECTUS.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
Public price........................................................................ $ $
Underwriting discounts and commissions.............................................. $ $
Proceeds to us...................................................................... $ $
</TABLE>
------------------------
The underwriters have an option to purchase shares of common stock
from us at the initial public offering price to cover any over-allotments of
shares.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
BEAR, STEARNS & CO. INC. THOMAS WEISEL PARTNERS LLC
<PAGE>
Our registered trademarks and service marks include The Manhattan Ocean
Club-Registered Trademark-, Park Avenue Cafe-Registered Trademark-,
Cite-Registered Trademark-, Cite Grill-Registered Trademark-, the Grill
Room-Registered Trademark-, Maloney & Porcelli-Registered Trademark-, Mrs.
Park's Tavern-Registered Trademark- and Wine Week-Registered Trademark- and we
license the Smith & Wollensky, Wollensky Grill and Mrs. Wollensky's Cigar Bar
trademarks. Each other trademark, trade name or service mark appearing in this
prospectus belongs to its holder.
[inside front cover artwork]
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN OUR COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE
103 OF REGULATION M. SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS MORE DETAILED INFORMATION AND THE FINANCIAL
STATEMENTS AND NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS. IN ADDITION TO THIS
SUMMARY WE URGE YOU TO READ THIS ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE
DISCUSSION OF THE RISKS OF INVESTING IN OUR COMMON STOCK SET FORTH UNDER THE
CAPTION "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS, BEFORE YOU
DECIDE TO BUY OUR COMMON STOCK.
OUR COMPANY
Since opening the original Smith & Wollensky steakhouse in New York City in
1977, we have become one of the leading creators, owners and operators of
high-end, high-volume restaurants in the United States. Our core concept, Smith
& Wollensky, a classic American steakhouse, is one of the most recognized brand
names in the high-end segment of the restaurant industry. Since December 1997,
we have opened five owned Smith & Wollensky restaurants in new markets. We
currently operate 12 restaurants, eight of which we own and four of which we
manage. In addition to Smith & Wollensky, we have created and operate five other
successful high-end, high-volume restaurant concepts-- Maloney & Porcelli, Park
Avenue Cafe, Cite, The Manhattan Ocean Club and The Post House.
An overview of our restaurants is provided below:
<TABLE>
<CAPTION>
AVERAGE
SALES FOR CHECK/PERSON FOR
THE 12 MONTHS THE 12 MONTHS
ENDED ENDED
RESTAURANT DESCRIPTION LOCATION DATE OPENED JUNE 28, 1999(1) JUNE 28, 1999(2)
- ---------------------------- -------------- ---------------- -------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
SMITH & WOLLENSKY Classic New York City(*) October 1977 $ 24.7 $ 58.50
(Includes Wollensky's American Miami December 1997 7.9 56.10
Grill) steakhouse Chicago April 1998 9.9 54.80
New Orleans October 1998 --(3) 43.60(3)
Las Vegas December 1998 --(4) 60.50(4)
Washington, D.C. July 1999 -- --
MALONEY & PORCELLI Updated New York City(*) September 1996 $ 10.3 $ 65.10
American
classic
cuisine
PARK AVENUE CAFE Cutting-edge New York City February 1992 $ 8.2(5) $ 64.90
(Includes Mrs. Park's new American Chicago(*) October 1994 6.4 24.30(6)
Tavern in Chicago) cuisine in a
cafe
atmosphere
CITE Parisian grand New York City December 1989 $ 9.8 $ 48.90
(Includes Cite Grill) cafe-style
restaurant
THE MANHATTAN High-end New York City January 1984 $ 8.7 $ 70.10
OCEAN CLUB seafood
restaurant
THE POST HOUSE Steak and chop New York City(*) August 1980 $ 6.1 $ 73.60
house with
American theme
<CAPTION>
SEATING
RESTAURANT CAPACITY
- ---------------------------- -------------
<S> <C>
SMITH & WOLLENSKY 480
(Includes Wollensky's 670
Grill) 610
375
675
340
MALONEY & PORCELLI 410
PARK AVENUE CAFE 260(5)
(Includes Mrs. Park's 460
Tavern in Chicago)
CITE 375
(Includes Cite Grill)
THE MANHATTAN 235
OCEAN CLUB
THE POST HOUSE 175
</TABLE>
- --------------------------
* REPRESENTS A RESTAURANT WHICH WE DO NOT OWN, BUT WHICH WE MANAGE PURSUANT TO
A MANAGEMENT CONTRACT OR ARRANGEMENT.
(1) SALES DATA THROUGHOUT THIS PROSPECTUS INCLUDES BANQUET AND RETAIL
MERCHANDISE SALES.
(2) AVERAGE CHECK DATA THROUGHOUT THIS PROSPECTUS DOES NOT INCLUDE RETAIL
MERCHANDISE SALES AND BANQUET SALES.
(3) THIS LOCATION, OPEN FOR NINE OF THE 12 MONTHS ENDED JUNE 28, 1999, HAD SALES
OF $3.7 MILLION.
(4) THIS LOCATION, OPEN FOR SEVEN OF THE 12 MONTHS ENDED JUNE 28, 1999, HAD
SALES OF $7.9 MILLION.
(5) INCLUDES THE TOWNHOUSE, A DEDICATED BANQUET FACILITY ADJACENT TO THE MAIN
RESTAURANT.
(6) WE MANAGE ALL FOOD AND BEVERAGE SERVICES AT THIS LOCATION PURSUANT TO A
MANAGEMENT CONTRACT WITH AN INTERNATIONAL HOTEL CHAIN. ROOM SERVICE DATA IS
INCLUDED IN SALES DATA AND EXCLUDED FROM THE AVERAGE CHECK PER PERSON DATA.
THE SALES DATA FOR THIS LOCATION IN THIS PROSPECTUS ARE BASED SOLELY ON
REPORTS PROVIDED BY THE HOTEL CHAIN AND ARE NOT SUBJECT TO OUR SYSTEM OF
INTERNAL CONTROLS.
3
<PAGE>
Our restaurants have received numerous national and local dining awards,
including the Distinguished Restaurants of North America "DiRoNA Award" and WINE
SPECTATOR'S "Grand Award." Six of our eight restaurants that were open for all
of 1998 were among the top 100 independent restaurants in the United States in
terms of sales according to RESTAURANTS & INSTITUTIONS, a leading trade
magazine. For the 12 months ended June 28, 1999, average sales for our
restaurants that were open for the full period were $10.2 million and the
average check per person was $55.60. During the same period, the restaurants we
operate had sales of $103.6 million.
Each of our restaurants provides a unique fine dining experience, offering
distinctive high quality food, creative menus, extensive wine selections and
exceptional customer service accompanied by attractive design and decor. We
believe that our restaurant concepts have broad national appeal and that, as a
result, we have significant opportunities to expand our business and generate
favorable returns.
OPERATING STRATEGY
The critical elements of our operating strategy are as follows:
- HIGH-END, HIGH-VOLUME RESTAURANTS. We seek to create large restaurants,
typically with 275 to 325 seats, which, by virtue of their layout, also
provide a distinctive and intimate dining experience for our customers.
Our high-volume approach is designed to generate higher sales and
operating profitability than other high-end restaurant concepts.
- PROMINENT RESTAURANT LOCATIONS. We seek to locate our restaurants on
attractive, high-profile sites near central business districts within
major metropolitan areas to attract business people and affluent diners.
In the case of Smith & Wollensky, we create icon-like locations through
the use of the signature green and white Smith & Wollensky exterior.
- CRITICALLY-ACCLAIMED FOOD. We strive to provide our customers with
distinctive food of the highest quality for which we have received
numerous awards. Our restaurants use only USDA prime grade beef which is
dry-aged on the premises, and the freshest, best quality ingredients
available. Our desserts are prepared by highly trained pastry chefs on
location, and several of our restaurants bake their own bread on the
premises. To maintain our high standards, our Corporate Executive Chef
oversees menu development and implementation and monitors ongoing quality
control at all of our restaurants.
- EXTENSIVE WINE SELECTION. We complement our commitment to offering the
best quality cuisine by also offering an extensive wine list in each of
our restaurants and by sponsoring nationally acclaimed wine programs. Our
restaurants have won the WINE SPECTATOR'S "Grand Award" from 1987 to 1995
and "Award of Excellence" from 1989 to 1998. We believe our restaurants'
aggregate selection of approximately 2,400 listings and 92,000 bottles of
wine distinguishes us from our competitors. For the 12 months ended June
28, 1999, wine sales at dinner accounted for $13.40 of the average $65.70
dinner check per person at our restaurants (excluding Park Avenue Cafe in
Chicago whose owner was unable to provide us with average dinner check per
person data).
- SIGNIFICANT AND INNOVATIVE MARKETING AND ADVERTISING. We seek to promote
strong brand awareness through innovative marketing and advertising
programs, in large part, through full-page advertising in leading national
publications such as THE NEW YORK TIMES, FORTUNE and FORBES. We believe
that our consistent investment in advertising and marketing is substantial
compared to other participants in the high-end segment of the restaurant
industry.
- EXCEPTIONAL CUSTOMER SERVICE. We strive to provide a consistent,
high-quality dining experience in order to foster customer satisfaction
and brand loyalty. To achieve this goal, we focus on
4
<PAGE>
providing our customers with attentive and professional service by
training and encouraging our employees to exceed guests' expectations.
- EXPERIENCED MANAGEMENT TEAM. Led by Alan Stillman, our Chief Executive
Officer and the creator of the Smith & Wollensky concept, our senior
management team has an average of 22 years in the restaurant industry and
is experienced in developing and operating high-end, high-volume
restaurants. The general managers of our restaurants have an average
tenure with us of 15 years, and all of them have worked in the restaurant
industry for at least 10 years.
GROWTH STRATEGY
We intend to expand primarily by opening three to four restaurants per year
while continuing to grow and develop recently opened restaurants. The critical
elements of our growth strategy include the following:
- OPEN SMITH & WOLLENSKY RESTAURANTS IN NEW MARKETS. We plan to capitalize
on Smith & Wollensky's broad customer appeal and strong brand recognition
by opening new units owned by us in major U.S. markets. Our new Smith &
Wollensky units incorporate the decor, menu and atmosphere of our New
York-based restaurant, while maintaining a flexible and up-to-date design
that can be readily adapted to accommodate different geographic regions
and locations.
- GROW AND DEVELOP RECENTLY OPENED RESTAURANTS. Since December 1997, we have
opened five Smith & Wollensky restaurants. Our experience has shown that
our restaurants take between 15 and 36 months to achieve their expected
level of operations. These new restaurants are currently in various stages
of the ramp-up phase, and we believe incremental revenue and restaurant
level operating profitability can be realized from each of these
restaurants as they continue to develop.
- CLUSTER OUR CONCEPTS IN EXISTING MARKETS. After entering a new market with
the Smith & Wollensky concept, we intend to selectively open our other
branded concepts in these markets. Our strategy calls for clustering our
restaurants in high-profile sites near central business districts to
increase revenue and maximize return on investment in a particular market.
Additionally, we may consider opportunistic acquisitions of existing
restaurants or new management arrangements.
- LEVERAGE CENTRALIZED OPERATIONS TO INCREASE PROFITABILITY. We have
established a central corporate infrastructure to efficiently manage our
operations and to enable us to take advantage of volume discounts in
marketing, advertising, purchasing and other expenses. As we continue to
grow and expand, we will seek to improve operating efficiencies by
controlling costs and spreading costs over a larger restaurant base.
- EXPAND RETAIL OFFERINGS AND DEVELOP BRANDED MERCHANDISE. We have recently
developed a comprehensive merchandising strategy to reinforce and
capitalize on the upscale image of our Smith & Wollensky brand through the
sale of items such as steak knives, steak sauce and cookbooks. While our
primary focus is to continue to increase overall food and beverage sales
at the restaurant level, we believe that merchandise sales, while
currently modest, represent an attractive opportunity for us to generate
incremental sales.
Our principal executive offices are located at 1114 First Avenue, New York,
New York 10021 and our telephone number is (212) 838-2061.
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by us... shares
Common stock outstanding
after this offering........ shares
Use of proceeds.............. For development of new restaurants, repayment of debt,
working capital and other general corporate purposes. See
"Use of Proceeds."
</TABLE>
The number of shares to be outstanding after this offering includes the
issuance of 2,172,794 shares of common stock in connection with the conversion
of all outstanding shares of preferred stock upon the closing of this offering.
It excludes 400,150 shares of common stock issuable upon exercise of options
outstanding as of the date of this prospectus. It excludes warrants to purchase
107,983 shares of common stock issued to Magnetite Asset Investors, L.L.C. in
connection with a $10.0 million financing completed by us on June 29, 1999.
References to "we" or "us" include The New York Restaurant Group, Inc. and
all wholly-owned subsidiaries and predecessor entities.
Except as otherwise noted, all information in this prospectus assumes:
- no exercise of the underwriters' over-allotment option;
- no exercise of those options and warrants to purchase shares of common
stock remaining outstanding after the completion of this offering;
- the issuance of shares of common stock in connection with the conversion
of all outstanding shares of preferred stock upon the closing of this
offering; and
- an increase in our authorized common stock to 20,000,000 shares and an
increase in our undesignated preferred stock to 1,000,000 shares effective
immediately prior to the closing of this offering.
6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER OPERATING DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL ------------------------
--------------------------------------------------------------- MARCH 30, MARCH 29,
1994 1995 1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Owned restaurant sales... $ 22,147 $ 23,454 $ 25,002 $ 26,582 $ 42,521 $ 9,212 $ 16,988
Income from owned
restaurant operations.. 2,125 2,400 3,165 3,776 2,190 949 1,274
Management fee income.... 687 863 988 1,901 2,968 576 648
Income from owned and
managed restaurants.... 2,812 3,263 4,153 5,677 5,158 1,525 1,922
General and
administrative
expenses............... 1,104 1,512 3,557 5,169 6,384 1,405 1,625
Operating income (loss).. 1,708 1,751 (1,904) (146) (1,536) 70 90
Interest expense
(income)--net.......... 74 4 275 331 337 (17) 362
Income (loss) before
income taxes........... 1,634 1,747 (2,179) (477) (1,873) 87 (272)
Net income (loss)........ 1,503 1,634 (2,063) (960) (2,445) (48) (410)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)
applicable to common
shares................. $ 1,503 $ 1,634 $ (2,063) $ (1,208) $ (3,932) $ (420) $ (782)
Net income (loss) per
share
Basic and diluted...... --(1) --(1) $ (0.62 (2) $ (0.34) $ (0.85) $ (0.09) $ (0.17)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Shares used in computing
net income (loss) per
share
Basic and diluted...... --(1) --(1) 3,333,450(2) 3,567,134 4,619,551 4,599,891 4,625,891
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
SELECTED OPERATING DATA:
Number of owned
restaurants at end of
period................. 3 3 3 4 7 4 7
Number of managed
restaurants at end of
period................. 3 3 4 4 4 4 4
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total number of owned and
managed restaurants at
end of period.......... 6 6 7 8 11 8 11
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Average owned restaurant
sales for units open
for entire year........ $ 7,382 $ 7,818 $ 8,334 $ 8,739 $ 8,544 -- --
Comparable owned
restaurant sales
increase(3)............ 9.7% 5.9% 6.6% 4.9% 3.0% 3.3% 3.4%
</TABLE>
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER OPERATING DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL ------------------------
--------------------------------------------------------------- MARCH 30, MARCH 29,
1994 1995 1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable managed
restaurant sales
increase(3)............ 1.6% 2.2% 3.0% 3.7% 0.9% 6.9% 1.6%
Total sales for owned and
managed restaurants $ 51,006 $ 56,979 $ 62,254 $ 72,323 $ 88,671 $ 20,439 $ 28,392
EBITDA from owned
restaurant
operations(4).......... $ 2,790 $ 3,066 $ 3,711 $ 4,205 $ 3,500 $ 1,164 $ 1,904
EBITDA(5)................ $ 2,373 $ 2,417 $ (936) $ 789 $ 408 $ 440 $ 918
</TABLE>
<TABLE>
<CAPTION>
MARCH 29, 1999
<S> <C> <C>
(UNAUDITED)
----------------------
<CAPTION>
ACTUAL ADJUSTED
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................................................................. $ -- $
Total assets............................................................................... 59,027
Long-term debt, including current portion.................................................. 17,600
Convertible redeemable preferred stock..................................................... 21,487
Total stockholders' equity................................................................. 8,714
</TABLE>
- --------------------------
(1) PRIOR TO JANUARY 1, 1996, THE COMPANY WAS COMPRISED OF A SERIES OF
PARTNERSHIP INTERESTS AND LIMITED LIABILITY COMPANIES AFFILIATED WITH A
COMMON CONTROL GROUP, ACCORDINGLY THERE WERE NO MEMBERSHIP UNITS OR COMMON
SHARES OUTSTANDING. AS SUCH, PRIOR TO 1996, EARNINGS (LOSS) PER MEMBERSHIP
UNITS OR SHARES OF COMMON STOCK INFORMATION IS NOT APPLICABLE.
(2) MEMBERSHIP UNITS WERE OUTSTANDING FROM JANUARY 1, 1996 THROUGH OCTOBER 31,
1997. ALL INCOME (LOSS) PER SHARE INFORMATION HAS BEEN ADJUSTED FOR A THREE
FOR TWO MEMBERSHIP UNIT SPLIT AND THE CONVERSION OF MEMBERSHIP UNITS INTO
SHARES OF COMMON STOCK ON OCTOBER 31, 1997. SEE "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS-- TRANSACTIONS INVOLVING MANAGEMENT--ROLL-UP
TRANSACTIONS."
(3) IN CALCULATING COMPARABLE RESTAURANT SALES, WE INTRODUCE A RESTAURANT INTO
OUR COMPARABLE RESTAURANT BASE ONCE IT HAS BEEN IN OPERATION FOR 15 CALENDAR
MONTHS.
(4) EBITDA FROM OWNED RESTAURANT OPERATIONS CONSISTS OF INCOME FROM OWNED
RESTAURANT OPERATIONS BEFORE RESTAURANT LEVEL DEPRECIATION AND AMORTIZATION
INCLUDED IN TOTAL COST OF OWNED RESTAURANT SALES. DOES NOT INCLUDE
MANAGEMENT FEE INCOME, GENERAL AND ADMINISTRATIVE EXPENSE, ROYALTY EXPENSE
AND CORPORATE-LEVEL DEPRECIATION AND AMORTIZATION. EBITDA FROM OWNED
RESTAURANT OPERATIONS SHOULD NOT BE CONSTRUED (A) AS AN ALTERNATIVE TO
OPERATING INCOME (AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES) AS AN INDICATOR OF OUR OPERATING PERFORMANCE, OR (B)
AS AN ALTERNATIVE TO CASH FLOWS FROM OPERATING ACTIVITIES (AS DETERMINED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) AS A MEASURE OF
LIQUIDITY. EBITDA FROM OWNED RESTAURANT OPERATIONS AS CALCULATED BY US MAY
BE CALCULATED DIFFERENTLY THAN EBITDA FROM OWNED RESTAURANT OPERATIONS FOR
OTHER COMPANIES.
(5) EBITDA REPRESENTS NET INCOME (LOSS) BEFORE INTEREST EXPENSE, TAXES AND
DEPRECIATION AND AMORTIZATION AND CORPORATE LEVEL DEPRECIATION AND
AMORTIZATION WHICH IS INCLUDED IN GENERAL AND ADMINISTRATIVE EXPENSES.
EBITDA SHOULD NOT BE CONSTRUED AS (A)AS AN ALTERNATIVE TO OPERATING INCOME
(AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)
AS AN INDICATOR OF OUR OPERATING PERFORMANCE, OR (B) AS AN ALTERNATIVE TO
CASH FLOWS FROM OPERATING ACTIVITIES (AS DETERMINED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) AS A MEASURE OF LIQUIDITY. EBITDA
AS CALCULATED BY US MAY BE CALCULATED DIFFERENTLY THAN EBITDA FOR OTHER
COMPANIES.
8
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS, AS WELL AS THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, BEFORE YOU DECIDE TO BUY OUR COMMON STOCK. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. MANY FACTORS, INCLUDING THOSE DESCRIBED BELOW, MAY CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM ANTICIPATED RESULTS. IN ANY SUCH CASE, THE
MARKET PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF
THE MONEY YOU PAID TO BUY OUR COMMON STOCK.
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO TRANSLATE OUR CURRENT SUCCESS TO
NEW MARKETS
We do not believe that we can significantly increase our annual revenue from
our New York restaurants because all but one have been open for more than seven
years. We have only recently expanded our business outside of New York City. We
cannot assure you that existing or new restaurants will be successful. In
addition, as we expand our business into additional markets, we anticipate that
such markets will support lower average checks, and as a result, the average
check for our consolidated results may decline.
OPENING OF NEW RESTAURANTS INVOLVES RISKS WHICH COULD ADVERSELY AFFECT OUR
OPERATING RESULTS
Our future growth and profitability depend on our ability to open new
restaurants efficiently. Our ability to expand is subject to a number of
factors, including:
- selection and availability of suitable restaurant sites;
- negotiation of acceptable lease or purchase terms for such sites;
- adequate supervision of construction;
- our ability to secure required governmental permits and approvals;
- adequate capital; and
- general economic conditions.
These factors could affect our ability to open new restaurants on a timely
basis. Delays in opening or failure to open new restaurants could materially and
adversely affect our business and results of operations.
OUR RESOURCES MAY BE STRAINED IN IMPLEMENTING OUR BUSINESS STRATEGY
Our growth strategy will place a strain on our management, financial,
information systems and other resources. To manage our growth effectively, we
must maintain the level of quality and service at our existing and future
restaurants. We must also continue to enhance our operational, information,
financial and management systems and locate, hire, train and retain qualified
personnel, particularly restaurant managers. We may not be able to effectively
manage any one or more of these or other aspects of our expansion. Failure to do
so could have a material adverse effect on our business and results of
operations.
BECAUSE WE MAINTAIN A SMALL NUMBER OF RESTAURANTS, WE COULD BE MATERIALLY AND
ADVERSELY AFFECTED BY THE NEGATIVE PERFORMANCE OF A SINGLE RESTAURANT
We currently operate 12 restaurants, eight of which we own. Due to this
relatively small number of restaurants, poor financial performance at any owned
restaurant could materially affect our profitability as a whole. Future growth
in sales and profits will depend to a substantial extent on our ability to
increase the number of our restaurants. The results achieved to date by our
relatively small restaurant
9
<PAGE>
base may not be indicative of the results of a larger number of restaurants in a
more geographically dispersed area with varied demographic characteristics.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO SEASONALITY AND OTHER
FACTORS WHICH COULD HAVE A NEGATIVE EFFECT ON THE PRICE OF OUR COMMON STOCK
Our business is subject to seasonal fluctuations which may vary greatly
depending upon the region of the United States in which a particular restaurant
is located. In addition to seasonality, our quarterly and annual operating
results and comparable unit sales may fluctuate significantly as a result of a
variety of factors, including:
- the amount of sales contributed by new and existing restaurants;
- the timing of new openings;
- labor costs for our personnel;
- our ability to achieve and sustain profitability on a quarterly or annual
basis;
- consumer confidence;
- changes in consumer preferences;
- the level of competition from existing or new competitors in the high-end
segment of the restaurant industry; and
- economic conditions generally and in each of the markets in which we are
located.
Additionally, when we open a new restaurant, integrating the restaurant into
our operations may adversely affect our near-term operating results. Our new
restaurants generally take about 15 to 36 months to reach planned operating
levels. This is due to temporary inefficiencies typically associated with
expanding into new regions and opening new restaurants, such as lack of market
awareness and acceptance and unavailability of experienced staff. As a result,
our continued expansion may result in an increase in these operating costs.
OUR MANAGEMENT ARRANGEMENT WITH THE SMITH & WOLLENSKY IN NEW YORK MAY BE
TERMINATED AT ANY TIME
We do not own the Smith & Wollensky restaurant in New York. While we manage
the Smith & Wollensky restaurant in New York in exchange for annual management
fees equal to 2.3% of this restaurant's annual revenue, we do not have a written
management contract with St. James Associates, the owner of this restaurant.
Although one of the two general partners of St. James Associates is an entity
controlled by our Chief Executive Officer, the other general partner of St.
James Associates is not. The general partners may cancel the management
arrangement at any time without notice to us. Additionally, under the terms of
the St. James Partnership Agreement, if the entity providing management services
on our behalf is not operated and directed by Mr. Stillman, the other general
partner may terminate retention of that entity by St. James and replace the
entity with any person, firm or corporation which the other general partner
chooses. We cannot assure you that our management arrangement will remain in
effect. The cancellation of this management arrangement could materially and
adversely affect us, including the loss of revenue and the inability to control
our flagship restaurant and to coordinate marketing and promotions with other
units.
WE DEPEND ON OUR CHIEF EXECUTIVE OFFICER
Our success has been, and will continue to be, dependent on Alan Stillman,
our Chief Executive Officer, and other members of our senior management group.
The loss of Mr. Stillman's services could materially and adversely affect our
business and development. We cannot assure you that we could find
10
<PAGE>
an adequate replacement for Mr. Stillman in the event of his unavailability.
Moreover, pursuant to provisions contained in our agreements with St. James
Associates and The Post House, these parties have the right to terminate the
management services provided by us to the Smith & Wollensky restaurant in New
York and The Post House restaurant if those services provided to them cease to
be operated or directed by Alan Stillman. Additionally, pursuant to provisions
contained in our management agreement with the Doubletree Hotel (which owns Mrs.
Park's Tavern in Chicago), Doubletree may terminate the agreement if Alan
Stillman ceases to own at least 20% of our common stock, and serve as our Chief
Executive Officer. We entered into an employment agreement with Mr. Stillman in
1998 for a term of five years and are the beneficiary of a life insurance policy
in the amount of $5 million on the life of Mr. Stillman. We cannot assure you
that such insurance will be available in the future.
WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN QUALITY SENIOR AND
RESTAURANT-LEVEL MANAGEMENT
The development and success of our restaurants depend, in large part, on the
efforts, abilities, experience and reputations of the general managers and chefs
at such restaurants. Our inability to recruit and retain such individuals may
delay the opening of new restaurants or result in higher employee turnover in
existing restaurants which could materially and adversely affect our results of
operations or business. We are also dependent on our senior management. The loss
of any of these individuals could materially and adversely affect our business
and results of operations.
MR. STILLMAN'S EXISTING INTERESTS IN ST. JAMES ASSOCIATES COULD PRESENT A
CONFLICT OF INTEREST WITH US
Some of our stockholders hold limited partnership interests in St. James
Associates which owns the Smith & Wollensky restaurant in New York and the
rights to the trademark "Smith & Wollensky." Additionally, an entity controlled
by Mr. Stillman is a general partner of St. James Associates. As a result, in
the event that a dispute arose between us and St. James Associates, it is
possible that Mr. Stillman would have a conflict of interest as a result of his
duties to both parties. Such a conflict of interest could make the resolution of
any such dispute more difficult and could materially and adversely affect our
business.
UNANTICIPATED COSTS OR DELAYS IN THE DEVELOPMENT OR CONSTRUCTION OF OUR
RESTAURANTS COULD PREVENT OUR TIMELY AND COST-EFFECTIVE OPENING OF NEW
RESTAURANTS
We depend on contractors and real estate developers to construct our
restaurants. Many factors may adversely affect the cost and time associated with
the development and construction of our restaurants, including:
- labor disputes;
- shortages of materials or skilled labor;
- adverse weather;
- unforeseen engineering problems;
- environmental problems;
- construction or zoning problems;
- local government regulations;
- modifications in design; and
- other unanticipated increases in costs.
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<PAGE>
Any of these factors could give rise to delays or cost overruns which may
prevent us from developing additional restaurants within our anticipated budgets
or time periods or at all. Any such failure could have a material adverse effect
on our business and results of operations.
THE FAILURE TO ENFORCE AND MAINTAIN OUR TRADEMARKS AND TRADENAMES COULD
ADVERSELY AFFECT OUR ABILITY TO ESTABLISH AND MAINTAIN BRAND AWARENESS
Subject to the terms of a license agreement, we license from St. James
Associates the exclusive and perpetual right to use and sublicense the
trademarks "Smith & Wollensky" and "Wollensky's Grill" and any variations
thereof. We own the following trademarks used in our business: The Manhattan
Ocean Club, Park Avenue Cafe, Cite, Cite Grill, the Grill Room, Maloney &
Porcelli, Mrs. Park's Tavern and Wine Week. Our current operations and marketing
strategy depend significantly on the strength of trademarks and service marks,
especially Smith & Wollensky. The success of our expansion strategy depends on
our continued ability to use our existing trademarks and service marks in order
to increase brand awareness and further develop our branded products. Although
we are not aware of any infringing uses of any of the trademarks or service
marks that we believe could materially affect us, we cannot assure you that we
will be free from such infringements in the future.
The name "Smith & Wollensky" represents our core concept and flagship
restaurant. The termination of our right to use this name or our failure to
maintain any of our other existing trademarks could materially and adversely
affect us and our business.
THE RESTAURANT INDUSTRY IS INTENSELY COMPETITIVE AND OUR SUCCESS DEPENDS UPON
OUR ABILITY TO MAINTAIN OUR COMPETITIVE POSITION
The restaurant industry is intensely competitive. There are a great number
of restaurants, both locally owned and members of regional or national chains,
with which we compete directly and indirectly. While we believe that our
restaurants are distinctive in design and operating concept, our principal
competitors are other restaurants that operate in the high-end segment of the
restaurant industry. Some of our competitors are significantly larger, have
greater financial and other resources, have been in existence longer and are
better established in areas where our restaurants are, or will be, located.
WE MAY NOT BE ABLE TO OBTAIN AND MAINTAIN FEDERAL, STATE AND LOCAL PERMITS
NECESSARY FOR OUR RESTAURANTS
Our business is subject to extensive Federal, state and local government
regulations, including regulations relating to:
- alcoholic beverage control;
- the preparation and sale of food;
- public health and safety;
- sanitation, building, zoning and fire codes; and
- employment and related tax matters.
All these regulations impact not only our current operations but also our
ability to open new restaurants. We will be required to comply with applicable
state and local regulations in new locations into which we expand. Any
difficulties, delays or failures in obtaining licenses, permits or approvals in
such new locations could delay or prevent the opening of a restaurant in a
particular area or reduce operations at an existing location, either of which
would materially and adversely affect us and our operations.
12
<PAGE>
WE ARE SUBJECT TO AND MAY FACE LIABILITY UNDER DRAM SHOP STATUTES.
We are subject in certain states to "dram shop" statutes which generally
provide a person injured by an intoxicated person the right to recover damages
from an establishment which wrongfully served alcoholic beverages to such
person. While we carry liquor liability coverage as part of our existing
comprehensive general liability insurance, a judgment against us under a dram
shop statute in excess of our liability coverage, or our inability to continue
to obtain such insurance coverage at reasonable costs, could materially and
adversely affect us.
INCREASED FOOD COSTS COULD MATERIALLY AFFECT OUR OPERATING RESULTS
Our profitability is dependent in large measure on our ability to anticipate
and react to changes in food costs. Various factors beyond our control,
including climatic changes and government regulations, may affect food costs.
Specifically, our dependence on frequent, timely deliveries of fresh prime beef,
poultry, seafood and produce subjects us to the risks of possible shortages or
interruptions in supply caused by adverse weather or other conditions which
could adversely affect the availability and cost of any such items. While we
have been able to anticipate and react to increasing food costs through
purchasing practices, menu changes and price adjustments in the past, we cannot
assure you that we will be able to do so in the future. The failure to react to
these increases could materially and adversely affect our business and result of
operations.
WE COULD FACE LABOR SHORTAGES, INCREASED LABOR COSTS AND OTHER ADVERSE EFFECTS
OF VARYING LABOR CONDITIONS
Our success depends in part upon our ability to attract, motivate and retain
a sufficient number of qualified employees, including restaurant managers,
kitchen staff and wait staff, especially in light of our expansion schedule.
Qualified individuals needed to fill these positions are in short supply in
certain areas, and the inability to recruit and retain such individuals may
delay the planned openings of new restaurants or result in high employee
turnover in existing restaurants. A significant delay in finding qualified
employees or high turnover of existing employees could materially and adversely
affect our business and results of operations. Also, competition for qualified
employees could require us to pay higher wages to attract sufficient qualified
employees which could result in higher labor costs. In addition, increases in
the minimum hourly wage, unemployment tax rates, and similar matters over which
we have no control may adversely affect our operating costs.
Additionally, the employees of two of our managed restaurants in New York,
Smith & Wollensky and The Post House, are members of a union. Our collective
bargaining agreement with these employees will expire in August 2000. The terms
of a future collective bargaining agreement could result in increased labor
costs. In addition, our failure to negotiate an agreement in a timely manner
could result in an interruption of operations at those two managed locations
which could materially and adversely affect our business and our results of
operations.
WE MAY BE UNABLE TO FUND OUR SUBSTANTIAL WORKING CAPITAL REQUIREMENTS AND MAY
NEED ADDITIONAL FUNDING SOONER THAN WE ANTICIPATE
We believe that the proceeds from this offering, together with anticipated
cash flow from operations and funds available from a credit facility, will be
sufficient to satisfy our working capital requirements through at least December
31, 2000. We plan to incur substantial costs over the near-term in connection
with our expansion plans. We may need to seek additional financing sooner than
we anticipate as a result of the following factors:
- changes in our operating plans;
- acceleration of our expansion plans;
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<PAGE>
- lower than anticipated sales;
- increased costs of expansion, including construction costs;
- increased food and/or operating costs; and
- potential acquisitions.
Additional financing may not be available on acceptable terms or at all. If
we fail to get additional financing as needed, our business and results of
operations would likely suffer. Please see "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" for a discussion of our
expected capital needs and current resources available.
AS A RESTAURANT SERVICE PROVIDER, WE COULD BE SUBJECT TO ADVERSE PUBLICITY OR
CLAIMS FROM OUR GUESTS AND EMPLOYEES
We may be the subject of complaints or litigation from guests alleging
food-related illness, injuries suffered on the premises or other food quality,
health or operational concerns. Adverse publicity resulting from such
allegations may materially adversely affect us and our restaurants, regardless
of whether such allegations are true or whether we are ultimately held liable.
We may also be the subject of complaints or allegations from current, former or
prospective employees from time to time. A lawsuit or claim could result in an
adverse decision against us that could have a material adverse effect on our
business and results of operations. We may also be subject to litigation which,
regardless of the outcome, could result in adverse publicity. Such litigation,
adverse publicity or damages could have a material adverse effect on our
business and results of operations.
OUR CURRENT INSURANCE MAY NOT PROVIDE ADEQUATE LEVELS OF COVERAGE AGAINST CLAIMS
There are types of losses, such as punitive damages, we may incur that may
be uninsurable or that we believe are not economically insurable. Further, we do
not currently maintain any insurance coverage for employee-related litigation or
the effects of adverse publicity. In addition, we may not be able to maintain in
the future the type of insurance we currently maintain at rates we think
appropriate or at all. If we incur any unusual losses, our lack of adequate
insurance may have a material adverse effect.
WE MAY FAIL TO BE YEAR 2000 COMPLIANT
We and third parties with whom we do business rely on numerous computer
programs for day to day operations. We cannot ensure that we will be able to
effectively address any Year 2000 issues in a timely and cost-efficient manner
and without interruption to our business. We have initiated discussions with and
sent surveys to our significant suppliers regarding their plans to solve Year
2000 issues where their systems interface with our systems or otherwise impact
our operations. We cannot ensure that Year 2000 difficulties encountered by our
suppliers or other third parties with whom we do business will not materially or
adversely affect our business or results of operations. Additionally, we are in
the process of upgrading our current point of sale system, which is not Year
2000 compliant, to a system which is Year 2000 compliant. We cannot ensure this
upgrade will be completed in a timely manner or at all, and any such failure
could materially adversely affect us.
OUR COMMON STOCK MAY NOT DEVELOP AN ACTIVE, LIQUID TRADING MARKET
We cannot predict the extent to which investor interest in us will lead to
the development of an active trading market or the level of trading volume that
will exist for our common stock after this offering. Low trading volumes may
adversely affect your ability to sell your shares quickly at the market price.
The initial public offering price for the shares will be determined by
negotiations among us and the representatives of the underwriters. This initial
price may not be indicative of prices that will
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<PAGE>
prevail in the trading market. Please see "Underwriting" for more information
regarding our arrangement with the underwriters and the factors considered in
setting the initial public offering price.
OUR CERTIFICATE OF INCORPORATION AND BY-LAWS MAY DELAY OR PREVENT A CHANGE OF
CONTROL TRANSACTION
Delaware corporate law contains, and our Amended and Restated Certificate of
Incorporation and by-laws contain, provisions that could have the effect of
delaying, deferring or preventing a change in control of our Company on terms
which you may deem advantageous. These provisions could limit the price that
investors might be willing to pay in the future for shares of our common stock.
These provisions:
- authorize the issuance of "blank check" preferred stock (preferred stock
which our board of directors can create and issue without prior
stockholder approval) with rights senior to those of common stock;
- provide for a board of directors with staggered terms;
- prohibit stockholder action, without a meeting of stockholders, by less
than unanimous written consent; and
- establish advance notice requirements for proposing matters to be acted
upon by stockholders at a meeting.
A LIMITED NUMBER OF STOCKHOLDERS WILL HAVE THE ABILITY TO DETERMINE OUR POLICIES
FOLLOWING THIS OFFERING
A substantial majority of our capital stock is held by a limited number of
stockholders. After completion of this offering, our officers and directors and
parties affiliated with or related to such persons or to us will own
approximately % of the shares of common stock outstanding. Accordingly, such
stockholders will likely control major decisions of corporate policy and
determine the outcome of any major transaction or other matters submitted to our
stockholders or board of directors, including potential mergers or acquisitions,
and amendments to our Amended and Restated Certificate of Incorporation.
Stockholders other than these principal stockholders are therefore likely to
have little or no influence on decisions regarding such matters.
THE PRICE OF OUR STOCK COULD DECREASE AS A RESULT OF SHARES BEING SOLD IN THE
MARKET AFTER THIS OFFERING
The market price of our common stock could drop as a result of sales of a
large number of shares of common stock in the market after this offering, or the
perception that such sales could occur. These factors also could make it more
difficult for us to raise funds through future offerings of common stock.
There will be shares of common stock outstanding immediately after
this offering. Of these shares, the shares sold in this offering will be freely
transferable without restriction or further registration under the Securities
Act, except for any shares purchased by our "affiliates" as defined in Rule 144
under the Securities Act. The remaining shares of common stock outstanding will
be "restricted securities" as defined in Rule 144. These shares may be sold in
the future without registration under the Securities Act to the extent permitted
by Rule 144 or an exemption under the Securities Act. In addition,
additional shares of common stock subject to outstanding vested stock options
could also be sold. Other holders of shares of common stock will also have
registration rights allowing them to cause us to register their shares under the
Securities Act. Finally, the holders of warrants to purchase 107,983 shares of
common stock could purchase additional shares which also could be sold in the
future, subject to compliance with Rule 144. shares subject to outstanding
options may also be sold upon vesting, when applicable.
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<PAGE>
In connection with this offering, our executive officers, directors and
stockholders owning, in the aggregate, shares have agreed that, without
the consent of Bear, Stearns & Co. Inc., they will not sell any shares of common
stock for at least 180 days after the date of this prospectus.
THE MARKET PRICE OF OUR STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY
The stock market has experienced extreme price and volume fluctuations. The
trading price of our common stock could be subject to wide fluctuations in
response to a number of factors, including:
- fluctuations in our quarterly or annual results of operations;
- changes in published earnings estimates by analysts and whether our
earnings meet or exceed such estimates;
- additions or departures of key personnel; and
- changes in overall stock market conditions, including the stock prices of
other comparable restaurant companies.
In the past, companies that have experienced volatility in the market price
of their stock have been the object of securities class action litigation. If we
were subject to securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources.
16
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of common
stock offered by us will be approximately $ , after deducting
underwriting discounts and commissions and estimated offering expenses. We
intend to use the net proceeds of this offering as follows:
- $ for the development of new restaurants.
- $ to repay all amounts outstanding under our $15.0 million senior
credit facility, dated September 1, 1998, as amended, with Fleet Bank,
N.A. Our interest rate under the Fleet facility is, at our option, prime
rate or 3.25% above the LIBOR rate. As of March 29, 1999, the interest
rate on certain loans outstanding was 8.38%, while the interest rate on
LIBOR loans ranged from 8.18% to 8.22%. All amounts outstanding under the
Fleet facility are required to be pre-paid upon consummation of this
offering. Amounts outstanding under the Fleet facility as of January 15,
2000 convert to a term loan maturing on January 15, 2003. Proceeds from
the Fleet facility have been used to fund the development of our
restaurants and for working capital purposes. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS--LIQUIDITY
AND CAPITAL RESOURCES."
- $ to repay all amounts outstanding under our 12.5% Senior
Subordinated Note due June 29, 2006 dated June 29, 1999 held by Magnetite
Asset Investors, L.L.C., in the original principal amount of $10.0
million. Amounts borrowed under the Magnetite senior subordinated note
were used to repay a portion of outstanding advances under our Fleet
facility and to meet working capital needs. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS--LIQUIDITY
AND CAPITAL RESOURCES."
Pending these uses, we intend to invest the proceeds in investment grade,
interest-bearing investments.
DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock. We
currently anticipate that we will retain all available funds for use in our
business, and do not anticipate paying any cash dividends in the foreseeable
future. Any payment of cash dividends in the future will be at the discretion of
our board of directors and will depend upon our results of operations, earnings,
capital requirements, contractual restrictions and other factors deemed relevant
by our board of directors. In addition, our Fleet facility prohibits us from
paying any cash dividends without our lender's consent, and our ability to pay
dividends is also restricted by our senior subordinated note purchase agreement
with Magnetite.
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<PAGE>
DILUTION
Our net tangible book value as of March 29, 1999 was $ million
or $ per share of common stock. After giving effect to the sale of the
common stock pursuant to this offering at an assumed initial public offering
price of $ per share, and after deducting underwriting discounts and
commissions and estimated expenses of this offering, our adjusted pro forma net
tangible book value at March 29, 1999, would have been $ or
$ per share.
Net tangible book value per share before this offering has been determined
by dividing our total tangible assets less total liabilities by the number of
shares of common shares outstanding at March 29, 1999. This offering will result
in an increase in net tangible book value per share of $ to
existing stockholders and dilution in net pro forma tangible book value per
share of $ to new investors who purchase common stock in this
offering. Dilution is determined by subtracting pro forma net tangible book
value per share from the assumed per share initial public offering price of
$ . The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $
Net tangible book value per share at March 29, 1999..... $
Increase attributable to sale of shares in this
offering..............................................
Pro forma net tangible book value per share after this
offering..............................................
Pro forma dilution of net tangible book value per share
to persons who purchase shares in this offering....... $
---------
---------
</TABLE>
The following table summarizes, on a pro forma basis as of March 29, 1999,
the total number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid by existing
stockholders and by new investors:
<TABLE>
<CAPTION>
SHARES(1) TOTAL CONSIDERATION
--------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ------------- ------- -----------------
Existing stockholders........................... % $ % $
New investors...................................
Total........................................... % $ % $
</TABLE>
- ------------------------
(1) DOES NOT INCLUDE WARRANT OF MAGNETITE ASSET INVESTORS, L.L.C. TO PURCHASE
107,983 SHARES OF COMMON STOCK AT AN EXERCISE PRICE OF $.01 PER SHARE, OR
400,150 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS
OUTSTANDING AT A WEIGHTED AVERAGE EXERCISE PRICE OF $6.96 PER SHARE, OR
234,375 SHARES AVAILABLE FOR ISSUANCE UNDER OUR STOCK OPTION PLANS. SEE
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--LIQUIDITY AND CAPITAL RESOURCES" AND "MANAGEMENT--BENEFIT
PLANS."
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<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 29, 1999. Our
capitalization is presented:
- on an actual basis;
- on a pro forma basis to give effect to the conversion of all outstanding
shares of preferred stock which will occur upon the closing of this
offering and the exercise of a warrant issued to Magnetite Asset
Investors, L.L.C. to purchase 107,983 shares of common stock at an
exercise price of $.01 per share; and
- on a pro forma as adjusted basis to reflect our receipt of the net
proceeds from the sale of shares of common stock in this offering at
an assumed initial public offering price of $ per share
after deducting the underwriting discounts and commissions and estimated
offering expenses and after application of proceeds to the repayment of
debt.
It excludes:
- 400,150 shares of common stock issuable upon the exercise of options
outstanding at a weighted average exercise price of $6.96 per share;
- 234,375 shares available for issuance under our stock option plans.
SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS-- LIQUIDITY AND CAPITAL RESOURCES" AND "MANAGEMENT--BENEFIT
PLANS."
<TABLE>
<CAPTION>
MARCH 29, 1999
-----------------------------------
<S> <C> <C> <C>
(UNAUDITED)
<CAPTION>
PRO FORMA
AS
ACTUAL PRO FORMA ADJUSTED
--------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents...................................................... $ -- $ $
--------- ----- -----
--------- ----- -----
Long-term debt, net of current portion......................................... $ 17,070 $ $
Convertible redeemable preferred stock: $.01 par value; 5,000,000 shares
authorized; 2,172,794 shares issued and outstanding on an actual basis;
shares issued and outstanding on a pro forma basis; and shares issued
and outstanding on a pro forma as adjusted basis............................. 21,487
Stockholders' equity:
Common stock: $.01 par value; 10,000,000 shares authorized; 4,625,891 shares
issued and outstanding on an actual basis; shares issued and
outstanding on a pro forma basis; and shares issued and outstanding
on a pro forma as adjusted basis........................................... 46
Additional paid-in capital................................................... 14,248
Accumulated deficit.......................................................... (5,580)
--------- ----- -----
Total stockholders' equity............................................... 8,714
--------- ----- -----
Total capitalization..................................................... $ 47,271 $ $
--------- ----- -----
--------- ----- -----
</TABLE>
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following selected consolidated financial data should be read in conjunction
with the consolidated financial statements and the notes to such statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The consolidated statement of
operations data for the years ended December 29, 1997 and December 28, 1998 and
the consolidated balance sheet data at December 29, 1997 and December 28, 1998
are derived from our consolidated financial statements which have been audited
by KPMG LLP, independent auditors, and the consolidated statement of operations
and balance sheet data for the year ended December 30, 1996 are derived from our
consolidated financial statements which have been audited by Goldstein Golub
Kessler LLP, and are included elsewhere in this prospectus. The consolidated
statement of operations data for the years ended January 2, 1995 (fiscal 1994)
and January 1, 1996 (fiscal 1995), are derived from audited consolidated
financial statements not included in this prospectus. The unaudited consolidated
statement of operations for the three months ended March 30, 1998 and March 29,
1999 and the consolidated balance sheet data at March 29, 1999 have been derived
from the unaudited financial statements included elsewhere in this prospectus
and have been prepared on the same basis as the audited consolidated financial
statements and, in our opinion, contain all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for such periods. Historical results are not
necessarily indicative of the results to be expected in the future and results
for interim periods are not necessarily indicative of results for the entire
year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL ----------------------
---------------------------------------------------------- MARCH 30, MARCH 29,
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Owned restaurant sales............. $ 22,147 $ 23,454 $ 25,002 $ 26,582 $ 42,521 $ 9,212 $ 16,988
---------- ---------- ---------- ---------- ---------- ---------- ----------
Cost of owned restaurant sales:
Food and beverage costs.......... 5,854 6,190 6,642 7,031 12,188 2,699 4,970
Salaried and related benefits.... 6,713 7,178 7,230 8,022 14,058 2,844 5,143
Restaurant operating expenses.... 3,716 4,001 4,046 3,998 7,318 1,437 2,782
Occupancy and related expenses... 1,528 1,582 1,620 1,624 2,656 570 1,064
Marketing and promotional
expenses....................... 1,546 1,437 1,753 1,702 2,801 498 1,125
Depreciation and amortization.... 665 666 546 429 1,310 215 630
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total cost of owned restaurant
sales............................ 20,022 21,054 21,837 22,806 40,331 8,263 15,714
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from owned restaurant
operations....................... 2,125 2,400 3,165 3,776 2,190 949 1,274
Management fee income.............. 687 863 988 1,901 2,968 576 648
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from owned and managed
restaurants...................... 2,812 3,263 4,153 5,677 5,158 1,525 1,922
General and administrative
expenses......................... 1,104 1,512 3,557 5,169 6,384 1,405 1,625
Royalty expense.................... -- -- -- 7 310 50 207
Write-off of offering and financing
costs............................ -- -- -- 647 -- -- --
Acquisition of management
contract......................... -- -- 2,500 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)............ 1,708 1,751 (1,904) (146) (1,536) 70 90
Interest expense (income)--net of
interest income.................. 74 4 275 331 337 (17) 362
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes............................ 1,634 1,747 (2,179) (477) (1,873) 87 (272)
Provision (benefit) for income
taxes............................ 131 113 (116) 483 572 135 138
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................. 1,503 1,634 (2,063) (960) (2,445) (48) (410)
Accrual of dividends and
amortization of issuance costs on
preferred shares................. -- -- -- (248) (1,487) (372) (372)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to
common shares.................... $ 1,503 $ 1,634 $ (2,063) $ (1,208) $ (3,932) $ (420) $ (782)
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) per share
Basic and diluted................ (1) (1) $ (0.62 (2) $ (0.34 (2) $ (0.85) $ (0.09) $ (0.17)
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Shares used in computing net
income (loss) per share
Basic and diluted................ (1) (1) 3,333,450(2) 3,567,134(2) 4,619,551 4,599,891 4,625,891
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
20
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL ----------------------
---------------------------------------------------------- MARCH 30, MARCH 29,
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Number of owned restaurants at end
of period........................ 3 3 3 4 7 4 7
Number of managed restauarants at
end of period.................... 3 3 4 4 4 4 4
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total of owned and managed
restaurants at
end of period.................... 6 6 7 8 11 8 11
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Average owned restaurant sales for
units open for entire period..... $ 7,382 $ 7,818 $ 8,334 $ 8,739 $ 8,544 -- --
Comparable owned restaurant sales
increase(3)...................... 9.7% 5.9% 6.6% 4.9% 3.0% 3.3% 3.4%
Comparable managed restaurant sales
increase......................... 1.6% 2.2% 3.0% 3.7% 0.9% 6.9% 1.6%
Total sales for owned and managed
restaurants...................... $ 51,006 $ 56,979 $ 62,254 $ 72,323 $ 88,671 $ 20,439 $ 28,392
EBITDA from owned restaurant
operations(4).................... $ 2,790 $ 3,066 $ 3,711 $ 4,205 $ 3,500 $ 1,164 $ 1,904
EBITDA(5).......................... $ 2,373 $ 2,417 $ (936) $ 789 $ 408 $ 440 $ 918
</TABLE>
<TABLE>
<CAPTION>
FISCAL
-----------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................................................. $ 1,385 $ 2,349 $ 1,549 $ 9,638 $ --
Total assets............................................................... 6,692 7,545 20,612 44,347 58,376
Long-term debt, including current portion.................................. 275 175 7,397 3,515 17,104
Convertible redeemable preferred stock..................................... -- -- -- 19,628 21,115
Equity..................................................................... 2,075 2,254 7,018 13,177 9,496
<CAPTION>
-------------
MARCH 29,
1999
-------------
<S> <C>
(UNAUDITED)
<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................................................. $ --
Total assets............................................................... 59,027
Long-term debt, including current portion.................................. 17,600
Convertible redeemable preferred stock..................................... 21,487
Equity..................................................................... 8,714
</TABLE>
- ------------------------------
(1) PRIOR TO JANUARY 1, 1996, THE COMPANY WAS COMPRISED OF A SERIES OF
PARTNERSHIP INTERESTS AND LIMITED LIABILTY COMPANIES AFFILIATED WITH A
COMMON CONTROL GROUP, ACCORDINGLY THERE WERE NO MEMBERSHIP UNITS OR SHARES
OF COMMON STOCK OUTSTANDING. AS SUCH PRIOR TO 1996, EARNINGS (LOSS) PER
MEMBERSHIP UNITS OR COMMON SHARES INFORMATION IS NOT APPLICABLE.
(2) MEMBERSHIP UNITS WERE OUTSTANDING FROM JANUARY 1, 1996 THROUGH OCTOBER 31,
1997. ALL INCOME (LOSS) PER SHARE INFORMATION HAS BEEN ADJUSTED FOR A THREE
FOR TWO MEMBERSHIP UNIT SPLIT AND THE CONVERSION OF MEMBERSHIP UNITS INTO
COMMON SHARES ON OCTOBER 31, 1997.
(3) IN CALCULATING COMPARABLE RESTAURANT SALES, WE INTRODUCE A RESTAURANT INTO
OUR COMPARABLE RESTAURANT BASE ONCE IT HAS BEEN IN OPERATION FOR 15 CALENDAR
MONTHS.
(4) EBITDA FROM OWNED RESTAURANT OPERATIONS CONSISTS OF INCOME FROM OWNED
RESTAURANT OPERATIONS BEFORE RESTAURANT LEVEL DEPRECIATION AND AMORTIZATION
INCLUDED IN TOTAL COST OF OWNED RESTAURANT SALES. DOES NOT INCLUDE
MANAGEMENT FEE INCOME, GENERAL AND ADMINISTRATIVE EXPENSE, ROYALTY EXPENSE
AND CORPORATE-LEVEL DEPRECIATION AND AMORTIZATION. EBITDA FROM OWNED
RESTAURANT OPERATIONS SHOULD NOT BE CONSTRUED (A) AS AN ALTERNATIVE TO
OPERATING INCOME (AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES) AS AN INDICATOR OF OUR OPERATING PERFORMANCE, OR (B)
AS AN ALTERNATIVE TO CASH FLOWS FROM OPERATING ACTIVITIES (AS DETERMINED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) AS A MEASURE OF
LIQUIDITY. EBITDA FROM OWNED RESTAURANT OPERATIONS AS CALCULATED BY US MAY
BE CALCULATED DIFFERENTLY THAN EBITDA FROM OWNED RESTAURANT OPERATIONS FOR
OTHER COMPANIES.
(5) EBITDA REPRESENTS NET INCOME (LOSS) BEFORE INTEREST EXPENSE, TAXES AND
DEPRECIATION AND AMORTIZATION AND CORPORATE LEVEL DEPRECIATION AND
AMORTIZATION WHICH IS INCLUDED IN GENERAL AND ADMINISTRATIVE EXPENSES.
EBITDA SHOULD NOT BE CONSTRUED AS (A)AS AN ALTERNATIVE TO OPERATING INCOME
(AS DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)
AS AN INDICATOR OF OUR OPERATING PERFORMANCE, OR (B) AS AN ALTERNATIVE TO
CASH FLOWS FROM OPERATING ACTIVITIES (AS DETERMINED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) AS A MEASURE OF LIQUIDITY. EBITDA
AS CALCULATED BY US MAY BE CALCULATED DIFFERENTLY THAN EBITDA FOR OTHER
COMPANIES.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and notes appearing elsewhere in this prospectus.
OVERVIEW
We opened our first restaurant in 1977 and by the end of 1996 we were
operating seven units. In 1996, in order to facilitate the expansion of our core
concept, Smith & Wollensky, we acquired the rights to use the name outside of
the New York metropolitan area. In December 1997, we opened our first Smith &
Wollensky unit outside of New York, in Miami Beach. We accelerated the number of
openings which targeted major metropolitan areas of the United States with the
opening of new Smith & Wollensky units in Chicago, New Orleans and Las Vegas in
1998, and Washington, D.C. in 1999. We believe that the particularly large size
of these markets warranted investment in restaurants with seating capacities
from 375 to 675. Our current expansion plan is to open one new unit in the last
quarter of 1999 or the first quarter of 2000. In addition, we plan to open three
to four new restaurants per year for the next several years, with seating
capacities between 275 and 325 seats. We believe our expansion into slightly
smaller markets will require smaller units at lower per unit initial investment.
We believe these new restaurants will require, on average, a total cash
investment of $4.5 million to $5.0 million excluding pre-opening expenses of
$400,000 to $500,000. See "BUSINESS--EXPANSION PLANS, SITE SELECTION OF
RESTAURANT DEVELOPMENT."
Starting in 1996, we implemented a plan to build our infrastructure to
position ourselves for growth. We recruited certain executives in the areas of
operations and finance, leased additional corporate office space and began
developing a system to electronically link the corporate office with the
restaurants for sales and financial reporting purposes. In connection with the
growth of our infrastructure, we significantly increased our advertising
expenditures in 1998 primarily to promote, through full-page print
advertisement, the new Smith & Wollensky units.
As a result of our recent expansion, period to period comparisons of our
financial results may not be meaningful. When a new restaurant opens, we
typically incur higher than normal levels of food and labor costs as a
percentage of sales during the first year of operations. Average sales for owned
units open for all of 1998 was $8.5 million. We currently have five units
outside of New York, of which only one was open for all of 1998. The three units
that we own and operate in New York, The Manhattan Ocean Club, Park Avenue Cafe
and Cite, had comparable restaurant sales growth of 3.0% in 1998 (in calculating
comparable restaurant sales, we introduce a restaurant into our comparable
restaurant base once it has been in operation for 15 calendar months). We
believe that growth at these units will be modest as they currently operate at
or near capacity.
Pursuant to management contracts and arrangements, we operate, but do not
own, the original Smith & Wollensky located in New York, as well as Maloney &
Porcelli and The Post House, also located in New York, and Park Avenue Cafe in
Chicago. See "BUSINESS--MANAGEMENT ARRANGEMENTS."
On June 29, 1999 we entered into a senior subordinated note purchase
agreement with Magnetite Asset Investors, L.L.C. which we expect to prepay with
a portion of the proceeds of this offering. A portion of this facility was used
to repay a portion of our Fleet credit facility. During the third-quarter of
1999, we expect to incur an extraordinary charge of approximately $
million related to the prepayment of the Magnetite senior subordinated
note. We also have outstanding $21.5 million of convertible redeemable preferred
stock that is convertible, at the option of the holders, into common stock. All
of the outstanding convertible redeemable preferred stock is being converted
into shares of common stock in connection with this offering. We are currently
accruing a cumulative 6.0% dividend per year on such convertible redeemable
preferred stock which dividend will be
22
<PAGE>
surrendered upon conversion. In addition, the $ outstanding under
the Fleet credit facility is required to be repaid upon the completion of the
offering. See "USE OF PROCEEDS."
Owned restaurant sales include gross sales less sales taxes and other
discounts. Cost of owned restaurant sales include food and beverage costs,
salaries and related benefits, restaurant operating expenses, occupancy and
related expenses, marketing and promotional expenses and restaurant level
depreciation and amortization. Salaries and related benefits include components
of restaurant labor, including direct hourly and management wages, bonus and
fringe benefits. Restaurant operating expenses include operating supplies,
utilities, maintenance and repairs and other operating expenses. Occupancy and
related expenses include rent, real estate taxes and other occupancy costs.
Management fee income relates to fees that we receive from our managed
units. These fees are based on a percentage of sales from the managed units,
ranging from 1.5% to 6.0%. Management fee income includes fees from Maloney &
Porcelli equal to 50.0% of the unit's net operating cash flow generated during
each fiscal year (provided that the Maloney & Porcelli owner receives a minimum
amount per year ranging from $144,000 to $480,000) and fees from the Doubletree
Hotel's profits, based on the hotel's profits pursuant to the terms of our
management agreement with Doubletree. See "BUSINESS--MANAGEMENT ARRANGEMENTS."
General and administrative expenses include all corporate and administrative
functions that support existing owned and managed operations and provide
infrastructure to facilitate our growth. General and administrative expenses are
comprised of management, supervisory and staff salaries and employee benefits,
travel, information systems, training, corporate rent and professional and
consulting fees. General and administrative expenses also include the
depreciation of corporate-level property and equipment and the amortization of
certain corporate intangible assets, such as goodwill, licensing agreements and
management contracts.
Royalty expense represent fees paid, pursuant to the licensing agreement,
based upon 2.0% of sales for restaurants utilizing the Smith & Wollensky name.
See "BUSINESS--MANAGEMENT ARRANGEMENTS."
In this prospectus, wherever we refer to a particular year, we refer to our
52- or 53-week fiscal year ending on the Monday nearest December 31, unless
otherwise noted. Fiscal years ended December 30, 1996, December 29, 1997 and
December 28, 1998 each consisted of 52 weeks. The periods ended March 30, 1998
and March 29, 1999 each consisted of 13 weeks.
23
<PAGE>
RESULTS OF OPERATIONS
Our operating results, expressed as a percentage of sales, were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
<S> <C> <C> <C> <C> <C>
MARCH 30, MARCH 29,
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS DATA: (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Owned restaurant sales............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of owned restaurant sales:
Food and beverage costs............................ 26.6 26.5 28.7 29.3 29.3
Salaries and related benefits...................... 28.9 30.2 33.1 30.9 30.3
Restaurant operating expenses...................... 16.2 15.0 17.2 15.6 16.4
Occupancy and related expenses..................... 6.5 6.1 6.2 6.2 6.2
Marketing and promotional expenses................. 7.0 6.4 6.6 5.4 6.6
Depreciation and amortization...................... 2.2 1.6 3.1 2.3 3.7
----------- ----------- ----------- ----------- -----------
Total cost of owned restaurant sales................. 87.4 85.8 94.9 89.7 92.5
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income from owned restaurant operations.............. 12.6 14.2 5.1 10.3 7.5
Management fee income................................ 4.0 7.2 7.0 6.3 3.8
Income from owned and managed restaurants............ 16.6 21.4 12.1 16.6 11.3
General and administrative expenses.................. 14.2 19.5 15.0 15.3 9.6
Royalty expense...................................... -- -- 0.7 0.5 1.2
Write-off of offering and financing costs............ -- 2.4 -- -- --
Acquisition of management contract................... 10.0 -- -- -- --
----------- ----------- ----------- ----------- -----------
Operating income (loss).............................. (7.6) (0.5) (3.6) 0.8 0.5
Interest expense (income)--net of interest income.... 1.1 1.3 0.8 (0.2) 2.1
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes.................... (8.7) (1.8) (4.4) 1.0 (1.6)
Provision (benefit) for income taxes................. (0.5) 1.8 1.4 1.5 0.8
----------- ----------- ----------- ----------- -----------
Net loss............................................. (8.2)% (3.6)% (5.8)% (0.5)% (2.4)%
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
QUARTER ENDED MARCH 29, 1999 COMPARED TO THE QUARTER ENDED MARCH 30, 1998
OWNED RESTAURANT SALES. Owned restaurant sales increased $7.8 million, or
84.4%, to $17.0 million in the three months ended March 29, 1999 from $9.2
million in the three months ended March 30, 1998. The increase was primarily due
to sales of $7.5 million at the three Smith & Wollensky units that opened after
the first quarter of 1998. While sales at the Chicago and Las Vegas locations
have met management's expectations, sales at the New Orleans location have not.
Drawing on our experience with other restaurants, we are seeking to increase
sales in New Orleans through an increase in advertising and promotional events.
The increase in comparable store sales was $312,000, or 3.4%, primarily as a
result of an increase in sales at the Smith & Wollensky in Miami partially
offset by a decrease in sales at The Manhattan Ocean Club.
FOOD AND BEVERAGE COSTS. Food and beverage costs increased $2.3 million to
$5.0 million in the three months ended March 29, 1999 from $2.7 million in the
three months ended March 30, 1998, primarily due to the three Smith & Wollensky
units that opened after the first quarter of 1998. Food and beverage costs as a
percent of owned restaurant sales remained constant at 29.3% in the three months
ended March 29, 1999 and the three months ended March 30, 1998.
SALARIES AND RELATED BENEFITS. Salaries and related benefits increased by
$2.3 million to $5.1 million in the three months ended March 29, 1999 from $2.8
million in the three months ended
24
<PAGE>
March 30, 1998. Salaries and related benefits as a percent of owned restaurant
sales decreased to 30.3% in the three months ended March 29, 1999 from 30.9% in
the three months ended March 30, 1998, primarily due to cost efficiencies
achieved at the Smith & Wollensky in Miami.
RESTAURANT OPERATING EXPENSES. Restaurant operating expenses increased $1.4
million to $2.8 million in the three months ended March 29, 1999 from $1.4
million in the three months ended March 30, 1998. Restaurant operating expenses
as a percent of owned restaurant sales increased to 16.4% in the three months
ended March 29, 1999 from 15.6% in the three months ended March 30, 1998,
primarily due to the three Smith & Wollensky units that opened after the first
quarter of 1998.
OCCUPANCY AND RELATED EXPENSES. Occupancy and related expenses increased
$494,000 to $1.1 million in the three months ended March 29, 1999 from $570,000
in the three months ended March 30, 1998, primarily due to the Smith & Wollensky
in Chicago and Las Vegas that opened after the first quarter of 1998. Occupancy
and related expenses as a percent of owned restaurant sales remained constant at
6.2% in the three months ended March 29, 1999 and the three months ended March
30, 1998.
MARKETING AND PROMOTIONAL EXPENSES. Marketing and promotional expenses
increased $627,000 to $1.1 million in the three months ended March 29, 1999 from
$498,000 in the three months ended March 30, 1998, primarily due to an increase
in full-page print advertisements related to the new Smith & Wollensky units.
Marketing and promotional expenses as a percent of owned restaurant sales
increased to 6.6% in the three months ended March 29, 1999 from 5.4% in the
three months ended March 30, 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$415,000 to $630,000 in the three months ended March 29, 1999 from $215,000 in
the three months ended March 30, 1998 as result of the addition of approximately
$26.3 million of new assets put into service after the first quarter of 1998
relating directly to the construction of the new Smith & Wollensky restaurants.
These new Smith & Wollensky units are larger than the previously owned units and
required significant capital expenditures.
MANAGEMENT FEE INCOME. Management fee income increased $72,000 to $648,000
in the three months ended March 29, 1999 from $576,000 in the three months ended
March 30, 1998, primarily due to an increase in fees from Maloney & Porcelli.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $220,000 to $1.6 million in the three months ended March 29, 1999 from
$1.4 million in the three months ended March 30, 1998, primarily due to
additional travel by corporate personnel relating to the new Smith & Wollensky
units. General and administrative expenses as a percent of owned restaurant
sales decreased to 9.6% in the three months ended March 29, 1999 from 15.3% in
the three months ended March 30, 1998, primarily due to the distribution of
general and administrative expenses over an increasing revenue base.
ROYALTY EXPENSE. Royalty expense increased $157,000 to $207,000 in the
three months ended March 29, 1999 from $50,000 in the three months ended March
30, 1998, primarily due to the new Smith & Wollensky units that were open after
the first quarter of 1998.
INTEREST EXPENSE--NET OF INTEREST INCOME. Interest expense, net of interest
income, increased $379,000 to $362,000 in the three months ended March 29, 1999
from ($17,000) in the three months ended March 30, 1998, which increase relates
directly to the amounts outstanding under our $15.0 million Fleet credit
facility.
PROVISION (BENEFIT) FOR INCOME TAXES. The provision (benefit) for income
taxes for the three months ended March 29, 1999 and the three months ended March
30, 1998 represents certain state and
25
<PAGE>
city taxes based on pretax book income adjusted by certain taxable factors. The
Company has not provided for federal income taxes in light of its cumulative net
operating losses.
1998 COMPARED TO 1997
OWNED RESTAURANT SALES. Owned restaurant sales increased $15.9 million, or
60.0%, to $42.5 million in 1998 from $26.6 million in 1997, primarily due to the
opening of three new Smith & Wollensky units during 1998 as well as the Smith &
Wollensky in Miami which opened in December 1997. The Smith & Wollensky in Miami
contributed $6.8 million of incremental sales in 1998 over 1997. In addition,
the three new owned units that were opened in 1998 contributed an additional
$8.3 million in sales in 1998. The increase in comparable store sales, was
$795,000, or 3.0%, due to an increase in sales at Park Avenue Cafe and, to a
lesser extent, Cite.
FOOD AND BEVERAGE COSTS. Food and beverage costs increased by $5.2 million
to $12.2 million in 1998 from $7.0 million in 1997. Food and beverage costs as a
percent of owned restaurant sales increased to 28.7% in 1998 from 26.5% in 1997,
as a result of the new Smith & Wollensky unit openings. In the first 15 months
of new restaurant operations, it is not uncommon to experience higher than
normal food and beverage costs as a percent of sales as a result of initial
startup inefficiencies and a lower revenue base.
SALARIES AND RELATED BENEFITS. Salaries and related benefits increased by
$6.1 million to $14.1 million in 1998 from $8.0 million in 1997. Salaries and
related benefits as a percent of owned restaurant sales increased to 33.1% in
1998 from 30.2% in 1997, primarily due to the additional staffing required
during the ramp-up phase to support the opening of the new Smith & Wollensky
units in 1998.
RESTAURANT OPERATING EXPENSES. Restaurant operating expenses increased $3.3
million to $7.3 million in 1998 from $4.0 million in 1997. Restaurant operating
expenses as a percent of owned restaurant sales increased to 17.2% in 1998 from
15.0% in 1997, as a result of the new Smith & Wollensky unit openings. In the
first 15 months of new restaurant operations, it is not uncommon to experience
higher than normal restaurant operating costs as a percent of sales related to
the opening of the new units.
OCCUPANCY AND RELATED EXPENSES. Occupancy and related expenses increased
$1.0 million to $2.6 million in 1998 from $1.6 million in 1997, primarily due to
the new Smith & Wollensky unit openings. Occupancy and related expenses as a
percent of owned restaurant sales increased to 6.2% in 1998 from 6.1% in 1997.
MARKETING AND PROMOTIONAL EXPENSES. Marketing and promotional expenses
increased $1.1 million to $2.8 million in 1998 from $1.7 million in 1997,
primarily due to an increase in full-page print advertisements related to the
new Smith & Wollensky units opened in 1998. Marketing and promotional expenses
as a percent of owned restaurant sales increased to 6.6% in 1998 from 6.4% in
1997.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$881,000 to $1.3 million in 1998 from $429,000 in 1997 as result of the addition
of approximately $26.3 million of new assets put into service throughout 1998
relating to the construction of the new Smith & Wollensky units. These new Smith
& Wollensky units are larger than the previously owned units and required
significant capital expenditures.
MANAGEMENT FEE INCOME. Management fee income increased $1.1 million to $3.0
million in 1998 from $1.9 million in 1997, primarily due to an increase of
$987,000 in fees from Maloney & Porcelli in 1998.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $1.2 million to $6.4 million in 1998 from $5.2 million in 1997,
primarily due to an increase in corporate
26
<PAGE>
management necessary to facilitate the expansion plan and training personnel
required for the opening of additional units, resulting in additional payroll
and related benefits of approximately $800,000. General and administrative
expenses decreased as a percent of restaurant sales to 15.0% in 1998 from 19.5%
in 1997.
ROYALTY EXPENSE. Royalty expense increased $303,000 to $310,000 in 1998
from $7,000 in 1997, primarily due to the new Smith & Wollensky units opened in
1998 and the Smith & Wollensky in Miami which opened in December 1997.
INTEREST EXPENSE--NET OF INTEREST INCOME. Interest expense, net of interest
income, increased $6,000 to $337,000 in 1998 from $331,000 in 1997.
PROVISION (BENEFIT) FOR INCOME TAXES. The provision (benefit) for income
taxes for 1997 and 1996 represents certain state and city taxes based on pretax
book income adjusted by certain taxable factors. The Company has not provided
for federal income taxes in light of its cumulative net operating losses.
1997 COMPARED TO 1996
OWNED RESTAURANT SALES. Owned restaurant sales increased $1.6 million, or
6.3%, to $26.6 million in 1997 from $25.0 million in 1996, primarily due to
sales increase of $1.2 million, or 4.9%, for comparable store sales, along with
$367,000 in sales generated by the Smith & Wollensky unit in Miami that opened
in December 1997. The comparable store sales increase was primarily due to the
YEAR OF THE GRAPE promotion at Cite and an increase in banquet sales at Park
Avenue Cafe.
FOOD AND BEVERAGE COSTS. Food and beverage costs increased by $389,000 to
$7.0 million in 1997 from $6.6 million in 1996. Food and beverage costs as a
percent of owned restaurant sales decreased to 26.5% in 1997 from 26.6% in 1996.
SALARIES AND RELATED BENEFITS. Salaries and related benefits increased by
$791,000 to $8.0 million in 1997 from $7.2 million in 1996. Salaried and related
benefits as a percent of owned restaurant sales increased to 30.2% in 1997 from
28.9% in 1996, primarily due to the additional staffing required to support the
opening of the Smith & Wollensky in Miami in December 1997.
RESTAURANT OPERATING EXPENSES. Restaurant operating expenses remained
constant at $4.0 million in 1997 and 1996. Restaurant operating expenses as a
percentage of owned restaurant sales decreased to 15.0% in 1997 from 16.2% in
1996, primarily due to continued efficiencies of comparable units that helped
offset the increase due to the Smith & Wollensky in Miami opening.
OCCUPANCY AND RELATED EXPENSES. Occupancy and related expenses remained
constant at $1.6 million in 1997 and 1996. Occupancy and related expenses as
percentage of owned restaurant sales decreased to 6.1% in 1997 from 6.5% in
1996.
MARKETING AND PROMOTIONAL EXPENSES. Marketing and promotional expenses
decreased to $1.7 million in 1997 from $1.8 million in 1996. Marketing and
promotional expenses as a percent of owned restaurant sales decreased to 6.4% in
1997 from 7.0% in 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased
$117,000 to $429,000 in 1997 from $546,000 in 1996, primarily attributable to
certain fixed assets at Cite that were in their final year of depreciation in
1996.
MANAGEMENT FEE INCOME. Management fee income increased $913,000 to $1.9
million in 1997 from $1.0 million in 1996. The increase relates primarily to
Maloney & Porcelli which commenced operations in August 1996.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $1.6 million to $5.2 million in 1997 from $3.6 million in 1996,
primarily due to an increase in corporate management necessary to facilitate the
expansion plan and training personnel required for the opening
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of the Smith & Wollensky in Miami, resulting in additional payroll and related
benefits of approximately $1.4 million in fiscal 1997. General and
administrative expenses increased as a percentage of owned restaurant sales to
19.5% in 1997 from 14.2% in 1996.
WRITE-OFF OF OFFERING AND FINANCING COSTS. The write-off of offering and
financing costs of $647,000 reflects the write-off of certain professional fees
associated with the proposed raising of additional capital.
ACQUISITION OF MANAGEMENT CONTRACT. The acquisition of the management
contract represents the $2.5 million charge, paid in the form of common stock,
for Alan Stillman's assignment of his right to receive management fees from
certain owned restaurants.
INTEREST EXPENSE--NET OF INTEREST INCOME. Interest expense, net of interest
income, increased $56,000 to $331,000 in 1997 from $275,000 in 1996. The
increase in interest expense of $73,000 is primarily due to the sale of $4.0
million in subordinated notes in February 1997. The increase in interest expense
was offset by an increase in interest income associated with the investment of
the net proceeds from our $21.0 million preferred stock private placement in
October 1997.
PROVISION (BENEFIT) FOR INCOME TAXES. The provision (benefit) for income
taxes for 1997 and 1996 represents certain state and city taxes based on pretax
book income adjusted by certain taxable factors. The 1996 benefit for income tax
includes the recognition of a deferred tax asset. The deferred tax asset was
reserved for in 1997, as utilization of this asset in future periods was deemed
uncertain. The Company has not provided for federal income taxes in light of its
cumulative net operating losses.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our capital requirements in recent years through cash flow
from operations, private placements of preferred stock, the sale of subordinated
notes and bank debt. Net cash provided by operating activities amounted to $1.7
million in 1997 and $924,000 for the three months ended March 29, 1999 and we
had net cash used of $781,000 in 1998.
Net cash provided by financing activities was $19.8 million, $13.8 million
and $496,000 for 1997 and 1998, and for the three months ended March 29, 1999,
respectively. In 1997, we raised approximately $19.4 million, net of financing
costs, from the sale of preferred stock. In 1996 and 1997 we raised
approximately $11.4 million from the sale of subordinated notes and in June 1999
we received $10.0 million from the sale of the Magnetite senior subordinated
note.
We use cash primarily to fund the development and construction of new
restaurants. Net cash used in investing activities was $13.5 million, $22.7
million and $1.4 million for 1997 and 1998, and for the three months ended March
29, 1999, respectively. Due to our use of funds for the construction of new
restaurants and the costs associated with the ramp-up phases of such
restaurants, we had no cash on hand at March 29, 1999 or December 28, 1998, as
compared to $9.6 million of cash on hand at December 29, 1997.
Total capital expenditures are expected to be approximately $7.0 million in
1999 and $15.0 million in 2000. Our current expansion plans call for us to open
three to four new units per year for the next several years. We intend to
develop restaurants that will require, on average, a total cash investment of
$4.5 million to $5.0 million excluding pre-opening costs of approximately
$400,000 to $500,000. See "BUSINESS--GROWTH STRATEGY, EXPANSION PLANS, SITE
SELECTION AND RESTAURANT DEVELOPMENT.".
We may require additional capital which we would seek to obtain through
commercial borrowings or the private or public issuance of debt or equity
securities.
We entered into a revolving credit facility with Fleet on September 1, 1998,
as amended on June 8, 1999 and June 29, 1999. We may borrow up to a maximum of
$15.0 million under the Fleet facility for restaurant construction and to
provide a maximum of $5.0 million for working capital. We may select a rate of
interest at the prime rate or 3.25% above the LIBOR rate. Amounts outstanding
under the
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Fleet facility must be repaid upon consummation of this offering. Revolving
loans in an amount up to $12.2 million outstanding under the Fleet facility
convert to a three-year term loan on January 15, 2000. The Fleet facility is
secured by a first security interest in all of our personal property (excluding
licensed names), specified restaurant leases and our management agreements. The
Fleet facility is guaranteed by all of our subsidiaries. The Fleet facility
prohibits the payment of dividends. SEE "NOTE 8 TO CONSOLIDATED FINANCIAL
STATEMENTS." We are in the process of negotiating a new $20.0 million credit
facility with Fleet to take effect upon consummation of this offering. As of
December 28, 1998, the Company was not in compliance with certain financial
covenants. On June 29, 1999, the financial institution waived the covenant
violations and amended certain of the financial covenants. Additionally, the
loan agreement includes restrictions and limitations on the payment of dividends
and capital expenditures.
On June 29, 1999, we entered into a senior subordinated note purchase
agreement with Magnetite. In connection with such purchase agreement, we issued
a $10.0 million senior subordinated note bearing interest at 12.5%. The senior
subordinated note becomes due in June 2006, but we plan to prepay the note with
the proceeds of this offering at a 1% prepayment premium. The Magnetite senior
subordinated note is guaranteed by all of our subsidiaries, but is not secured.
The note purchase agreement contains restrictions on our ability to incur
indebtedness and pay dividends. In addition, in connection with such financing,
we issued Magnetite a warrant to purchase up to 107,983 shares of our common
stock at an exercise price of $.01 per share. Magnetite has piggyback
registration rights with respect to the common stock underlying the warrant but
does not have the right to include the common stock underlying the warrant in
this offering.
In 1997, we assumed certain debt from two bankrupt corporations in
connection with the acquisition of our lease for the Smith & Wollensky in Miami.
Pursuant to the terms of the bankruptcy resolution, we are obligated to make
quarterly and annual payments over a six-year period. This debt bears interest
at rates ranging from 9.0% to 12.0%. The aggregate amount of such debt was
approximately $636,000 at March 29, 1999. Also, we assumed a mortgage on the
Miami property that requires monthly installments, expires in June 2004, and
bears interest at 9.5% per year. In addition, we assumed a loan payable to a
financing institution that requires monthly installments through the year 2014
which bears interest at 7.67% per year. The aggregate balance of the mortgage
and loan payable was approximately $2.0 million at March 29, 1999.
We believe that the proceeds from this offering, together with anticipated
cash flow from operations and funds available from our credit facility, will be
sufficient to satisfy our working capital and capital expenditure requirements
through at least December 31, 2000. We plan to incur substantial costs over the
near term in connection with our expansion program. Changes in our operating
plans, acceleration of our expansion plans, lower than anticipated sales,
increased expenses, potential acquisitions or other events may cause us to seek
additional financing sooner than anticipated. Additional financing may not be
available on acceptable terms, or at all. Failure to obtain financing as needed
could have a material adverse effect on our business and results of operations.
ACCOUNTING STANDARD TO BE ADOPTED
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("Statement
133"), was issued which is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. Statement 133 standardizes the accounting for
derivative instruments and requires that all derivative instruments be carried
at fair value. We have not determined the impact that Statement 133 will have on
its financial statements and believe that such determination will not be
meaningful until closer to the date of the initial adoption in January 2001.
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SEASONALITY
Our business is somewhat seasonal in nature, with revenues being less in the
third quarter than in other quarters due to reduced summer volume. As we
continue to expand in other locations, the seasonality pattern may change.
QUARTERLY RESULTS
The following tables set forth unaudited quarterly information for the last
five quarters. This quarterly information has been prepared on a basis
consistent with the audited consolidated financial statements and, we believe,
includes all adjustments, consisting of normal recurring adjustments necessary
for a fair presentation of the information shown. Our quarterly operating
results may fluctuate significantly as a result of a variety of factors and
operating results for any quarter are not necessarily indicative of results for
a full year.
<TABLE>
<CAPTION>
1998 1999
---------------------------------------------- -----------
FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER
----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Owned restaurant sales..................................... $ 9,212 $ 10,095 $ 8,963 $ 14,251 $ 16,988
Cost of owned restaurant sales:
Food and beverage costs.................................. 2,699 2,861 2,486 4,142 4,970
Salaries and related benefits............................ 2,844 3,509 3,086 4,619 5,143
Restaurant operating expenses............................ 1,437 1,734 1,536 2,611 2,782
Occupancy and related expenses........................... 570 663 616 807 1,064
Marketing and promotional expenses....................... 498 651 511 1,141 1,125
Depreciation and amortization............................ 215 312 252 531 630
----------- --------- ----------- --------- -----------
Total cost of owned restaurant sales....................... 8,263 9,730 8,487 13,851 15,714
----------- --------- ----------- --------- -----------
Income from owned restaurant
operations............................................... 949 365 476 400 1,274
Management fee income...................................... 576 564 585 1,243 648
Income from owned and managed restaurants.................. 1,525 929 1,061 1,643 1,922
General and administrative expenses........................ 1,405 1,590 1,477 1,912 1,625
Royalty expense............................................ 50 65 70 125 207
----------- --------- ----------- --------- -----------
Operating income (loss).................................... 70 (726) (486) (394) 90
Interest expense (income)--net of interest income.......... (17) 22 61 271 362
----------- --------- ----------- --------- -----------
Income (loss) before income taxes........................ 87 (748) (547) (665) (272)
Provision for income taxes................................. 135 152 118 167 138
----------- --------- ----------- --------- -----------
Net loss................................................... $ (48) $ (900) $ (665) $ (832) (410)
----------- --------- ----------- --------- -----------
----------- --------- ----------- --------- -----------
Number of owned restaurants at end of period............... 4 5 5 7 7
Number of managed restaurants at end of period............. 4 4 4 4 4
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
1998 1999
-------------------------------------------------- -------------
FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Owned restaurant sales........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of owned restaurant sales:
Food and beverage costs..................................... 29.3 28.3 27.7 29.1 29.3
Salaries and related benefits............................... 30.9 34.8 34.4 32.4 30.3
Restaurant operating expenses............................... 15.6 17.2 17.1 18.3 16.4
Occupancy and related expenses.............................. 6.2 6.6 6.9 5.7 6.2
Marketing and promotional expenses.......................... 5.4 6.4 5.7 8.0 6.6
Depreciation and amortization............................... 2.3 3.1 2.8 3.7 3.7
----- ----- ----- ----- -----
Total cost of owned restaurant sales.......................... 89.7 96.4 94.6 97.2 92.5
----- ----- ----- ----- -----
Income from owned restaurant operations....................... 10.3 3.6 5.4 2.8 7.5
Management fee income......................................... 6.3 5.6 6.5 8.7 3.8
----- ----- ----- ----- -----
Income from owned and managed restaurants..................... 16.6 9.2 11.9 11.5 11.3
General and administrative expenses........................... 15.3 15.8 16.5 13.4 9.6
Royalty expense............................................... 0.5 0.6 0.8 0.9 1.2
Operating income (loss)....................................... 0.8 (7.2) (5.4) (2.8) 0.5
Interest expense (income)--net of interest income............. (0.2) 0.2 0.7 1.9 2.1
----- ----- ----- ----- -----
Income (loss) before income taxes............................. 1.0 (7.4) (6.1) (4.7) (1.6)
Provision for income taxes.................................... 1.5 1.5 1.3 1.2 0.8
----- ----- ----- ----- -----
Net loss...................................................... (0.5)% (8.9)% (7.4)% (5.9)% (2.4)%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
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<PAGE>
We anticipate our quarterly operating results will fluctuate significantly
as a result of a variety of factors, including the timing of new restaurant
openings and related expenses, profitability of new restaurants, increases or
decreases in comparable restaurant sales, general economic conditions, consumer
confidence in the economy, changes in consumer preferences, competitive factors,
vacation schedules and weather conditions. In the past, we have experienced
significant variability in preopening costs from quarter to quarter. These
fluctuations are primarily a function of the timing of restaurant openings. We
typically incur the most significant portion of preopening costs associated with
a given restaurant within the three months immediately preceding the opening of
the restaurant. In addition, our experience to date has been that labor and
direct and occupancy costs associated with a newly opened restaurant are
materially higher during the ramp-up phase than what can be expected after such
time, both in aggregate dollars and as a percentage of restaurant sales.
Accordingly, the volume and timing of new restaurant openings in any quarter has
had and is expected to continue to have a significant impact on quarterly
preopening costs and labor and direct and occupancy costs.
YEAR 2000 READINESS DISCLOSURE
Historically, most computer databases, as well as embedded microprocessors
in computer systems and industrial equipment, were designed with date using only
two digits of the year. Most computer programs, computers and embedded
microprocessors controlling equipment were programmed to assume that all two
digit dates were preceded by "19," causing "00" to be interpreted as the year
1900. This formerly common practice now could result in a computer system or
embedded microprocessor which fails to recognize properly a year that begins
"20," rather than "19." This in turn could result in computer system
miscalculations or failures, as well as failures of equipment controlled by date
sensitive microprocessors, and is generally referred to as the "Year 2000"
issue.
We have instituted a company wide initiative to examine the implications of
the Year 2000 on our computer systems and applications to ensure that our
computer systems will function properly in the Year 2000 and thereafter. We
anticipate completing our Year 2000 project by the end of the third quarter of
1999 and believe that the Year 2000 issue will not pose significant operational
problems for our computer systems. We have not determined the impact, if any, on
our operations if outside third parties with which we have a business
relationship fail to comply with Year 2000 requirements. Management currently
believes that the costs related to our compliance with the Year 2000 issue
should not have a material adverse effect on our consolidated financial
position, results of operations or cash flows.
FORWARD-LOOKING STATEMENTS
Forward-looking statements, written, oral or otherwise made, represent our
expectation or belief concerning future events. Without limiting the foregoing,
the words "believes," "thinks," "anticipates," "plans," "expects" and similar
expressions are intended to identify forward-looking statements. We caution that
these statements are further qualified by important economic and competitive
factors that could cause actual results to differ materially, or otherwise, from
those in the forward-looking statements, including, without limitation, risks of
the restaurant industry and the impact of changes in consumer tastes, local,
regional and national economic conditions, demographic trends, cost increases
and other risks. In addition, our ability to expand is dependent upon various
factors, including our ability to negotiate suitable lease terms, the ability to
generate or borrow funds to develop new restaurants and the ability to obtain
various government permits and licenses and the recruitment and training of
skilled management and restaurant employees. Accordingly, such forward-looking
statements do not purport to be predictions of future events or circumstances
and therefore there can be no assurance that any forward-looking statements
contained herein will prove to be accurate.
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<PAGE>
INFLATION
Components of our operations subject to inflation include food, beverage,
lease and labor costs. Our leases require us to pay taxes, maintenance, repairs,
insurance, and utilities, all of which are subject to inflationary increases. We
believe inflation has not had a material impact on our results of operations in
recent years.
PROPERTIES
We lease restaurant and office facilities and real property under operating
leases expiring through 2024. As of the date of this prospectus, our future
minimum lease payments of our headquarters and restaurants are as follows:
remainder of 1999--$2.7 million; 2000--$3.7 million; 2001--$4.0 million;
2002--$3.9 million; 2003--$4.1 million; and thereafter--$60.5 million.
33
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BUSINESS
OUR COMPANY
Since opening the original Smith & Wollensky steakhouse in New York City in
1977, we have become one of the leading creators, owners and operators of
high-end, high-volume restaurants in the United States. In 1980, three years
after opening our first Smith & Wollensky, we developed The Post House, a
distinctive steak and chop house with an American theme. In 1984, we opened the
Manhattan Ocean Club, an upscale seafood restaurant, and in 1989, we opened
Cite, a Parisian grand-cafe style restaurant. The Park Avenue Cafe concept,
begun in 1992, combines country-style new American cuisine in a cafe atmosphere,
while Maloney & Porcelli, developed in 1996, presents updated classic American
cuisine. We believe that our restaurant concepts have broad national appeal and
that, as a result, we have significant opportunities to expand our business.
Each of our restaurants provides a fine dining experience, offering distinctive
high-quality food, creative menus and extensive wine lists accompanied by
attractive design interior and decor. For over 20 years, our restaurants have
been receiving local and national dining awards including the Distinguished
Restaurants of North America "DiRoNA Award" and WINE SPECTATOR'S "Grand Award."
Our core concept, Smith & Wollensky, is one of the most recognized brand
names in the restaurant industry. We currently operate 12 restaurants, eight of
which we own and four of which we manage. Six of our eight restaurants that were
open for all of 1998 were among the top 100 independent restaurants in the
United States in 1998 in terms of sales, according to RESTAURANTS &
INSTITUTIONS, a leading industry magazine. For the 12 months ended June 28,
1999, average sales for our restaurants that were open for the full period were
$10.2 million and the average check per person for all restaurants was $55.60.
THE SMITH & WOLLENSKY CONCEPT
We opened the first Smith & Wollensky in New York City in 1977. With the
Smith & Wollensky concept, we have sought to create a unique dining experience
which provides high quality steaks and other entrees in an upscale environment.
The Smith & Wollensky restaurant in New York typifies our approach and has been
described by GOURMET as the "quintessential New York steakhouse." The only two
Smith & Wollensky restaurants open for all of 1998 were among the top 100
independent restaurants in the United States in 1998 in terms of sales,
according to RESTAURANTS & INSTITUTIONS, with Smith & Wollensky in New York
ranking number three.
DRY-AGED STEAKS AND MORE. Smith & Wollensky restaurants feature USDA prime
grade beef, served in generous portions. Unlike most other high-end steakhouses,
Smith & Wollensky dry ages and butchers its beef on the premises. During this
dry aging process, which takes three to four weeks to complete, the beef
generally loses approximately 20% of its weight. This process tenderizes and
intensifies the flavor of the beef. Although the dry aging process is expensive
and time consuming, we believe it produces a more flavorful and tender steak
than alternative processes.
Our menu also offers the highest quality veal, lamb, poultry, fish and other
seafood, including three- to thirteen-pound lobsters. Freshly baked bread is
served as well. Complementing our substantial main courses, our dessert menu
features traditional desserts such as pecan pie and cheesecake as well as other
specialized confections prepared on location by our highly trained pastry chefs.
EXTENSIVE WINE SELECTION. Fine wine is an integral part of the Smith &
Wollensky dining experience. Smith & Wollensky restaurants boast an extensive
wine list of 49,000 bottles, and our Smith & Wollensky in New York, which has
20,000 bottles of wine, has received WINE SPECTATOR'S "Grand Award" each year
from 1987 through 1995, and WINE SPECTATOR'S "Award of Excellence" from 1996
through 1998. Additionally, our Smith & Wollensky in New York won the
Distinguished Restaurants of North America "DiRoNA Award" in 1994, given to
restaurants in business for more than three years that exemplify the highest
standards for food, beverage service and atmosphere. Our
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<PAGE>
nationally acclaimed wine programs, such as Wine Week, have been written about
extensively by THE NEW YORK TIMES and WINE SPECTATOR.
DISTINCTIVE DESIGN AND DECOR. We believe that a unique decor is essential
to the creation of a fine dining experience for the customer. Each of our Smith
& Wollensky restaurants has a decor that suggests "turn-of-the-century"
ambiance, featuring hardwood floors, polished brass and dark wood accents and
authentic folk-art from 1900-1940 Americana. Menus are presented under glass in
stained wooden frames, while blackboards located around the dining rooms display
daily specials. Each restaurant's exterior, complete with traditional awnings,
incorporates the Smith & Wollensky concept's signature green and white colors,
giving the restaurant a distinctive appearance.
In addition to appealing and distinctive decor, our Smith & Wollensky
restaurants feature a design layout which both provides an intimate atmosphere
and enhances efficiency. Our large square footage is broken into small areas
which create a private, more intimate dining experience while maintaining a
large seating capacity. In order to ensure the hottest food and most efficient
service, Smith & Wollensky has kitchens located on each floor. This flexible
design allows us to close off sections of our restaurants, and thus reduce
operating costs, during non-peak hours.
We also offer customers a chance to view our chefs in action. Each Smith &
Wollensky has a "kitchen table" in a glass-enclosed area inside of the main
kitchen. Diners at the kitchen table can eat, drink wine and watch our expert
chefs prepare dinner. Additionally, each of our Smith & Wollensky locations
offers outdoor cafe dining.
WOLLENSKY'S GRILL. Each Smith & Wollensky also incorporates a Wollensky's
Grill, a more informal alternative to Smith & Wollensky, which offers menu
selections similar to those offered at Smith & Wollensky in smaller,
lower-priced portions, as well as hamburgers and sandwiches. Wollensky's Grill
provides flexibility for Smith & Wollensky, and the two dining areas have the
ability to expand and contract relative to one another to accommodate customer
demand. Wollensky's Grill generally has a separate entrance and offers expanded
late-night hours. A Wollensky's Grill typically seats up to 125 customers.
MAJOR LOCATIONS.
NEW YORK The first Smith & Wollensky, opened in October 1977, is located
in midtown Manhattan within blocks of many major hotels and office
buildings. Its distinctive green and white architecture has made it a
Manhattan landmark. Our Smith & Wollensky in New York was the third
largest independent restaurant in terms of sales in 1998, according to
RESTAURANTS & INSTITUTIONS, a leading industry magazine. Thomas Hart is
our general manager in New York and has been with us for 23 years. Victor
Chavez is our chef in New York and has been with us for 22 years. This
location has a seating capacity of 480, and for the 12 months ended June
28, 1999, its average check per person was $58.50. We manage the Smith &
Wollensky in New York under a management arrangement described below. See
"--MANAGEMENT ARRANGEMENTS."
MIAMI The Smith & Wollensky in Miami, opened in December 1997, is located
in South Beach overlooking Fisher's Island. Our Miami restaurant features
the popular Mrs. Wollensky's Cigar Bar. Arthur Forgette is our general
manager in Miami and has been with us since we opened this location.
Robert Mignola is our chef in Miami and has been with us for seven years.
This location has a seating capacity of 670, and for the 12 months ended
June 28, 1999, its average check per person was $56.10.
CHICAGO The Smith & Wollensky in Chicago, opened in April 1998, is
located near the city's central business district and overlooks the
Chicago River. Our Chicago restaurant takes advantage of its location
overlooking the river with an outdoor bar and dining area open in the
spring and summer months. Patrick Norton is our general manager in
Chicago and has
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been with us for 13 years. Hans Aeschbacher is our chef in Chicago and
has been with us since we opened this restaurant. This location has a
seating capacity of 610, and for the 12 months ended June 28, 1999, its
average check per person was $54.80.
NEW ORLEANS The Smith & Wollensky in New Orleans, opened in October 1998,
is in the city's
central business district, near the French Quarter. The site of our New
Orleans restaurant is a registered National Landmark and features outdoor
dining in keeping with the character of the French quarter. Eli Levy is
our general manager in New Orleans and has been with us for one and one
half years. Robert Bruce is our chef in New Orleans and has been with us
since we opened this restaurant. This location has a seating capacity of
375, and for the nine months ended June 28, 1999, its average check per
person was $43.60.
LAS VEGAS The Smith & Wollensky in Las Vegas, opened in December 1998, is
located on the famous Las Vegas strip across from major hotels such as
the Bellagio, New York/New York, and the Monte Carlo and within walking
distance of the MGM Grand and the soon to be opened Paris and Aladdin
Hotels. Smith & Wollensky in Las Vegas was named "Steakhouse of the Year"
for 1998 by the LAS VEGAS REVIEW-JOURNAL. Michael Feighery is our general
manager in Las Vegas and has been with us for 13 years. John Piccolino is
our chef in Las Vegas and has been with us since we opened this
restaurant. This location has a seating capacity of 675, and for the
seven months ended June 28, 1999, its average check per person was
$60.50.
WASHINGTON, D.C. The Smith & Wollensky in Washington, D.C., opened in
July 1999, is located on 19th Street in the central business district. We
have leased 20,000 square feet of space for the Smith & Wollensky in
Washington, D.C., allowing plenty of room for expansion. Darren McDonald
is our general manager in Washington, D.C. and has been with us for 10
years. Thomas Elbershari is our chef in Washington, D.C. and has been
with us for five years. The 13,000 square feet currently used in
operating this location has a seating capacity of 340.
OUR OTHER RESTAURANT CONCEPTS
In addition to Smith & Wollensky, we have developed other restaurant
concepts that we plan to selectively expand into new locations.
MALONEY & PORCELLI. Maloney & Porcelli, opened in New York in September
1996 and located in midtown Manhattan, highlights Corporate Executive Chef David
Burke's creative approach to food, featuring updated classic American cuisine.
This restaurant won USA TODAY'S award for Top Dish of 1997 for its Crackling
Pork Shank. Maloney & Porcelli also won WINE SPECTATOR'S "Award of Excellence"
in 1997 and 1998 and was "Tops for Business Lunch" in 1998, according to
GOURMET. Kevin Dillon is our general manager at Maloney & Porcelli in New York
and has been with us for 18 years. Patrick Vaccariello is our chef at Maloney &
Porcelli in New York has been with us for five years. This location has a
seating capacity of 410, and for the 12 months ended June 28, 1999, its average
check per person was $65.10. Maloney & Porcelli offers dedicated banquet
facilities on its third floor. We plan to open a Maloney & Porcelli in
Washington, D.C. in the last quarter of 1999 or the first quarter of 2000.
PARK AVENUE CAFE. Park Avenue Cafe opened in New York in February 1992 and
in Chicago in October 1994. Park Avenue Cafe is a country-style restaurant
offering New American cuisine in a "cafe" atmosphere. Corporate Executive Chef
Burke's innovative menu includes Pastrami Smoked Salmon and the trademarked Park
Avenue Cafe Swordfish Chop-Registered Trademark-. In 1997, Park Avenue Cafe won
the Distinguished Restaurants of North America "DiRoNA Award," and in 1994
through 1998 Park Avenue Cafe won WINE SPECTATOR'S "Award of Excellence." The
setting at Park Avenue Cafe is elegant and tailored, yet casual and warm, and is
informally decorated with an American folk art motif. Park Avenue Cafe in New
York is located on the upper east side of Manhattan. Park Avenue Cafe in New
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York includes the Townhouse, a dedicated banquet facility, which is located
adjacent to the main restaurant and seats up to 50 guests. Nicholas de Seve is
our general manager at Park Avenue Cafe in New York and has been with us for 17
years. Neil Murphy is our chef at Park Avenue Cafe in New York and has been with
us for one year. This location has a seating capacity of 210, and for the 12
months ended June 28, 1999, its average check per person was $64.90.
CITE. Cite, opened in New York in December 1989, is a Parisian grand cafe
style restaurant. The adjacent Cite Grill offers a lower-priced, more casual
alternative to the main dining room. Cite's menu is a streamlined version of the
menu of an American brasserie, with dishes ranging from steak frite to crab
cakes. The selection at Cite Grill is similar to Cite, with the addition of
simple bistro favorites. Cite has a popular wine promotion program in which each
night after 8:00 p.m., Cite offers a selection of four complimentary wines as
part of a $59.95 per person prix fixe dinner menu. Cite's Parisian brasserie
decor creates a colorful and festive atmosphere. Cite received the Distinguished
Restaurants of North America "DiRoNA Award" in 1995, given to restaurants that
exemplify the highest standards for food, beverage service and atmosphere. Cite
has also received, each year from 1990 through 1998, the "Award of Excellence"
from WINE SPECTATOR. Michael Hart is our general manager at Cite and has been
with us for 19 years. David Amorelli is our chef at Cite and has been with us
for eight years. Cite has a seating capacity of 375, and for the 12 months ended
June 28, 1999, its average check per person was $48.90.
THE MANHATTAN OCEAN CLUB. The Manhattan Ocean Club, opened in New York in
January 1984, is an upscale seafood restaurant offering the finest, freshest
fish and shellfish. The menu offers classic presentations of seafood, as well as
more modern interpretations. Desserts, prepared on the premises, are served
table side from antique glass-enclosed pastry carts. The extensive wine list,
focusing on the great white wine producing regions of the world, complements its
seafood menu and has received WINE SPECTATOR'S "Award for Excellence" from 1989
to 1998. The Manhattan Ocean Club's decor is designed to evoke an air of
understated, continental elegance. The interior, separated into two dining
levels by a circular metal stairway, is light and airy with white walls, wood
railings, dark green marble floors and well-appointed tables. More than 50
Picasso-signed Vallauris ceramics are exhibited in wall niches throughout the
restaurant. The Manhattan Ocean Club received the "DiRoNA Award" from the
Distinguished Restaurants of North America in 1998. The Manhattan Ocean Club
located just south of Central Park draws its clientele from the luxury hotels,
residences, shopping areas and office towers surrounding its midtown Manhattan
location. Samuel Pack is our general manager at The Manhattan Ocean Club and has
been with us for 26 years. Jonathan Parker is our chef at The Manhattan Ocean
Club and has been with us for 10 years. It has a seating capacity of 235, and
for the 12 months ended June 28, 1999, its average check per person was $70.10.
THE POST HOUSE. The Post House, opened in August 1980, is located on the
upper east side of Manhattan in the Lowell Hotel. It is a distinctive steak and
chop house in a sophisticated and warm dining setting with an Americana theme.
The Post House was ranked as "One of the Top 10 Steakhouses in America" by WINE
SPECTATOR in 1996, received WINE SPECTATOR'S "Award of Excellence" from 1989
through 1999 and won the "DiRoNA Award" from the Distinguished Restaurants of
North America in 1998. John Hagan is our general manager at The Post House and
has been with us for 18 years. Andres Tzul is our chef at The Post House and has
been with us for six years. The Post House has a seating capacity of 175, and
for the 12 months ended June 28, 1999, its average check per person was $73.60.
OTHER SOURCES OF REVENUE
BANQUET FACILITIES. Maloney & Porcelli, Park Avenue Cafe and all of our
owned Smith & Wollensky restaurants have dedicated banquet facilities. These
facilities host numerous events which generate higher per-person average checks
than do our restaurants. In addition to these dedicated
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banquet facilities, all of our restaurants have the capacity to host banquets
and parties, and all of our restaurant locations have separate banquet managers
that coordinate these special events.
HOSPITALITY SERVICE. We provide food and beverage management services to a
hotel in downtown Chicago. The services include room service, banquet services
and the management of two restaurants, Mrs. Park's Tavern and Park Avenue Cafe
in Chicago, which are located in the hotel. See "--MANAGEMENT ARRANGEMENTS."
MERCHANDISE SALES. We have recently developed a comprehensive merchandising
strategy to reinforce and capitalize on the upscale image of our Smith &
Wollensky brand. At our Smith & Wollensky restaurants, we now offer selected
products for sale under the Smith & Wollensky brand name, including custom steak
knives, dry-aged steaks, steak sauces and cookbooks.
OPERATING STRATEGY
We believe that the key to our success is our distinctive restaurant
concepts that are focused on the high-end segment of the restaurant industry. To
continue and leverage this success, we are pursuing the following operating
strategies:
HIGH-END, HIGH-VOLUME RESTAURANTS. Our core competency is the creation and
development of high-end restaurants which serve distinctive cuisine within the
upscale dining market. Our restaurants are characterized by strong brand
recognition, high restaurant volume and high average checks. We believe that our
core restaurant concept, Smith & Wollensky, as well as our other restaurant
concepts, have generated customer satisfaction and brand loyalty.
PROMINENT LOCATIONS. We believe that the locations of our restaurants are
critical to our long-term success, and we devote significant time and resources
to analyzing each prospective site. In general, we prefer to open restaurants on
attractive, high-profile sites near central business districts within larger
metropolitan areas. In addition to carefully analyzing demographic information
for each prospective site, we consider factors such as visibility, traffic
patterns, accessibility, adequacy of parking facilities, proximity to shopping
areas, office towers or parks, hotels, tourist volume, and local competition.
COMMITMENT TO SUPERIOR QUALITY FOOD. We believe that a primary element of
our appeal to our customers is our reputation for superior quality menus and
wine lists and the creative presentation of carefully prepared food. Our
restaurants use only USDA prime grade beef, dry-aged on the premises, and the
freshest, highest quality ingredients available, purchased daily in local
marketplaces. Many of our restaurants bake their own bread on the premises and
each of our restaurants feature highly trained pastry chefs who prepare a range
of traditional desserts and special confections. To maintain our exacting
standards, David Burke serves as our Corporate Executive Chef to oversee menu
development and implementation and to monitor ongoing quality control at all of
our restaurants. Chef Burke is nationally recognized for his culinary talents.
In 1996, he received the first Auggie Award awarded by the Culinary Institute of
America and was one of six recipients of the Robert Mondavi Culinary Award of
Excellence, in 1997 he was named Chef of the Year by CHEF magazine, and in 1998
he was named Chef of the Year by Vatel Club.
EXTENSIVE WINE SELECTION. Our commitment to fine wines is evident in our
extensive inventory of approximately 2,400 listings and over 92,000 bottles of
wine. Each restaurant has its own wine steward, who is supported at the
corporate management level by our wine director. The wine lists at our
restaurants have received numerous awards over the last decade, including WINE
SPECTATOR'S "Grand Award."
SIGNIFICANT AND INNOVATIVE MARKETING AND ADVERTISING. We believe that our
marketing program has contributed to the success and national awareness of our
restaurants. Our marketing strategy is designed to build a regular customer
base, enhance the strong identity and name recognition of our restaurants and
generate positive word-of-mouth advertising. The program is implemented through
the
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use of advertising, promotional activity and cross-marketing of our restaurants.
We run full-page advertisements in leading national publications, including THE
NEW YORK TIMES, FORBES AND FORTUNE. We also employ limited radio and cable
television advertising. In addition, we hold creative promotional events such as
"Wine Week," a popular semi-annual event, restaurant opening galas and concierge
dinners. See "--MARKETING, ADVERTISING AND PROMOTIONS." We believe that our
commitment to advertising sets us apart from other upscale restaurants and that
our advertising expenditures are substantially greater than at comparable
high-end restaurants. We also take advantage of opportunities to cross-promote
our restaurants by publishing advertisements and marketing materials featuring
all of our restaurants as a group.
EXCEPTIONAL CUSTOMER SERVICE. We are committed to providing our customers
attentive and professional service by employees trained to exceed guests'
expectations. We believe that our significant brand recognition, high unit sales
volume and high average check enable us to attract some of the industry's most
talented managers, chefs and wait staff. Each restaurant is staffed with an
experienced team of managers, kitchen personnel and wait staff, many of whom
have a long tenure with us. Before being promoted to general manager, an
employee is typically required to have three to five years of work experience in
our restaurants. Restaurant personnel are instructed in areas of restaurant
management, including food quality and preparation, wine selection, customer
service and beverage service. In addition, our ability to offer opportunities
for promotion and training by experienced managers enhances our recruiting and
training efforts. We believe our low rate of turnover contributes to consistent
quality and attentive customer service.
DEPTH AND STABILITY IN MANAGEMENT. Our senior management team is highly
experienced in the creation and implementation of successful restaurant
concepts. Alan Stillman, our Chief Executive Officer, has been creating
successful restaurant concepts for over 30 years, including the T.G.I. Friday's
concepts. Mr. Stillman has been with us for over 20 years. Mr. Stillman is
supported by a qualified team of professionals responsible for managing site
selection, operations, systems design and implementation, staff hiring and
training and administration. Our senior management team, comprised of Alan
Stillman, James Dunn, Mark Levine, James Gersten and Eugene Byrne, has an
average of 22 years of experience in the restaurant industry and have opened
numerous restaurants. James Dunn, our President, has 20 years of experience
operating restaurants, including responsibility for opening and operating five
House of Blues, eight Hard Rock Cafe and three Chart House restaurants. Our
restaurant general managers, most of whom are drawn from our restaurant
personnel, have an average tenure with us of 15 years, and all of them have
worked in the restaurant industry for at least 10 years. In addition to our
general managers, we currently employ approximately 145 restaurant managers and
believe they will be a substantial source of managerial talent as we expand.
GROWTH STRATEGY
Our objective is to leverage our experience in developing and operating
high-end restaurants through the expansion of our core and other leading
concepts in new markets while building our restaurants' reputations for
providing an exceptional dining experience and high-quality food. We plan to
open three to four new restaurants per year for the next several years in
carefully selected markets.
OPEN SMITH & WOLLENSKY RESTAURANTS IN NEW MARKETS. Smith & Wollensky is the
lead concept in our expansion strategy. As we open new Smith & Wollensky
restaurants, we intend to convey the concept of our New York-based restaurant in
decor, menu and atmosphere, while maintaining a flexible and fresh design that
can be readily adapted to accommodate particular geographic regions and
locations. Since December 1997, we have opened five new Smith & Wollensky
restaurants in major metropolitan areas throughout the United States, including
our most recent unit which opened in July, 1999 in Washington, D.C. We are
currently considering sites in Atlanta, Boston, Denver and Philadelphia.
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GROW AND DEVELOP RECENTLY OPENED RESTAURANTS. Since December 1997, we have
opened five Smith & Wollensky restaurants. Our experience has shown that our
restaurants take between 15 and 36 months to achieve expected levels of
operations. Our new restaurants are currently in various stages of the ramp-up
phase, and we believe incremental revenue and restaurant level operating
profitability can be realized from each of these restaurants as they continue to
develop.
CLUSTER OUR CONCEPTS IN EXISTING MARKETS. After entering a new market with
our concept, we plan to selectively open our other branded concepts in these new
markets. Our strategy calls for clustering our restaurants in high-profile sites
near central business districts to increase revenue and maximize return on
investment in a particular market. Additionally, we may consider opportunistic
acquisitions of existing restaurants or operations and enter into new management
arrangements. We intend to open a Maloney & Porcelli in Washington, D.C. in the
last quarter of 1999 or the first quarter of 2000.
LEVERAGE CENTRALIZED OPERATIONS TO INCREASE PROFITABILITY. We have
established a central corporate infrastructure to manage our restaurants through
which we seek to take advantage of volume discounts and the allocation of fixed
costs over a larger revenue base. All of our restaurants report daily through a
point-of-sale system which allows us to monitor our revenues, costs, inventory
and other operating statistics. See "--RESTAURANT OPERATIONS AND MANAGEMENT." As
we continue our expansion, we will seek to take advantage of even greater volume
discounts.
EXPAND RETAIL OFFERINGS AND DEVELOP BRANDED MERCHANDISE. We have developed
a new merchandising program to create and reinforce a distinctive brand image
built on the quality and name recognition of our restaurants. We anticipate
creating retail areas in new restaurants and our other existing restaurants
offering products incorporating the use of our restaurant logos with innovative
packaging and unique product presentation. We will offer high-quality
merchandise, such as Smith & Wollensky custom steak knives and cookbooks, as
well as food products, including steaks and sauces. Sales of items incorporating
the Smith & Wollensky name will be subject to the payment of a royalty. See
"--EXPANSION PLANS, SITE SELECTION AND RESTAURANT DEVELOPMENT" AND "--SERVICE
MARKS AND TRADEMARKS."
MARKETING, ADVERTISING AND PROMOTIONS
For the past 20 years, the goal of our marketing strategy has been to build
a regular customer base, enhance the strong identity and name recognition of our
restaurants, generate positive word-of-mouth advertising and create
opportunities to cross-promote our restaurants. In order to attract new
customers, we focus primarily on print advertising, but also employ limited
radio and television advertising. We achieve national as well as local exposure
through our print campaign; advertisements for our restaurants have appeared in
national publications and magazines such as THE NEW YORK TIMES, THE NEW YORK
TIMES MAGAZINE, FORBES, THE NEW YORKER, FORTUNE, SENIOR GOLFER, DEPARTURES and
various airline magazines. We also employ local advertising media. In Miami,
Chicago, New Orleans and Las Vegas, for example, our restaurants receive
significant exposure on airport dioramas, allowing us to take advantage of the
influx of tourists into these areas.
Not only do we advertise directly to the general public, but we also offer
specific customer services which have the potential for repeated referrals. The
Company's restaurants host parties for the concierges of nearby hotels which are
designed to enhance each restaurant's name recognition and reputation for
quality and service, thereby encouraging concierge recommendations.
Additionally, our wait staff selectively provides complimentary food and drinks
to customers, further developing customer loyalty.
The Company is continually strengthening its name recognition and brand
identity, particularly in new markets. In conjunction with restaurant openings,
the Company hosts dinners, lunches and cocktail parties for various civic,
philanthropic and charitable organizations. For example, in Miami Beach in
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1997, we held the 25th Anniversary party for the 1972 undefeated Miami Dolphin
football team. This event was covered by the local television stations and
appeared on the front page of THE MIAMI HERALD. In Las Vegas, we hosted the
Andre Agassi Foundation party at our newly opened Smith & Wollensky.
We also host Wine Week, which we started in 1986. Wine Week has evolved into
"National Wine Weeks" which we hold twice a year, usually in September and
March. Our restaurants sponsor wine tastings at lunch each day for the entire
week where wine makers are invited to represent their wineries and to serve and
discuss their wines with customers. These events earned our restaurants'
reputations for dedication to maintaining superior quality wine lists.
Additionally, in the summer of 1999, we are holding wine dinners called "Summer
of the Grape" as off-season promotions in Miami and New Orleans. Our other
promotions include cigar or scotch events as well as dinners hosted by
nationally renowned chefs. We believe that our promotions build customer loyalty
and increase future sales at our restaurants.
We maintain a public relations department in order to continually promote
our restaurants through print, television and radio. We have received wide
coverage in all of these media including Pinnacle on CNN, Life Styles of the
Rich and Famous, full page stories in THE NEW YORK TIMES, THE NEW YORK TIMES
MAGAZINE, multiple stories in FOOD AND WINE, BUSINESS WEEK, FORBES, and numerous
local newspapers. We have been named "The Quintessential New York Steakhouse" by
GOURMET,
"A Steakhouse To End All Arguments" by THE NEW YORK TIMES, and we were recently
selected as the "Best Steakhouse of Las Vegas" by the LAS VEGAS REVIEW--JOURNAL.
EXPANSION PLANS, SITE SELECTION AND RESTAURANT DEVELOPMENT
We expect to grow our business primarily through the expansion of our
branded restaurants outside of the New York metropolitan area. We recently
opened a Smith & Wollensky in Washington, D.C. and plan to open a Maloney &
Porcelli in Washington, D.C. in the last quarter of 1999 or the first quarter of
2000. In addition, we plan to open three to four new restaurants per year for
the next several years. Based on our experience and our planning to date, we
expect to make a total cash investment of $4.5 to $5.0 million in each new
restaurant, excluding pre-opening expenses of $400,000 to $500,000, and to open
restaurants with a seating capacity between 275 and 325 seats. Our typical new
restaurant will have fewer seats than our existing restaurants due to the
smaller size of new markets compared to our existing markets. Our cost estimates
include the cost of building out the restaurant, furnishing and initially
stocking the restaurant. Our experience has shown that it takes between 15 and
36 months for each new restaurant to achieve its expected level of operations.
We expect that our new restaurants will experience a similar ramp-up phase.
Although the anticipated costs and ramp-up periods associated with our planned
expansion are based on our experience, we cannot be certain that our estimates
will be correct.
In general, we prefer to open our restaurants on attractive, high-profile
sites and/or near central business districts within larger metropolitan areas.
Typically, prior to opening a new restaurant our management team carefully
analyzes demographic information for each prospective site, such as visibility,
traffic patterns, accessibility, ample parking facilities, proximity to shopping
areas, office towers or parks, hotels, tourist volume, local competition, gross
revenues of such competition and average household income levels. After
reviewing each of the relevant information management will rate the city in
terms of whether or not it is an appropriate location for a high-end restaurant
generally, and specifically, a Smith & Wollensky.
We seek long-term leases providing for substantial development or rent
contributions from our landlords or real estate developers in exchange for a
minimum rent equal to the greater of a market-based minimum annual rent or a
percentage of annual gross sales above a stipulated minimum. We also evaluate
opportunities to purchase existing restaurant sites that satisfy our selection
criteria. Use of such sites can significantly reduce construction costs,
increase return on investment and shorten the
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time required to open a new restaurant. We have identified Atlanta, Boston,
Denver and Philadelphia as likely expansion opportunities and are actively
involved in lease negotiations. We cannot assure you, however, that we will
obtain a favorable lease at any of these sites.
Our goal is to develop high profile locations which generate attractive
cash-on-cash returns. The costs of opening a new restaurant will vary depending
upon, among other things, size, landlord contributions, the location of the site
and the extent of required renovations. We are striving, however, to reduce our
new restaurant capital expenditures in the future by building smaller units on
sites that do not require significant development costs.
We have developed a restaurant opening program and team designed to optimize
the performance of our new restaurants. The team includes a general manager,
training manager, purchasing manager, beverage manager and chef/kitchen manager.
Restaurant managers typically complete a three to six month training program,
and the senior managers of our established restaurants spend up to six months at
each of the new restaurants in order to ensure quality control. Management
believes it is imperative for new managers to spend much of their training
period side by side with managers in existing operations in order to gain
critical insight into day to day operations and overall management philosophy.
The director of operations and the local restaurant manager interview all staff
on site. Chefs are brought to New York for training prior to an opening, and
periodically are given the opportunity to work at other locations under the
supervision of our award-winning chefs. The director of management information
systems typically stays at each new location for three weeks to ensure that all
accounting and management information systems are fully operational. We also
coordinate our marketing, advertising and promotional program to support new
restaurant openings while at the same time building national brand recognition.
RESTAURANT OPERATIONS AND MANAGEMENT
We believe that our high unit sales volume, profitability and portfolio of
concepts allow us to attract, compensate and maintain high-quality, experienced
restaurant management and personnel. We believe we have a low rate of staff
turnover for the restaurant industry. Professional, efficient and attentive
service is integral to our overall success. Each of our restaurants is operated
as an independent facility with each restaurant's general manager exercising
discretion and playing a key role in its success. Prior to being promoted to
general manager, our restaurant personnel have three to five years of working
experience in our restaurants. The general managers in our restaurants have an
average tenure with us of 15 years. During training, restaurant personnel are
instructed in areas of restaurant management, including food quality and
preparation, wine selection, customer service, beverage service, quality and
cost controls and employee relations. Restaurant general managers are also
provided with operations manuals relating to food and beverage preparation and
operation of restaurants. These manuals are designed to ensure uniform
operations, consistently high-quality products and service and proper accounting
for restaurant operations.
New wait staff at our restaurants participate in approximately three weeks
of training during which time they work under the close supervision of the
restaurant's management. Wait staff are trained and tested on proper service
technique, wine and food knowledge, customer satisfaction and point-of-sale
system usage.
PURCHASING
Our ability to maintain consistent quality throughout our restaurants
depends in part upon our ability to acquire food products and related items from
reliable sources in accordance with our specifications. We have no long-term
contracts for any food items in our restaurants. While we believe adequate
alternative sources of supply are readily available, these alternative sources
might not provide as favorable terms to us as our current suppliers when viewed
on a long-term basis. We believe we are
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able to achieve cost savings through purchasing restaurant items such as glass,
china, silver, utensils and similar items and equipment and certain food items
for our restaurants from the same suppliers. We also maintain an extensive
inventory of wines. Our wines are selected centrally by our Chief Wine Steward
and the majority of our wine is purchased in local markets by the wine steward
at each individual restaurant in order to tailor wine selections to customer
preferences, market availability and menu/wine pairing.
We devote considerable attention to controlling food costs. We make use of
information technology and each of our restaurants' point-of-sale system,
providing us with precise information on daily sales and inventory needs, thus
reducing our need to carry large quantities of food inventory. This cost
management system is complemented by our ability to obtain volume-based
discounts. Additionally, as we expand we expect to take further advantage of
volume discounts and other cost savings.
MANAGEMENT INFORMATION SYSTEMS
We maintain financial and accounting controls for each of our restaurants
through the use of centralized accounting and management information systems. We
collect sales and related information daily from each restaurant and we provide
restaurant managers with operating statements for their respective locations. We
expect to connect point-of-sale systems in individual restaurants via modem to a
central computer network in the corporate office and upgrade such point-of-sale
systems to facilitate the instantaneous downloading and constant monitoring of
financial information.
COMPETITION
The restaurant business is highly competitive and fragmented nationally and
in the metropolitan areas in which our restaurants operate. The number, size and
strength of our competitors varies widely from region to region. We believe that
competition is based on quality of the food products offered, customer service
reputation, restaurant location, name awareness and price. There are a great
number of restaurants, both locally owned restaurants and restaurants which are
members of regional or national chains, that compete directly and indirectly
with us. In the upscale steakhouse segment of the restaurant industry, we
compete with Morton's of Chicago, Palm and Ruth's Chris Steak House. Although we
believe we compete effectively, several of our competitors have been in
existence longer than we have, have better access to capital than we do and are
better established in areas where our restaurants are, or are planned to be,
located. We compete with other restaurants and retail establishments for sites.
EMPLOYEES
As of June 29, 1999, we had 879 employees, of whom 716 were hourly
employees, 129 were salaried employees engaged in administrative and supervisory
capacities, and 34 were corporate and office personnel. Many of the hourly
employees are employed on a part-time basis to provide services necessary during
peak periods of restaurant operations. None of the employees at our owned
restaurants are covered by a collective bargaining agreement. Of the restaurants
managed by us, Smith & Wollensky in New York and The Post House restaurants have
employees covered by collective bargaining agreements which expire on August 31,
2000. We, on behalf of the owners of the restaurants, negotiate these contracts
with these employees and while there can be no assurances, we believe we will
negotiate extensions of such contracts. We believe that our relations with our
employees and the employees in our managed restaurants are good. As of June 29,
1999, the restaurants managed by us had an aggregate of 387 employees, of whom
323 were hourly restaurant employees and 64 were salaried restaurant employees
engaged in administrative and supervisory capacities.
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PROPERTIES
All of our owned restaurants, except one, are located in space leased by us
as set forth below:
<TABLE>
<CAPTION>
YEAR OF
YEAR OF EXPIRATION
SQUARE EXPIRATION IF ALL OPTIONS
RESTAURANT LOCATION FOOTAGE OF INITIAL TERM EXERCISED
- -------------------------------- -------------------------------- --------- ----------------- -----------------
<S> <C> <C> <C> <C>
Smith & Wollensky in Miami...... 1 Washington Avenue, FL 23,700 2005 2025
Smith & Wollensky in Chicago.... 318 North State Street, IL 23,500 2012 2022
Smith & Wollensky in
Las Vegas..................... 3767 Las Vegas Blvd., NV 30,000 2018 2058
Smith & Wollensky in Washington,
D.C........................... 1112 19th Street, Washington, 20,000 2015 2025
D.C.
Maloney & Porcelli in
Washington, D.C. ............. 601 Pennsylvania Avenue, N.W., 10,000 2009 2019
North Building,
Washington, D.C.
Park Avenue Cafe................ 100 E. 63rd Street, NY 11,000 2006 2016
Cite............................ 120 W. 50th Street, NY 13,000 2009 2009
The Manhattan Ocean Club........ 57 W. 57th Street, NY 12,000 2013 2013
</TABLE>
We own the property for the Smith & Wollensky in New Orleans. Also, we have
an option to purchase the property for Smith & Wollensky in Las Vegas. In
addition, we assumed certain debt from two bankrupt corporations in connection
with the acquisition of the lease for Smith & Wollensky in Miami. Pursuant to
the terms of the bankruptcy resolution, we are obligated to make quarterly and
annual payments on such debt over a six-year period. This debt bears interest at
rates ranging from 9.0% to 12.0%. The aggregate amount of such debt was
approximately $636,000 at March 29, 1999. Also, we assumed a mortgage on the
Miami property that requires monthly installments, expires in June 2004, and
bears interest at 9.5%. We also assumed a loan payable to a financing
institution that requires monthly installments through the year 2014 which bears
interest at 7.67%. The aggregate balance of the mortgage and loan payable was
approximately $2.0 million at March 29, 1999.
All leases, with the exception of three, provide for a specified annual
rental. The leases for Smith & Wollensky in Miami, Smith & Wollensky in Chicago
and Cite require additional rental based on sales volumes over specified levels.
The Cite lease, however, becomes a fixed-rate lease in 2001. Generally, the
leases are net leases which require each of our respective subsidiaries to pay
its pro rata share of all taxes, insurance and maintenance costs.
The locations of our managed restaurants are either owned by the restaurant
owner or subject to a long-term lease with a remaining term of at least ten
years. We lease our executive offices of approximately 10,000 square feet in New
York.
SERVICE MARKS AND TRADEMARKS
We have registered with the United States Patent and Trademark Office the
names "The Manhattan Ocean Club," "Park Avenue Cafe," "Park Avenue Cafe
Swordfish Chop," "Swordfish Chop," "Mrs. Park's Tavern," "Cite," "La Cite,"
"Cite Grill," "The Grill Room," "Maloney & Porcelli" and "Wine Week" and certain
other names used by our restaurants as trademarks or service marks. We have also
registered trademarks in several foreign countries. In addition, pursuant to our
management
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agreement regarding Maloney & Porcelli discussed below, we are the exclusive
owner of the name "Maloney & Porcelli" and may use that name without liability
to any party anywhere outside a five-mile radius from the Maloney & Porcelli in
New York. We are not aware of any infringing uses of our trademarks or service
marks that we believe could materially affect our business. We believe that our
trademarks and service marks are valuable to the operation of our restaurants
and are important to our marketing strategy.
In August 1996, we acquired a license for the use of the names "Smith &
Wollensky," "Wollensky's Grill," and all associated service marks, trademarks,
trade names and trade dress from St. James Associates. The Smith & Wollensky
license grants us the right to use the licensed names throughout the United
States and the world, subject to the limitations discussed below. St. James
Associates has reserved the exclusive right to use the licensed names, subject
to receiving our consent in specified circumstances, within a 100-mile radius of
the Smith & Wollensky in New York, subject to our exclusive right to use the
name within a 10-mile radius of City Hall in Philadelphia, Pennsylvania.
Consequently, we may not open new Smith & Wollensky restaurants or pursue
retailing or merchandising opportunities within such reserved territory. We are
required to pay a one-time fee to St. James Associates upon the opening of each
new restaurant utilizing the licensed names. This fee is equal to the fee paid
in the previous year (which in 1998 was $200,000) increased by the lesser of the
amount the Consumer Price Index increased for such year and 5% of the fee for
the preceding year. In addition, we must pay a royalty of 2.0% of aggregate
annual gross restaurant sales and non-restaurant sales (subject to an annual
aggregate minimum of $300,000 in 1999, increasing annually in $100,000
increments up to an annual aggregate minimum of $800,000 to be paid in 2004 and
each year thereafter). Additionally, the Smith & Wollensky license provides for
a royalty fee of 1.0% of annual gross restaurant sales for any new steakhouses
opened in the future by us not utilizing the licensed names. If we terminate or
default on the Smith & Wollensky license, we are subject to a fee of $2.0
million upon termination or $2.5 million to be paid over four years. An entity
controlled by Alan Stillman is a general partner and a limited partner of St.
James Associates. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
MANAGEMENT ARRANGEMENTS
Pursuant to our management arrangements, we provide new restaurant concept
design, construction, staff training, menu development, administration,
managerial and operating services to the restaurants we manage.
SMITH & WOLLENSKY. We manage the Smith & Wollensky restaurant in New York
pursuant to a management arrangement with St. James Associates. Smith &
Wollensky Operating Corp., an entity controlled by Mr. Stillman, is a general
partner and a limited partner of St. James Associates. Pursuant to the St. James
agreement, we were retained to provide management services to the Smith &
Wollensky restaurant in New York. Consequently, we manage the Smith & Wollensky
restaurant in New York in exchange for a fee of 2.3% of all restaurant sales.
However, there is no formal management contract between St. James Associates and
us. The general partners may cancel the management arrangement at any time
without notice to us. Additionally, under the terms of the St. James Associates
Partnership Agreement, if the entity providing the management services on our
behalf is not operated and directed by Mr. Stillman, the other general partner
has the right to terminate retention of that entity and replace the entity with
any person, firm or corporation which the other general partner chooses. This
right does not include the right to terminate the trade name license. See
"--SERVICE MARKS AND TRADEMARKS." Pursuant to the St. James Associates
agreement, any dispute between the two general partners must be resolved by
arbitration. See "RISK FACTORS--WE DEPEND ON OUR CHIEF EXECUTIVE OFFICER" and
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
THE POST HOUSE. We also manage The Post House pursuant to a written
restaurant management agreement. Pursuant to The Post House agreement, we
provide operating services for The Post House
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in exchange for a fee of 6.0% of gross revenues of The Post House. The Post
House agreement may be terminated by either party for cause or upon one year's
notice. Additionally, The Post House agreement may be terminated by the owners
under certain circumstances upon notice to us, including if Mr. Stillman ceases
to be our controlling owner and chief operating officer or ceases to supervise
and be closely associated with the rendering of services under The Post House
agreement. See "RISK FACTORS--WE DEPEND ON OUR CHIEF EXECUTIVE OFFICER."
MALONEY & PORCELLI. We also manage Maloney & Porcelli in New York pursuant
to a written restaurant management agreement. We own the rights to the name
Maloney & Porcelli and can use the name for our own use anywhere outside of a
five mile radius of the New York Maloney & Porcelli. We are not obligated to pay
a royalty or fee outside of New York. Therefore, this fee would not be payable
in connection with our Maloney & Porcelli expected to open in Washington, D.C.
in the last quarter of 1999 or the first quarter of 2000. We paid $1.5 million
for the right to provide management services to Maloney & Porcelli, for which we
receive a fee of 3.0% of all restaurant sales, plus a sum equal to the lesser of
(i) 50.0% of operating cash flow or (ii) cash flow minus certain sums to be
retained by the owner of Maloney & Porcelli pursuant to the Maloney & Porcelli
agreement. The amounts to be retained by Maloney & Porcelli increase from
$300,000 in 1999, $360,000 in years 2000-2003 and $480,000 in 2004 and
thereafter. The Maloney & Porcelli agreement grants us the right to manage
Maloney & Porcelli so long as its owner occupies the premises for the operation
of a restaurant. The Maloney & Porcelli agreement may be terminated by either
party for cause. After September 1999, we may terminate the Maloney & Porcelli
agreement upon 60 days' notice. We have an option to purchase all of the assets
of the owner of Maloney & Porcelli at any time before July 1, 2001, at a price
of $7.5 million (with such amount increasing by $1.0 million each year
thereafter up to a maximum amount of $10.5 million at anytime on or after June
30, 2004 subject to the owner's right to preempt the purchase option by paying
us an amount equal to the scheduled purchase price). Additionally, we have a
right to first refusal, should the owner receive an offer to sell Maloney &
Porcelli.
PARK AVENUE CAFE IN CHICAGO. We also operate the food and beverage
department of the Doubletree Hotel in Chicago pursuant to a written agreement.
The Doubletree agreement expires on the earlier of December 31, 2004 and the
termination of the Hotel Management Agreement between Chicago HSR Limited
Partnership (the owner of the Doubletree Hotel) and Doubletree Partners. Either
party may terminate the Doubletree agreement if certain financial conditions are
not met. Doubletree may terminate the Doubletree agreement if Alan Stillman is
not the owner of at least 20% of our common stock and is not our chief executive
officer. We receive a fee of (a) 1.5% of the total revenue of the food and
beverage department, plus (b) 17.5% of the profits of the food & beverage
department in excess of certain scheduled financial targets, plus (c) 5.0% of
hotel profits in excess of certain scheduled financial targets.
GOVERNMENT REGULATIONS
Our business is subject to extensive Federal, state and local government
regulations, including regulations relating to alcoholic beverage control, the
preparation and sale of food, public health and safety, sanitation, building,
zoning and fire codes. A significant percentage of the revenues of each of the
restaurants we own or manage are attributable to the sale of alcoholic
beverages. Each restaurant has appropriate licenses from regulatory authorities
allowing it to sell liquor and/or beer and wine, and each restaurant has food
service licenses from local health authorities. Our licenses to sell alcoholic
beverages must be renewed annually and each restaurant is operated in accordance
with standardized procedures designed to assure compliance with all applicable
codes and regulations.
We are subject, in certain states, to "dram shop" statutes which generally
provide a person injured by an intoxicated person the right to recover damages
from an establishment which wrongfully served alcoholic beverages to such person
and we carry liquor liability coverage as part of its existing comprehensive
general liability insurance.
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The development and construction of additional restaurants will be subject
to compliance with applicable zoning, land use and environmental regulations.
We are also subject to the Fair Labor Standards Act, the Immigration Reform
and Control Act of 1986 and various state laws governing such matters as minimum
wages, overtime, tip credits and other working conditions. A significant number
of our hourly personnel are paid at rates related to the Federal minimum wage.
LEGAL PROCEEDINGS
We and our subsidiaries are involved in legal proceedings arising in the
ordinary course of our business. We do not believe that such claims or lawsuits,
individually or in the aggregate, will have a material adverse effect on our
financial condition, results of operations or liquidity.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their respective
ages as of June 28, 1999 and positions are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Alan N. Stillman..................................... 62 Chief Executive Officer and Director
James M. Dunn........................................ 43 President and Director
Chief Financial Officer, Executive Vice President of
Finance, Director
Mark K. Levine....................................... 54
Eugene M. Byrne...................................... 54 Director of New York Operations
James L. Gersten..................................... 30 Director of New Operations
Samuel Goldfinger.................................... 30 Director of Finance
Eugene I. Zuriff..................................... 60 Director
Thomas H. Lee........................................ 55 Director
Richard S. LeFrak.................................... 54 Director
</TABLE>
ALAN N. STILLMAN, our founder, has been our Chairman and Chief Executive
Officer and a Director since 1997, and was President from 1977 to 1997. He
developed his first restaurant, T.G.I. Fridays, in 1965. In 1975, Mr. Stillman
sold his interests in the concept and focused on the high-end market, founding
Smith & Wollensky in 1977. Mr. Stillman received the Distinguished Restaurants
of North America "DiRoNa" Hall of Fame Award in 1999 and the Silver Spoon Award
given by FOOD ARTS magazine in 1992 and 1998. Mr. Stillman has also served as a
director of Meals on Wheels USA for over 20 years.
JAMES M. DUNN has been President since May 1998 and a Director since January
1996. He served as Executive Vice President of Development from 1995 through
1998. Prior to his employment with us, from 1991 to 1995 Mr. Dunn was the
Executive Vice President of House of Blues, Inc. responsible for all operations.
From 1987 to 1991, Mr. Dunn was the Director of European Operations for the Hard
Rock Cafe.
MARK K. LEVINE has been Chief Financial Officer and Executive Vice President
of Finance since January 1996 and a Director since September 1997. From 1980
through 1995, Mr. Levine served as Vice President of Finance and Controller.
Prior to joining us, he was Vice President of Finance and Administration for
KaneMiller Corporation, and previously worked for Studebaker-Worthington
Corporation and the accounting firm of Alexander Grant.
SAMUEL GOLDFINGER has been Director of Finance since 1997. From 1995 to
1997, Mr. Goldfinger was an audit manager and from 1990 to 1994 a staff
accountant at the accounting firm of Goldstein Golub Kessler & Co., P.C. where
his client base focus was in the restaurant industry.
EUGENE M. BYRNE has been Director of New York Operations since 1980. In
addition, Mr. Byrne has supervised Smith & Wollensky in New York on a daily
basis for over twenty years. Mr. Byrne is also a limited partner of St. James
Associates.
JAMES L. GERSTEN has been Director of New Operations since June 1998, and
the Director of Training from June 1997 to May 1998. From 1993 to 1996, Mr.
Gersten was the Project Manager for the Myriad Restaurant Group, opening,
staffing and running projects such as Nobu, Layla, Harley Davidson, NYC, Tribeca
Grill, Reebok Sports Club, TriBakery, East Hampton Point and Fresco by Scotto.
EUGENE I. ZURIFF has been a financial, expansion, and legal consultant to us
since February 1997 and a Director since October 1997. He has been actively
involved in financing, lease negotiations, retail
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sales development and marketing activities for our new restaurants. From 1988 to
1997 Mr. Zuriff was the New York representative of Multi Commercial Bank in
Geneva Switzerland. He was Executive Vice President of Century Business Credit
from 1969 to 1988 and in 1988 became Founding Director and Member of the
Executive Committee of the Commercial Bank of New York. Mr. Zuriff is also a
Director of the Key Advisor Fund and the Omni Financial Corporation. Mr. Zuriff
currently serves as Senior Chairman of the Health Care Chaplaincy.
THOMAS H. LEE has been a Director since 1997. Mr. Lee founded the Thomas H.
Lee Company in 1974. The Lee Company and its affiliated funds invest private
equity capital in growing companies and have raised more than $6.5 billion of
private equity funds, including its latest fund, Thomas H. Lee Equity Fund IV,
L.P., with equity commitments of $3.45 billion. Mr. Lee serves as a Director of
the following public companies; Finlay Fine Jewelry Corp., Livent, Inc., (which
filed for protection under Chapter 11 of the Federal Bankruptcy Code in November
1998), Metris Companies, Inc., Safelite Class Corp., Vail Resorts, Inc., and
Wyndham International, Inc.
RICHARD S. LEFRAK has been a Director since 1997. Mr. LeFrak is the
President of LeFrak Organization, Inc., a diversified, privately held company
active in major residential and commercial real estate development projects, oil
and gas exploration, finance and entertainment production since 1975. Mr. LeFrak
is also a member of the Board of the Sequoia Corporation, a New York Stock
Exchange company, a member of the Regional Advisory Board of Chase Manhattan
Bank and a Member of the New York State Banking Board.
BOARD COMMITTEES
The Compensation Committee of the Board of Directors is comprised of Alan
Stillman, Thomas Lee and Richard LeFrak. The Compensation Committee is
responsible for reviewing and establishing the compensation structure for our
officers and directors, including salaries, participation in incentive
compensation and benefit plans, stock option plans and other forms of
compensation. See "Benefit Plans."
The Audit Committee of the Board of Directors of the Company is comprised of
Richard LeFrak and Eugene Zuriff. We also expect to add one additional
independent director within 12 months following the consummation of this
offering. The Audit Committee is responsible for recommending to the Board our
independent auditors, analyzing the reports and recommendations of the auditors
and reviewing internal audit procedures and controls.
ELECTION AND COMPENSATION OF DIRECTORS
Our Amended and Restated Certificate of Incorporation provides for a
classified board of directors divided into three classes. Richard LeFrak is a
Class I director and his term will expire at the annual meeting of stockholders
to be held in 2000; each of Mark Levine and Eugene Zuriff are Class II directors
and their terms will expire at the annual meeting of stockholders to be held in
2001. Each of Alan Stillman, Thomas Lee and James Dunn are Class III directors
and their terms will expire at the annual meeting of stockholder to be held in
2002. At each annual meeting of stockholders, beginning with the 2000 annual
meeting, the successors to directors whose terms will then expire will be
elected to serve from the time of election and qualification until the third
annual meeting following election and until their successors have been duly
elected and qualified, or until their earlier resignation or removal, if any. To
the extent there is an increase or reduction in the number of directors,
increase or decrease in directorships resulting therefrom will be distributed
among the classes so that, as nearly as possible, each class will consist of an
equal number of directors.
Our current directors do not receive any compensation for serving as
directors. We intend to adopt a 1999 Non-Employee Director Stock Option Plan
under which we will reserve 100,000 shares of our common stock for issuance
under options to be granted to non-employee members of the board of
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directors. Under this proposed plan, each individual who becomes a non-employee
member of the board of directors will receive an option to purchase 10,000
shares of common stock on the date such individual becomes a board member
provided such individual has not previously been employed by us or any
subsidiary and shall be eligible to receive 2,500 additional shares each year
such person serves as a board member.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers serves as a member of the Board of Directors
or Compensation Committee of any other company that has one or more executive
officers serving as a member of our Board of Directors or Compensation
Committee.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by our Chief
Executive Officer and each of our four other most highly compensated executive
officers (collectively, the "Named Executive Officers") during the year ended
December 28, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- --------------------
OTHER NUMBER OF SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
- ------------------------------------ --------- ---------- ---------- ----------------- -------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Alan N. Stillman.................... 1998 $ 642,000 $ 130,000 $ 5,228 85,000 $ --
Chief Executive Officer
James M. Dunn....................... 1998 249,640 55,000 12,845 106,000 --
President
Mark K. Levine...................... 1998 186,400 35,000 5,816 47,500 --
Chief Financial Officer, Executive
Vice President of Finance
James L. Gersten.................... 1998 85,000 30,000 652 10,000 --
Director of New Operations
Eugene M. Byrne..................... 1998 74,100 -- -- 47,500 --
Director of New York Operations(1)
</TABLE>
- ------------------------
(1) EUGENE BYRNE ALSO RECEIVED COMPENSATION FROM ST. JAMES ASSOCIATES.
The following table sets forth information regarding the option grants made
during 1998 to each of the Company's named executive officers in the Summary
Compensation Table above. The Company issued no stock appreciation rights in
1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTION/SARS MARKET VALUE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR ON DATE OPTION TERM (1)
OPTION/SARS EMPLOYEES IN BASE PRICE OF GRANT EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR PER SHARE PER SHARE DATE 5% 10%
- ------------------------ ------------- --------------- ------------- --------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan N. Stillman........ 10,000 11.4% $ 8.00 $ 8.00 2/28/08 $ 50,300 $ 127,500
James M. Dunn........... 10,000 11.4 8.00 8.00 2/28/08 50,300 127,500
Mark K. Levine.......... 10,000 11.4 8.00 8.00 2/28/08 50,300 127,500
James L. Gersten........ 10,000 11.4 8.00 8.00 2/28/08 50,300 127,500
Eugene M. Byrne......... 10,000 11.4 8.00 8.00 2/28/08 50,300 127,500
</TABLE>
- ------------------------
(1) IN ACCORDANCE WITH THE RULES OF THE SEC, SHOWN ARE THE GAINS OR "OPTION
SPREADS" THAT WOULD EXIST FOR THE RESPECTIVE OPTIONS GRANTED. THESE GAINS
ARE BASED ON THE ASSUMED RATES OF ANNUAL COMPOUND STOCK PRICE APPRECIATION
OF 5% AND 10% FROM THE DATE THE OPTION WAS GRANTED OVER THE FULL OPTION
TERM. THESE ASSUMED ANNUAL COMPOUND RATES OF STOCK PRICE APPRECIATION ARE
MANDATED BY THE RULES OF THE SEC AND DO NOT REPRESENT THE OUR ESTIMATE OR
PROJECTION OF FUTURE COMMON STOCK PRICES.
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YEAR END OPTION TABLE.
The following table sets forth information regarding the number and value of
options held at December 28, 1998, by each of our named executive officers in
the Summary Compensation Table above. No options or stock appreciation rights
were exercised during 1998 and no stock appreciation rights were outstanding as
of December 28, 1998. The value of unexercised in-the-money options at December
28, 1998 is based on the difference between the option exercise price and an
assumed initial public offering price of the common stock of $
multiplied by the number of shares of common stock underlying the option.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT DECEMBER 28, MONEY OPTIONS AT DECEMBER
1998 28, 1998
-------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Alan N. Stillman...................................................... 23,500 61,500
James M. Dunn......................................................... 29,800 76,200
Mark K. Levine........................................................ 12,250 35,250
James L. Gersten...................................................... 1,000 9,000
Eugene M. Byrne....................................................... 12,250 35,250
</TABLE>
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<PAGE>
EMPLOYMENT AGREEMENTS
ALAN M. STILLMAN
We entered into an employment agreement with Alan Stillman, our Chief
Executive Officer, effective January 1, 1998 pursuant to which Mr. Stillman will
serve as our Chief Executive Officer through December 31, 2002. This agreement
provides that Mr. Stillman is entitled to a base salary of $650,000 per year,
subject to annual cost of living increases. In addition, Mr. Stillman is
entitled to customary employee benefits. Mr. Stillman's employment agreement may
be terminated by us at any time for "cause", which is defined as (a) the
conviction or plea of no contest to any felony and other specified crimes, (b)
continued and uncured insubordination, (c) fraud, embezzlement, intentional
breach of fiduciary duties or intentional dishonesty, any if which has a
material adverse effect, or (d) failure to perform his duties or breach of his
employment agreement. This agreement may also be terminated by us without cause
or by Mr. Stillman for "good reason," which is defined as (a) a material breach
by us of the employment agreement, (b) removal of Mr. Stillman as President or
Chief Executive Officer or a material diminution in his responsibilities, or (c)
relocation of Mr. Stillman outside of New York City. If Mr. Stillman is
terminated without cause or terminates for "good reason" (1) before December 31,
2000, Mr. Stillman is entitled to a severance payment equal to his base salary
through December 31, 2002, or (2) after December 31, 2000, Mr. Stillman is
entitled to a severance payment equal to his base salary for the greater of (x)
the remainder of the term, and (y) 12 months.
On January 1, 1996, we entered into a non-competition agreement with Alan
Stillman and Thomas H. Lee Company, Thomas H. Lee Equity Partners, L.P. and
THL-CCI Limited Partnership. This agreement provides that Mr. Stillman will not,
directly or indirectly, own, finance, manage or operate any "high-end, white
table cloth" restaurant (such as The Manhattan Ocean Club, Park Avenue Cafe,
Cite, Smith & Wollensky, The Post House and Mrs. Parks Tavern) located in any
city (or, in the case of New York City, any borough) in which we or our
subsidiaries own, operate or manage such a restaurant, until September 29, 1999,
or until a material breach of the agreement (which is not cured within 20 days)
by any of Thomas H. Lee Company, Thomas H. Lee Equity Partners, L.P., or THL-CCI
Limited Partnership of their obligation, during a prescribed period, to offer to
us any opportunity presented to any of them or their affiliates by a third party
to own, finance, manage or operate any "high-end, white table cloth" restaurant
in which such Lee entities would be entitled have an interest in 10% or more of
the revenues of such restaurant.
We are currently negotiating a new employment agreement with Mr. Stillman.
JAMES M. DUNN
We are currently negotiating an employment agreement with James Dunn.
MARK K. LEVINE
We are currently negotiating an employment agreement with Mark Levine.
BENEFIT PLANS
We have two stock option plans in effect:
- 1996 Option Plan (1996 Plan)
- 1997 Stock Option Plan (1997 Plan)
We also intend to adopt a 1999 Stock Option Plan (1999 Plan) prior to
consummation of this offering upon approval of a majority in interest of our
outstanding preferred stock.
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As of March 29, 1999, we had options to purchase 313,050 shares of common
stock outstanding under the 1996 Plan and options to purchase 87,100 shares of
common stock outstanding under the 1997 Plan. No further option grants will be
made under the 1996 Plan or 1997 Plan. The outstanding options have a weighted
average exercise price of $6.96 per share.
1996 PLAN
Our 1996 Plan permits the grant of nonqualified options. The maximum number
of shares of our common stock available for stock options granted under the 1996
Plan is 384,525 shares. The maximum number of shares available under the 1996
Plan is subject to adjustment for capital changes.
The 1996 Plan may be administered by the full board of directors. The Board
has the authority to adopt, amend and rescind rules and regulations which, in
its opinion, may be advisable in the administration of the 1996 Plan.
Options may be granted to any officer or key employee of us or our
subsidiaries. Options granted under the 1996 Plan will vest as determined by the
board of directors.
The right of any option holder to exercise an option granted to him or her
shall not be assignable or transferable by the option holder other than by will
or the laws of descent and distribution. Options exercisable during the lifetime
of the option holder may be exercised only by the option holder.
Subject to the following, an option granted to any employee option holder
who ceases to be an employee of us or one of our subsidiaries shall terminate 90
days following the date on which that option holder ceases to be an employee of
us or one of our subsidiaries. If that termination of employment is because of
dismissal for cause, then the option will terminate immediately on the date the
option holder ceases to be an employee of us or one of our subsidiaries. If that
termination of employment is because the option holder has died or become
permanently disabled, the option shall terminate 180 days following the date on
which the option holder ceases to be an employee. In no event shall an option be
exercisable after the date upon which it expires by its terms.
An option granted to an employee option holder who ceases to be an employee
of us or one of our subsidiaries shall be exercisable only to the extent that
the right to purchase shares under the option has accrued and is in effect on
the date the option holder ceases to be an employee of us or one of our
subsidiaries.
1997 PLAN
Our 1997 Plan permits the grant of stock options, which may be either
incentive stock or nonqualified options. The maximum number of shares of our
common stock available for stock options granted under the 1997 Plan is 250,000
shares. The maximum number of shares available under the 1997 Plan is subject to
adjustment for capital changes.
Prior to the date of registration of our common stock under the Securities
Act, the 1997 Plan may be administered either by the full board of directors or
by a committee consisting of two or more members of our board of directors.
After any registration under the Securities Act, the committee must administer
the 1997 Plan. The committee has the authority to adopt, amend and rescind rules
and regulations which, in its opinion, may be advisable in the administration of
the 1997 Plan.
Options designated as incentive stock options may be granted only to our
officers and other employees. Non-qualified options may be granted to any
officer, employee, consultant or director of us or our subsidiaries. No option
designated as an incentive stock option shall be granted to any employee if that
employee owns, immediately prior to the grant of an option, stock representing
more than 10% of the combined voting power of all classes of our stock or a
parent or a subsidiary, unless the purchase price for the stock under that
option is at least 110% of its fair market value at the time the
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<PAGE>
option is granted and the option, by its terms, is not exercisable more than
five years from the date it is granted. Options granted under the 1997 Plan will
vest as determined by the board of directors or the committee.
The right of any option holder to exercise an option granted to him or her
shall not be assignable or transferable by the option holder other than by will
or the laws of descent and distribution, except that an option holder may
transfer options that are not incentive stock options pursuant to a qualified
domestic relations order. Options exercisable during the lifetime of the option
holder may be exercised only by the option holder.
Subject to the following, an option granted to any employee option holder
who ceases to be an employee of us or one of our subsidiaries shall terminate 90
days following the date on which that
option holder ceases to be an employee of us or one of our subsidiaries. If that
termination of employment is because of dismissal for cause, the option will
terminate immediately on the date the option holder ceases to be an employee of
us or one of our subsidiaries. If that termination of employment is because the
option holder has died or become permanently disabled, the option shall
terminate 180 days following the date that option holder ceases to be an
employee.
An option granted to an employee option holder who ceases to be an employee
of us or one of our subsidiaries shall be exercisable only to the extent that
the right to purchase shares under the option has accrued and is in effect on
the date the option holder ceases to be an employee of us or one of our
subsidiaries.
1999 PLAN
The following summarizes the terms of the proposed 1999 Plan. We expect our
1999 Plan to permit the grant of either incentive stock or nonqualified options.
The maximum number of shares of our common stock available for stock options
granted under the 1999 Plan will be 950,000 shares. The maximum number of shares
available under the 1999 Plan will be subject to adjustment for capital changes.
The 1999 Plan may be administered either by the full board of directors or
by a committee consisting of two or more members of our board of directors. The
board or the committee will have the authority to adopt, amend and rescind rules
and regulations which, in its opinion, may be advisable in the administration of
the 1999 Plan.
We will only be permitted to grant options designated as incentive stock
options to our officers and other employees. We will be permitted to grant
non-qualified options to any officer, employee or consultant of ours or our
subsidiaries. No option designated as an incentive stock option shall be granted
to any employee if that employee owns, immediately prior to the grant of an
option, stock representing more than 10% of the combined voting power of all
classes of our stock or a parent or a subsidiary, unless the purchase price for
the stock under that option is at least 110% of its fair market value at the
time the option is granted and the option, by its terms, is not exercisable more
than five years from the date it is granted. We will provide that options
granted under the 1999 Plan will vest as determined by the board of directors or
the committee.
The 1999 Plan will also provide that the right of any option holder to
exercise an option granted to him or her shall not be assignable or transferable
by the option holder other than by will or the laws of descent and distribution,
except that an option holder may transfer options that are not incentive stock
options to the option holder's spouse or children or to a trust for the benefit
of the option holder or the option holder's spouse or children. The 1999 Plan
will further provide that options exercisable during the lifetime of the option
holder may be exercised only by the option holder.
In addition, we expect the 1999 Plan to provide, subject to the following,
an option granted to any employee option holder who ceases to be an employee of
us or one of our subsidiaries shall terminate
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<PAGE>
90 days following the date on which that option holder ceases to be an employee
of us or one of our subsidiaries. If that termination of employment is because
of dismissal for cause, the option will terminate immediately on the date the
option holder ceases to be an employee of us or one of our subsidiaries. If that
termination of employment is because the option holder has died or become
permanently disabled, the option shall terminate 180 days following the date
that option holder ceases to be an employee.
An option granted to an employee option holder who ceases to be an employee
of us or one of our subsidiaries shall be exercisable only to the extent that
the right to purchase shares under the option has accrued and is in effect on
the date the option holder ceases to be an employee of us or one of our
subsidiaries.
1999 EMPLOYEE STOCK PURCHASE PLAN
We also expect to adopt, upon approval of a majority in interest of our
outstanding preferred stock, a 1999 Employee Stock Purchase Plan (Stock Purchase
Plan) which will be intended to provide a means whereby eligible employees may
purchase our common stock through payroll deductions. The following summarizes
the terms of the proposed Stock Purchase Plan.
We intend to reserve 200,000 shares of our common stock for issuance under
the Stock Purchase Plan. All persons employed by us and any subsidiaries will be
eligible to participate in the Stock Purchase Plan, except persons whose
customary employment is less than twenty hours per week or five months or less
per year and persons who have been employed by us for less than three months on
the first day of the purchase period, with the exception of persons previously
eligible. In addition, persons who are deemed for purposes of Section 423(b)(3)
of the Internal Revenue Code of 1986, as amended, to own stock possessing 5% or
more of the total combined voting power or value of all classes of stock of us
or a subsidiary will be ineligible to participate in the Stock Purchase Plan.
Employment will be treated as continuing intact while a participating employee
is on military leave or other bona fide leave of absence, for up to 90 days or
for so long as such employee's right to re-employment is guaranteed by statute
or contract, if longer than 90 days.
The Stock Purchase Plan shall be administered by the board of directors or
the committee appointed from time to time by the board of directors. Committee
members shall be ineligible to participate under the Stock Purchase Plan. All
members of the committee shall serve at the discretion of the board of
directors. The board of directors or the committee, if one has been appointed,
is vested with full authority to make, administer and interpret rules and
regulations regarding the Stock Purchase Plan as it may deem advisable.
Determinations by the board of directors or the committee, as to the
interpretation and operation of the Stock Purchase Plan, shall be final and
conclusive.
There shall be four purchase periods within each year, with each commencing
on February 1, May 1, August 1 and November 1 of each year and continuing
through the final day of such period. The initial purchase period shall begin on
a date determined by our board of directors. The participating employee will
authorize regular payroll deductions amounting to a full percentage of the
participant's regular compensation as the participant shall designate. These
payroll deductions cannot amount to less than one percent (1%) nor more than ten
percent (10%) of the participant's regular compensation and cannot exceed
$25,000 per year.
All sums deducted from the regular compensation of participants will be
credited to a stock purchase account established for each participant on our
books, but prior to use of these funds for the purchase of shares of our common
stock in accordance with the Stock Purchase Plan, we may use these funds for any
valid corporate purpose. We will not be under any obligation to pay interest on
funds credited to a participant's stock purchase account in any event.
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<PAGE>
The purchase price of shares of our common stock under the Stock Purchase
Plan will be the lower of eighty-five percent (85%) of the fair market value of
a share of common stock for the first business day of the relevant purchase
period, or eighty-five percent (85%) of this value for the relevant exercise
date. The fair market value on a given day will be the mean between the high and
low sales prices of a share of common stock of the Company on the Nasdaq
National Market. Each participating employee will receive an option, effective
on the first day of the purchase period, to purchase shares of common stock on
the exercise date, which is the last business day of the purchase period. The
number of shares which a participant may purchase under the option will be the
quotient of the aggregate payroll deductions in the purchase period authorized
by the participant, divided by the purchase price. No employee will be granted
an option in one purchase period for more than 25,000 shares or 100,000 shares
annually, or such other number of shares as determined from time to time by the
board or the committee, as the case may be.
Upon our dissolution or liquidation or a merger or consolidation in which we
are not the surviving entity, every option outstanding under the Stock Purchase
Plan shall terminate, and each participant shall be refunded the sums then in
his account.
LIMITATION OF LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, we have included in
our Amended and Restated Certificate of Incorporation a provision to eliminate
the personal liability of our directors for monetary damages for breach or
alleged breach of their fiduciary duties as directors, subject to a number of
exceptions. In addition, our Bylaws provide that we are required to indemnify
our officers and directors under certain circumstances, including those
circumstances in which indemnification would otherwise be discretionary, and we
are required to advance expenses to its officers and directors as incurred in
connection with proceedings against them for which they may be indemnified. At
present, we are not aware of any pending or threatened litigation or proceeding
involving a director, officer, employee or agent of the Company in which
indemnification would be required or permitted. We believe that these provisions
are necessary to attract and retain qualified persons as directors and officers.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REGISTRATION RIGHTS AGREEMENT
The registration rights agreement among affiliates of the Thomas H. Lee
Company, our management stockholders and us provides that the stockholders party
to this agreement may require us to effect, on two occasions, the registration
for sale to the public of shares of common stock held by these stockholders as a
result of the conversion of notes previously issued to them after the earlier of
January 1, 2001 or the initial public offering of our common stock, subject to
resale limitations, and provided that any request for registration by management
stockholders must be for shares having an estimated fair market value of $20.0
million. In addition, under the terms of the registration rights agreement, if
we propose to register any of our shares under the Securities Act, whether for
our own account or otherwise, any stockholders party to this agreement are
entitled to notice of a registration and are entitled to include their shares in
such offering. All fees, costs and expenses, other than underwriting discounts
and commissions, transfer taxes and attorney's fees, of any registration
effected pursuant to the registration rights agreement will be paid by us. The
parties to the registration rights agreement have waived their rights to include
their shares in this offering. SEE "DESCRIPTION OF CAPITAL STOCK--REGISTRATION
RIGHTS OF CERTAIN HOLDERS."
STOCKHOLDERS AGREEMENT
The stockholders agreement among the holders of our preferred stock,
affiliates of the Thomas H. Lee Company, Alan Stillman and us provides that the
stockholders party to this agreement may require us to effect the registration
of shares of common stock held by these stockholders on two occasions beginning
six months following an initial public offering of our common stock, subject to
resale limitations, and provided that any request for registration must be made
with respect to shares with an expected aggregate offering price to the public
of at least $10.0 million. In addition, under the terms of the stockholders
agreement, if we propose to register any of our shares under the Securities Act,
whether for our own account or otherwise, any stockholders party to this
agreement are entitled to notice of this registration and are entitled to
include their shares in this offering. All fees, costs and expenses, other than
underwriting discounts and commissions, transfer taxes and attorney's fees, of
any registration effected pursuant to the stockholders agreement will be paid by
us. The parties to the stockholders agreement have waived their rights to
include their shares in this offering. All other provisions of the stockholders
agreement terminate upon conversion of the preferred stock to common stock. SEE
"DESCRIPTION OF CAPITAL STOCK--REGISTRATION RIGHTS OF CERTAIN HOLDERS."
MANAGEMENT AGREEMENT WITH THOMAS H. LEE COMPANY
Under the terms of a management agreement with the Thomas H. Lee Company, we
are required to pay to them an annual management fee of $60,000 and reimburse
any reasonable expenses incurred by them in performing such management services.
The management agreement continues until terminated by the mutual consent of the
parties or January 1, 2001.
TRANSACTIONS INVOLVING MANAGEMENT
COMPENSATION AND BENEFITS
Our executive officers receive compensation, bonuses and other benefits
under various employee benefit plan arrangements maintained by us. Our executive
officers have participated in such benefit plans under the same terms generally
made available to other similarly situated employees with similar
responsibilities and levels of compensation. SEE "MANAGEMENT--EXECUTIVE
COMPENSATION AND BENEFIT PLANS."
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ST. JAMES ASSOCIATES
An entity controlled by Alan Stillman is a limited partner and a general
partner of St. James Associates, which owns the Smith & Wollensky in New York
and the rights to the trademarks "Smith & Wollensky" and "Wollensky Grill." An
entity controlled by Alan Stillman is also a general partner and limited partner
of MW Realty Associates, the owner of the property on which the Smith &
Wollensky in New York is located. We have entered into a licensing agreement
with St. James Associates which permits us to use the name Smith & Wollensky. In
1998, we paid to St. James Associates $600,000 in opening fees for our Smith &
Wollenskys in Chicago, New Orleans and Las Vegas and $310,000 in royalty fees.
In 1997, we paid to St. James Associates $200,000 in opening fees for our Smith
& Wollensky in Miami. In 1996 we paid to St. James Associates a one-time
licensing fee of $2.5 million.
Pursuant to the management arrangement with St. James Associates, we were
retained to provide management services to the Smith & Wollensky restaurant in
New York. Under the terms of the agreement, the services arrangement between us
and St. James Associates may be terminated at any time and without prior notice.
Additionally, St. James Associates has the right to terminate the arrangement in
the event that Mr. Stillman no longer serves in his present role as operator or
manager of the New York Smith & Wollensky. In 1998, St. James Associates paid us
$562,000; in 1997 St. James Associates paid us $540,000; and in 1996 St. James
Associates paid us $513,000. Eugene Byrne is a limited partner of St. James
Associates. SEE "BUSINESS--MANAGEMENT AGREEMENTS--SMITH & WOLLENSKY."
ROLL-UP TRANSACTIONS
Our current corporate entity was formed in October 1997, as the result of a
merger with our predecessor, The New York Restaurant Group, LLC, with us
surviving the merger. Our predecessor was formed in August 1995 to act as a
holding company for a series of partnerships and limited liability companies
affiliated by a common control group which operated our owned restaurants. In
January 1996 we and the operating entities entered into a group of related asset
contribution and merger agreements whereby the owners of the operating entities
exchanged their underlying equity interests or exchanged the operating net
assets of the business in exchange for either cash or membership interests in
us, at their option.
Simultaneous with the roll-up transaction, we executed a Note Purchase
Agreement whereby we sold to Thomas H. Lee Equity Partners, L.P. and THL-CCI
Limited Partnership 6.0% convertible exchangeable subordinated notes for $7.4
million which notes were convertible into approximately 25.0% of the outstanding
membership units of our corporate predecessor. An additional $4.0 million of
these notes were sold in February 1997. These notes were converted into 10.4% of
the outstanding common stock in October 1997. Pursuant to these agreements,
certain owners sold their equity interests in the predecessor company for
approximately $3.0 million in cash, at a value of $10 per membership unit (or
$6.67 current per share common stock equivalent), and certain owners and new
investors purchased additional membership units at the same cost aggregating
approximately $0.7 million.
In a related transaction, Alan Stillman assigned his rights to receive
management fees from certain of our owned and managed restaurants in exchange
for 250,000 membership units.
EUGENE ZURIFF
Eugene Zuriff, one of our directors, has also provided consulting services
to us since 1997 on an at-will basis for which he receives $500.00 per day plus
reimbursement for out of pocket expenses. In 1998, we paid to Mr. Zuriff an
aggregate of $107,250. In 1997 we paid Mr. Zuriff an aggregate of $98,750.
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LOAN TO JAMES DUNN
In 1996, we loaned $100,000 to James Dunn, our President, in connection with
a purchase of ownership interests in The New York Restaurant Group, LLC prior to
its recapitalization into a corporation. This interest was converted into 44,800
shares of our common stock in our recapitalization. This loan is evidenced by a
promissory note which bears interest at an annual rate of 6.0% and is payable on
demand. At March 29, 1999, the outstanding principal amount of this promissory
note was $53,888.
NON-COMPETITIVE AGREEMENT
Pursuant to a non-competitive agreement dated January 1, 1996 with us and
Alan Stillman, Thomas H. Lee Company, Thomas H. Lee Equity Partners, L.P. and
THL-CCI Limited Partnership agreed to offer to us any opportunity presented to
any of them or their affiliates by a third party during the period ending on the
earlier of September 29, 1999 and the termination of Alan Stillman's employment
with us to own, finance, manage or operate any "high-end, white tablecloth"
restaurant in which such Lee entities would have an interest in 10.0% or more of
the revenues of such interest. See "MANAGEMENT--EMPLOYMENT AGREEMENT."
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of July 1, 1999, and as adjusted to reflect the
sale of the common stock offered hereby by:
- each person who is known by us to own beneficially more than 5% of the
outstanding shares of our capital stock;
- each of our directors;
- the named executive officers; and
- all directors and executive officers as a group.
Percentage of ownership is calculated as required by the Commission Rule
13d-3(d)(1). Except as indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them. The table below
includes the number of shares underlying options which are exercisable within 60
day from the date of this offering. Unless otherwise indicated, the address of
each of the beneficial owners identified is 1114 First Avenue, New York, New
York 10021.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL OWNERSHIP
OWNERSHIP PRIOR AFTER
TO THIS OFFERING THIS OFFERING
------------------------------ -------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT NUMBER OF SHARES
- --------------------------------------------------------- ----------------- ----------- -------------------------
<S> <C> <C> <C>
Alan N. Stillman (1)..................................... 2,024,060 29.7%
James M. Dunn (2)........................................ 44,800 1.0
Mark K. Levine (3)....................................... 68,382 *
Eugene M. Byrne (4)...................................... 176,866 2.3
Eugene I. Zuriff (5)..................................... 18,500 *
James L. Gersten (6)..................................... 4,000 *
Thomas H. Lee
75 State Street
Boston, MA 02109 (7)................................... 1,589,550 23.4
Richard S. LeFrak (8).................................... 10,362 *
Thomas H. Lee Equity Partners, L.P. (9).................. 1,312,410 19.3
THL-CCI Limited Partnership (10)......................... 277,140 4.1
Warburg Pincus Emerging Growth Fund (11)................. 336,786 5.0
Warburg Pincus Post-Venture Capital Fund (12)............ 77,720 1.1
All Directors and Executive Officers as a Group (7
persons, including the above).......................... 3,926,158 57.7%
<CAPTION>
NAME OF BENEFICIAL OWNER PERCENT
- --------------------------------------------------------- -------
<S> <C>
Alan N. Stillman (1).....................................
James M. Dunn (2)........................................
Mark K. Levine (3).......................................
Eugene M. Byrne (4)......................................
Eugene I. Zuriff (5).....................................
James L. Gersten (6).....................................
Thomas H. Lee
75 State Street
Boston, MA 02109 (7)...................................
Richard S. LeFrak (8)....................................
Thomas H. Lee Equity Partners, L.P. (9)..................
THL-CCI Limited Partnership (10).........................
Warburg Pincus Emerging Growth Fund (11).................
Warburg Pincus Post-Venture Capital Fund (12)............
All Directors and Executive Officers as a Group (7
persons, including the above)..........................
</TABLE>
- ------------------------
* LESS THAN ONE PERCENT
(1) INCLUDES 161,250 SHARES OWNED BY STILLMAN'S FIRST, 522,287 SHARES HELD BY
LA CITE, INC., 592,605 SHARES HELD BY WHITE & WITKOWSKY, 578,100 SHARES
HELD BY THURSDAYS SUPPER PUB, INC., 75,000 SHARES HELD BY THE DONNA
STILLMAN TRUST, 1,200 SHARES HELD BY DONNA STILLMAN AND 1,200 SHARES HELD
BY MICHAEL STILLMAN. ALSO INCLUDES IMMEDIATELY EXERCISABLE OPTIONS TO
PURCHASE 23,500 SHARES OF COMMON STOCK.
(2) INCLUDES IMMEDIATELY EXERCISABLE OPTIONS TO PURCHASE 29,800 SHARES OF
COMMON STOCK.
(3) INCLUDES IMMEDIATELY EXERCISABLE OPTIONS TO PURCHASE 12,250 SHARES OF
COMMON STOCK.
(4) INCLUDES IMMEDIATELY EXERCISABLE OPTIONS TO PURCHASE 12,250 SHARES OF
COMMON STOCK.
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(5) INCLUDES 3,000 SHARES HELD BY HIS INDIVIDUAL RETIREMENT ACCOUNT. ALSO
INCLUDES IMMEDIATELY EXERCISABLE OPTIONS TO PURCHASE 500 SHARES OF COMMON
STOCK.
(6) INCLUDES IMMEDIATELY EXERCISABLE OPTIONS TO PURCHASE 1,000 SHARES OF COMMON
STOCK.
(7) INCLUDES 1,312,410 SHARES HELD BY THOMAS H. LEE EQUITY PARTNERS, L.P. AND
277,140 SHARES HELD BY THL-CCI LIMITED PARTNERSHIP AS INDICATED BELOW. MR.
LEE IS THE GENERAL PARTNER OF THL EQUITY ADVISORS LIMITED PARTNERSHIP,
WHICH IS THE GENERAL PARTNER OF THOMAS H. LEE EQUITY PARTNERS, L.P. MR. LEE
IS ALSO THE GENERAL PARTNER OF THL-CCI LIMITED PARTNERSHIP. MR. LEE IS ALSO
A DIRECTOR OF THE NEW YORK RESTAURANT GROUP.
(8) PRINCIPAL ADDRESS IS 97-77 QUEENS BLVD. REGO PARK, NY 11374.
(9) PRINCIPAL ADDRESS IS 75 STATE STREET BOSTON, MA 02109.
(10) PRINCIPAL ADDRESS IS 75 STATE STREET BOSTON, MA 02109.
(11) PRINCIPAL ADDRESS IS 466 LEXINGTON AVENUE NEW YORK, NY 10017.
(12) PRINCIPAL ADDRESS IS 466 LEXINGTON AVENUE NEW YORK, NY 10017.
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DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, our authorized capital stock will consist
of 20,000,000 shares of common stock, $.01 par value per share, of which
shares will be outstanding, and 1,000,000 shares of preferred stock, $.01 par
value per share, none of which will be outstanding. The following description of
our capital stock, certain provisions of our Amended and Restated Certificate of
Incorporation and Bylaws is a summary and is qualified in its entirety by the
provisions of the Amended and Restated Certificate of Incorporation and Bylaws,
copies of which have been filed as exhibits to this Registration Statement of
which this prospectus is a part.
COMMON STOCK
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders, including the election of
directors. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election if they choose to do so. Our Amended and Restated
Certificate of Incorporation does not provide for cumulative voting for the
election of directors. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the board of
directors out of funds legally available therefor, and shall be entitled to
receive, pro rata, all assets available for distribution to such holders upon
liquidation. Holders of common stock have no preemptive, subscription or
redemption rights.
PREFERRED STOCK
Our Amended and Restated Certificate of Incorporation authorizes us to issue
"blank check" preferred stock which may be issued from time to time in one or
more series upon authorization by the board of directors. The board of
directors, without further approval of the stockholders, is authorized to fix
the dividend rights and terms, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, and any other rights, preferences,
privileges and restrictions applicable to each series of preferred stock. The
issuance of preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes could, among other things,
adversely affect the voting power of the holders of common stock and, under
certain circumstances, make it more difficult for a third party to gain control
of the Company, discourage bids for our common stock at a premium or otherwise
adversely affect the market price of the common stock. We currently have no
plans to issue any preferred stock.
WARRANTS TO PURCHASE COMMON STOCK
In connection with our $10.0 million senior subordinated note financing with
Magnetite Asset Investors, L.L.C., on June 29, 1999, we issued a warrant to
Magnetite to purchase up to 107,983 shares (subject to adjustment for dividends,
distributions, recapitalizations, stock splits, subdivisions and the like) of
our common stock (increasing to 143,977 shares of common stock if the $10.0
million senior subordinated note is not paid in full by June 29, 2001) at an
exercise price of $.01 per share. These warrants expire on June 29, 2009.
Magnetite has piggyback registration rights with respect to the common stock
underlying the warrant.
CERTAIN AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, BYLAW AND STATUTORY
ANTI-TAKEOVER PROVISIONS AFFECTING STOCKHOLDERS
CLASSIFIED BOARD.
Our board of directors is divided into three classes, each of which, after a
transitional period, will serve for three years, with one class being elected
each year. Removal of a member of the board of directors with or without cause
requires a majority vote of the board of directors or of the
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stockholders. A majority of the remaining directors then in office, though less
than a quorum, or the stockholders, are empowered to fill any vacancy on the
board of directors. A majority vote of the stockholders is required to alter,
amend or repeal the foregoing.
DELAWARE TAKEOVER STATUTE
We are subject to the "business combination" provisions of Section 203 of
the Delaware General Corporation Law. With limited exceptions, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless:
- the transaction is approved by the board of directors prior to the date
the interested stockholder obtained interested stockholder status;
- upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the stockholder owned at least 85% of
our voting stock outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding
those shares owned by (a) persons who are directors and also officers and
(b) employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
- on or subsequent to the date the business combination is approved by the
board and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock
that is not owned by the interested stockholder.
A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to exceptions described in the Delaware General Corporation Law, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15.0% or more of the
corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to us and, accordingly, may discourage attempts to acquire us.
In addition, provisions of our Amended and Restated Certificate of
Incorporation and Bylaws summarized in the foregoing paragraphs may be deemed to
have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in his, her or its best
interest, including those attempts that might result in a premium over the
market price for the shares held by stockholders.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our Amended and Restated Certificate of Incorporation provides that, except
to the extent prohibited by Delaware law, our directors shall not be personally
liable to us or our stockholders for monetary damages for any breach of
fiduciary duty as our directors. Under Delaware law, the directors have a
fiduciary duty to us which is not eliminated by this provision of the Amended
and Restated Certificate of Incorporation and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of nonmonetary relief will
remain available. In addition, each director will continue to be subject to
liability under Delaware law for breach of the director's duty of loyalty to us
for acts or omissions which are found by a court of competent jurisdiction to be
not in good faith or which involve intentional misconduct, or knowing violations
of law, for actions leading to improper personal benefit to the director, and
for payment of dividends or approval of stock repurchases or redemptions that
are prohibited by Delaware law. This provision does not affect the directors'
responsibilities under any other laws, such as the Federal securities laws or
state or Federal environmental laws.
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or
64
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status as directors and officers, provided that this provision shall not
eliminate or limit the liability of a director for the following:
- any breach of the director's duty of loyalty to us or our stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock purchases or redemptions;
or
- for any transaction from which the director derived an improper personal
benefit.
Delaware law provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under our Bylaws, any agreement, a vote of stockholders
or otherwise. The Amended and Restated Certificate of Incorporation eliminates
the personal liability of directors to the fullest extent permitted by Delaware
law. In addition, our Amended and Restated Certificate of Incorporation provides
that we may fully indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that such person is or was one of our directors
or officers or is or was serving at our request as a director of or officer of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses including attorney's fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding. We believe that these
provisions are necessary to attract and retain qualified directors and executive
officers. Our Bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his
or her actions, regardless of whether Delaware law would permit indemnification.
We have liability insurance for our officers and directors.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Amended and Restated Certificate of
Incorporation. We are not aware of any threatened litigation or proceeding that
may result in a claim for such indemnification.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
Under the terms of the Stockholders Agreement, if we propose to register any
of our securities under the Securities Act following this offering, whether for
our own account or otherwise, holders of approximately 2,172,794 million shares
of common stock are entitled to notice of such registration and are entitled to
include their shares therein, subject to certain conditions and limitations. The
holders of registrable shares also may require us to effect the registration of
their registrable shares for sale to the public, subject to other conditions and
limitations.
Additionally, under the terms of the Registration Rights Agreement, if we
propose to register any of our securities under the Securities Act following
this offering, whether for our own account or otherwise, holders of
approximately 3,927,477 million shares of common stock are entitled to notice of
such registration and are entitled to include their shares therein, subject to
certain conditions and limitations. The holders of registrable shares also may
require us to effect the registration of their registrable shares for sale to
the public, subject to other conditions and limitations.
Also, the terms of the Magnetite Warrant provide that in the event we
propose to register any of our securities under the Securities Act following
this offering, then Magnetite is entitled to notice of such registration and is
entitled to include the 107,983 shares of common stock underlying the warrant in
such registration, subject to certain conditions and limitations, Magnetite does
not have such registration rights in connection with this offering.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is , of
.
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SHARES ELIGIBLE FOR FUTURE SALE
The market price of our common stock could decline as a result of sales of a
larger number of shares of our common stock in the market after this offering,
or the perception that such sales could occur. Such sales also might make it
more difficult for us to sell equity securities in the future at a time and
price that we deem appropriate. After this offering, shares of
common stock will be outstanding. Of these shares, the shares being
offered in this offering are freely tradable. This leaves shares
eligible for sale in the public market as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- --------------------------------------------------------------------------------------- ---------
<S> <C>
After the date of this prospectus
Upon the filing of a registration statement to register for resale shares of common
stock issuable upon the exercise of options granted under our stock option plans
At various times after 180 days from the date of this prospectus, subject, in some
cases, to volume limitations.
</TABLE>
In general, under Rule 144, as currently in effect, an affiliate of ours or
a person or persons whose shares are required to be aggregated and who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of (1)
approximately shares immediately after this offering or (2) the
average weekly trading volume in the common stock during the four calendar weeks
preceding the date on which notice of such sale is filed, subject to other
restrictions under Rule 144. In addition, a person who is not deemed to have
been our affiliate at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from one
of our affiliates, such person's holding period for the purpose of effecting a
sale under Rule 144 commences on the date of transfer from the affiliate.
As of the date of this prospectus, options to purchase a total of
shares of common stock are outstanding, of which shares
are currently vested and immediately exercisable. Upon the closing of this
offering, we intend to file a registration statement to register for resale the
shares of common stock reserved for issuance under our stock option
plans. We expect such registration statement to become effective immediately
upon filing. Shares issued upon the exercise of stock options granted under our
stock option plans will be eligible for resale in the public market from time to
time subject to vesting and, in the case of options held by persons who have
signed lock-up agreements referred to below, the expiration of the lock-up
agreements. Under Rule 701, shares held as a result of option exercised prior to
the effectiveness of this prospectus shall be eligible for resale under Rule 144
ninety days after the date of this prospectus.
We and our executive officers, directors and holders of approximately
shares of common stock have agreed that, subject to certain limited
exceptions, for a period of 180 days after the date of this prospectus, without
the prior written consent of Bear, Stearns & Co. Inc., they will not, directly
or indirectly, issue, sell, offer or agree to sell or otherwise dispose of any
shares of common stock (or securities convertible into, exchangeable for or
evidencing the right to purchase shares of common stock). Bear, Stearns & Co.
Inc. may, in its sole discretion and at any time without notice, release all or
any portion of the shares subject to such agreements.
Holders of approximately shares of common stock have the right,
subject to conditions and limitations described in the Shareholder and
Registration Rights Agreements, to include their shares in registration
statements relating to our securities. Also, Magnetite has the right to include
107,983 shares of common stock underlying its warrant in certain registration
statements relating to our securities (excluding this offering). By exercising
their registration rights and causing a large number of
66
<PAGE>
shares to be registered and sold in the public market, these holders may cause
the price of the common stock to fall. In addition, any demand to include such
shares in our registration statements could have an adverse effect on our
ability to raise needed capital. Please see "DESCRIPTION OF CAPITAL STOCK--
REGISTRATION RIGHTS OF CERTAIN HOLDERS" for a description of the registration
rights of our stockholders and "RISK FACTORS--THE PRICE OF OUR COMMON STOCK
COULD DECREASE AS A RESULT OF SHARES BEING SOLD IN THE MARKET AFTER THIS
OFFERING" for a discussion of the risks associated with a large number of shares
being available for public sale.
67
<PAGE>
UNDERWRITING
The underwriters of this offering named below, for whom Bear, Stearns & Co.
Inc. and Thomas Weisel Partners LLC are acting as representatives, have
severally agreed with us, subject to the terms and conditions of the
Underwriting Agreement (the form of which has been filed as an exhibit to the
Registration Statement on Form S-1 of which this prospectus is a part), to
purchase from us the aggregate number of shares of common stock set forth
opposite their respective names below:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
Bear, Stearns & Co. Inc........................................................................
Thomas Weisel Partners LLC.....................................................................
-----------------
Total......................................................................................
-----------------
-----------------
</TABLE>
The nature of the respective obligations of the underwriters is such that
all of the shares of common stock (other than shares of common stock covered by
the over-allotment option described below) must be purchased if any are
purchased. Those obligations are subject, however, to various conditions,
including the approval of certain matters by counsel. We have agreed to
indemnify the underwriters against certain liabilities, including liabilities
under the Securities Act, and, where such indemnification is unavailable, to
contribute to payments that the underwriters may be required to make in respect
of such liabilities.
The Company has been advised that the underwriters propose to offer the
shares of common stock directly to the public initially at the public offering
price set forth on the cover page of this prospectus and to certain selected
dealers at such price less a concession not to exceed $ per share,
that the underwriters may allow, and such selected dealers may allow, a
concession to certain other dealers not to exceed $ per share and that
after the commencement of this offering, the public offering price and the
concessions may be changed.
We have granted to the underwriters an option to purchase in the aggregate
up to additional shares of common stock to be sold in this offering solely
to cover over-allotments, if any. The option may be exercised in whole or in
part at any time within 30 days after the date of this prospectus. To the extent
the option is exercised, the underwriters will be severally committed, subject
to certain conditions, including the approval of certain matters by counsel, to
purchase the additional shares of common stock in proportion to their respective
purchase commitments as indicated in the preceding table.
The underwriters have reserved for sale at the initial public offering price
up to 5% of the number of shares of common stock offered hereby for sale to our
directors, officers, other employees, business affiliates and related persons
who have expressed an interest in purchasing shares.
The number of shares available for sale to the general public will be
reduced to the extent any reserved shares are purchased. Any reserved shares not
so purchased will be offered by the underwriters on the same basis as the other
shares offered hereby.
The following table shows the underwriting fees to be paid to the
underwriters in connection with this offering. These amounts are shown assuming
both no exercise and full exercise of the over-allotment option.
<TABLE>
<CAPTION>
FULL
NO EXERCISE EXERCISE
------------ ------------
<S> <C> <C>
Per Share......................................................... $ $
Total.............................................................
</TABLE>
68
<PAGE>
Bear, Stearns & Co. Inc. provided us with investment banking services in
connection with the June 29, 1999 subordinated debt transaction with Magnetite
Asset Investors, L.L.C. for which they received customary fees. On June 29,
1999, we entered into a senior subordinated note purchase agreement with
Magnetite Asset Investors, L.L.C. pursuant to which we sold to Magnetite $10.0
million in face value of the Company's senior subordinated notes due June 29,
2006 and warrants for 107,983 shares of our common stock expiring June 29, 2009.
Prior to this offering, there has been no public market for the common
stock. Consequently, the initial public offering price will be determined
through negotiations among us and the representatives of the underwriters. Among
the factors considered in making such determination were our financial and
operating history and condition, market valuations of other companies engaged in
activities similar to ours, our prospects and prospects for the industry in
which we do business in general, our management, prevailing equity market
conditions and the demand for securities considered comparable to ours.
In order to facilitate this offering, certain persons participating in this
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the common stock during and after this offering. Specifically, the
underwriters may over-allot or otherwise create a short position in the common
stock for their own account by selling more shares of common stock than have
been sold to them by us. The underwriters may elect to cover any such short
position by purchasing shares of common stock in the open market or by
exercising the over-allotment option granted to the underwriters. In addition,
the underwriters may stabilize or maintain the price of the common stock by
bidding for or purchasing shares of common stock in the open market and may
impose penalty bids, under which selling concessions allowed to syndicate
members or other broker-dealers participating in this offering are reclaimed if
shares of common stock previously distributed in this offering are repurchased
in connection with stabilization transactions or otherwise. The effect of these
transactions may be to stabilize or maintain the market price of the common
stock at a level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of the common stock to
the extent that it discourages resales thereof. No representation is made as to
the magnitude or effect of any such stabilization or other transactions. Such
transactions may be effected on the Nasdaq National Market or otherwise and, if
commenced, may be discontinued at any time.
Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners LLC has lead-managed one public offering of equity
securities, co-managed 24 public offerings of equity securities and acted as an
underwriter in an additional 19 public offerings of equity securities. Thomas
Weisel Partners LLC does not have any material relationship with us or any of
our officers, directors or controlling persons, except with respect to its
contractual relationship with us pursuant to the Underwriting Agreement to be
entered into in connection with this offering.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for The New York Restaurant Group, Inc. by Hutchins, Wheeler & Dittmar, A
Professional Corporation, Boston, Massachusetts. Certain stockholders of
Hutchins, Wheeler & Dittmar are limited partners in THL-- CCI Limited
Partnership and as a result may be deemed to have a beneficial interest in an
aggregate of 5,300 shares of our common stock. Certain legal matters in
connection with this offering will be passed upon for the underwriters by Kramer
Levin Naftalis & Frankel LLP, New York, New York.
69
<PAGE>
EXPERTS
The consolidated financial statements of The New York Restaurant Group, Inc.
(formerly The New York Restaurant Group, LLC) and subsidiaries as of December
29, 1997 and December 28, 1998, and for the years then ended, have been included
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of The New York Restaurant Group, LLC
and subsidiaries for the year ended December 30, 1996, have been included herein
and in the registration statement in reliance upon the report of Goldstein Golub
Kessler LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 with the SEC for the
common stock we are offering by this prospectus. This prospectus does not
contain all of the information set forth in the registration statement and the
exhibits and schedules thereto. For further information with respect to us and
our common stock, reference is hereby made to the registration statement and to
the exhibits and schedules filed therewith. Statements contained in this
prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and in each instance, reference is made to the
copy of such contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference. A copy of the registration statement may be inspected by anyone
without charge at the SEC's principal office in Washington, D.C., and copies of
all or any part of the registration statement may be obtained from the public
reference section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of fees prescribed by the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. The SEC maintains a World Wide Website that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the website is
http://www.sec.gov.
Upon completion of this offering, we will be subject to the information
reporting requirements of the Securities Exchange Act of 1934, as amended, and,
in accordance therewith, will file reports, proxy statements and other
information with the SEC.
We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent certified public accountants and
quarterly reports for the first three fiscal quarters of each fiscal year
containing unaudited interim financial information.
70
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Independent Auditors' Report of KPMG LLP................................................................... F-2
Independent Auditors' Report of Goldstein Golub Kessler LLP................................................ F-3
Consolidated Balance Sheets as of December 29, 1997 and December 28, 1998.................................. F-4
Consolidated Statements of Operations for the years ended December 30, 1996, December 29, 1997 and December
28, 1998................................................................................................. F-5
Consolidated Statements of Equity for the years ended December 30, 1996, December 29, 1997 and December 28,
1998..................................................................................................... F-6
Consolidated Statements of Cash Flows for the years ended December 30, 1996, December 29, 1997 and December
28, 1998................................................................................................. F-7
Notes to Consolidated Financial Statements................................................................. F-9
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The New York Restaurant Group, Inc.:
We have audited the accompanying consolidated balance sheets of The New York
Restaurant Group, Inc. (formerly The New York Restaurant Group, LLC) and
subsidiaries as of December 29, 1997 and December 28, 1998, and the related
consolidated statements of operations, equity and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. The accompanying
consolidated financial statements of the Company for the year ended December 30,
1996 were audited by other auditors whose report dated February 28, 1997,
expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 1997 and 1998 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of The
New York Restaurant Group, Inc. (formerly The New York Restaurant Group, LLC)
and subsidiaries at December 29, 1997 and December 28, 1998, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
KPMG LLP
New York, New York
June 29, 1999
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The New York Restaurant Group, L.L.C
We have audited the accompanying statements of operations, owners' equity, and
cash flows for the year ended December 30, 1996 of The New York Restaurant
Group, L.L.C. and subsidiaries. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of The New York
Restaurant Group, L.L.C. and subsidiaries for the year ended December 30, 1996
in conformity with generally accepted accounting principles.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
February 28, 1997
F-3
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Consolidated Balance Sheets
December 29, 1997 and December 28, 1998
(dollar amounts in thousands, except per share amounts)
<TABLE>
<S> <C> <C>
ASSETS 1997 1998
--------- ---------
Current assets:
Cash.................................................................... $ 9,638 $ --
Accounts receivable, net................................................ 822 996
Merchandise inventory................................................... 1,314 2,446
Prepaid expenses and other current assets............................... 337 1,004
--------- ---------
Total current assets.............................................. 12,111 4,446
Property and equipment, net............................................... 18,489 38,810
Goodwill, net............................................................. 8,121 7,831
Licensing agreement, net.................................................. 2,637 3,137
Management contract, net.................................................. 1,329 1,229
Other assets.............................................................. 1,660 2,923
--------- ---------
Total assets...................................................... $ 44,347 $ 58,376
--------- ---------
--------- ---------
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt....................................... $ 217 $ 279
Accounts payable and accrued expenses................................... 5,706 7,440
--------- ---------
Total current liabilities......................................... 5,923 7,719
Long-term debt, net of current portion.................................... 3,298 16,825
Deferred rent............................................................. 2,321 3,221
--------- ---------
Total liabilities................................................. 11,542 27,765
Convertible redeemable preferred stock (par value $.01; authorized
5,000,000 shares; 2,172,794 shares issued and outstanding) 19,628 21,115
Equity:
Common stock (par value $.01; authorized 10,000,000 shares;
4,599,891 and 4,625,891 shares issued and outstanding at December 29,
1997 and December 28, 1998, respectively) 46 46
Additional paid-in capital.............................................. 13,997 14,248
Accumulated deficit..................................................... (866) (4,798)
--------- ---------
13,177 9,496
--------- ---------
Commitments and contingencies
Total liabilities and equity...................................... $ 44,347 $ 58,376
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 30, 1996, December 29, 1997 and
December 28, 1998
(dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Owned restaurant sales.................................................. $ 25,002 $ 26,582 $ 42,521
------------ ------------ ------------
Cost of owned restaurant sales:
Food and beverage costs............................................... 6,642 7,031 12,188
Salaries and related benefits......................................... 7,230 8,022 14,058
Restaurant operating expenses......................................... 4,046 3,998 7,318
Occupancy and related expenses........................................ 1,620 1,624 2,656
Marketing and promotional expenses.................................... 1,753 1,702 2,801
Depreciation and amortization......................................... 546 429 1,310
------------ ------------ ------------
Total cost of owned restaurant sales.................................... 21,837 22,806 40,331
------------ ------------ ------------
Income from owned restaurant operations................................. 3,165 3,776 2,190
Management fee income................................................... 988 1,901 2,968
------------ ------------ ------------
Income from owned and managed restaurants............................... 4,153 5,677 5,158
General and administrative expenses..................................... 3,557 5,169 6,384
Royalty expense......................................................... -- 7 310
Write-off of offering and financing costs............................... -- 647 --
Acquisition of management contract...................................... 2,500 -- --
------------ ------------ ------------
Operating loss.......................................................... (1,904) (146) (1,536)
Interest expense........................................................ (443) (516) (453)
Interest income......................................................... 168 185 116
------------ ------------ ------------
(275) (331) (337)
Loss before provision (benefit) for income taxes........................ (2,179) (477) (1,873)
Provision (benefit) for income taxes.................................... (116) 483 572
------------ ------------ ------------
Net loss................................................................ (2,063) (960) (2,445)
Accrual of dividends and amortization of issuance costs on preferred
shares................................................................ -- (248) (1,487)
------------ ------------ ------------
Net loss applicable to common shares.................................... $ (2,063) $ (1,208) $ (3,932)
------------ ------------ ------------
------------ ------------ ------------
Net loss per common share:
Basic and diluted....................................................... $ (0.62) $ (0.34) $ (0.85)
------------ ------------ ------------
------------ ------------ ------------
Weighted average common shares outstanding:
Basic and diluted..................................................... 3,333,450 3,567,134 4,619,551
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Consolidated Statements of Equity
Years ended December 30, 1996, December 29, 1997 and
December 28, 1998
(dollar amounts in thousands)
<TABLE>
<CAPTION>
COMMON STOCK
MEMBERSHIP MEMBERS' ----------------------
UNITS EQUITY SHARES AMOUNT
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1996.............................................. -- $ 2,254 -- $ --
Issuance of membership units............................................ 2,450,000 -- -- --
Acquisition of minority interests....................................... -- 8,455 -- --
Management contract..................................................... -- 2,500 -- --
Capital contributions................................................... 68,888 689 -- --
Capital withdrawals..................................................... (296,588) (2,966) -- --
Distributions........................................................... -- (1,564) -- --
Net assets not contributed.............................................. -- (287) -- --
Net loss................................................................ -- (2,063) -- --
----------- ----------- --------- ---
Balance at December 30, 1996............................................ 2,222,300 7,018 -- --
Capital contributions................................................... 27,340 335 -- --
Capital withdrawals..................................................... (1,700) (21) -- --
Distributions........................................................... -- (855) -- --
Membership unit split 3 for 2........................................... 1,123,970 -- -- --
Net loss for period December 31, 1996 through October 31, 1997.......... -- (342) -- --
Conversion of membership interest in The New York Restaurant Group, LLC
to common shares of The New York Restaurant Group, Inc................ (3,371,910) (6,135) 3,371,910 34
Conversion of $11,937 of convertible notes into common shares of The New
York Restaurant Group, Inc............................................ -- -- 1,589,550 16
Redemption and retirement of 361,569 common shares...................... -- -- (361,569) (4)
Accrued dividends on preferred shares................................... -- -- -- --
Amortization of issuance costs on preferred shares...................... -- -- -- --
Net loss for period November 1, 1997 through December 29, 1997.......... -- -- -- --
----------- ----------- --------- ---
Balance at December 29, 1997............................................ -- -- 4,599,891 46
Issuance of common shares............................................... -- -- 26,000 --
Accrued dividends on preferred shares................................... -- -- -- --
Amortization of issuance costs on preferred shares...................... -- -- -- --
Net loss................................................................ -- -- -- --
----------- ----------- --------- ---
Balance at December 28, 1998............................................ -- $ -- 4,625,891 $ 46
----------- ----------- --------- ---
----------- ----------- --------- ---
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED TOTAL
CAPITAL DEFICIT EQUITY
----------- ------------- ---------
<S> <C> <C> <C>
Balance at January 1, 1996.............................................. $ -- $ -- $ 2,254
Issuance of membership units............................................ -- -- --
Acquisition of minority interests....................................... -- -- 8,455
Management contract..................................................... -- -- 2,500
Capital contributions................................................... -- -- 689
Capital withdrawals..................................................... -- -- (2,966)
Distributions........................................................... -- -- (1,564)
Net assets not contributed.............................................. -- -- (287)
Net loss................................................................ -- -- (2,063)
----------- ------------- ---------
Balance at December 30, 1996............................................ -- -- 7,018
Capital contributions................................................... -- -- 335
Capital withdrawals..................................................... -- -- (21)
Distributions........................................................... -- -- (855)
Membership unit split 3 for 2........................................... -- -- --
Net loss for period December 31, 1996 through October 31, 1997.......... -- -- (342)
Conversion of membership interest in The New York Restaurant Group, LLC
to common shares of The New York Restaurant Group, Inc................ 6,101 -- --
Conversion of $11,937 of convertible notes into common shares of The New
York Restaurant Group, Inc............................................ 11,381 -- 11,397
Redemption and retirement of 361,569 common shares...................... (3,485) -- (3,489)
Accrued dividends on preferred shares................................... -- (210) (210)
Amortization of issuance costs on preferred shares...................... -- (38) (38)
Net loss for period November 1, 1997 through December 29, 1997.......... -- (618) (618)
----------- ------------- ---------
Balance at December 29, 1997............................................ 13,997 (866) 13,177
Issuance of common shares............................................... 251 -- 251
Accrued dividends on preferred shares................................... -- (1,257) (1,257)
Amortization of issuance costs on preferred shares...................... -- (230) (230)
Net loss................................................................ -- (2,445) (2,445)
----------- ------------- ---------
Balance at December 28, 1998............................................ $ 14,248 $ (4,798) $ 9,496
----------- ------------- ---------
----------- ------------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 30, 1996, December 29, 1997
and December 28, 1998
(dollar amounts in thousands)
<TABLE>
<CAPTION>
1996 1997 1998
--------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss...................................................................... $ (2,063) $ (960) $ (2,445)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization............................................. 968 935 1,944
Gain on sale of property and equipment.................................... (9) -- --
Acquisition of creative management contract............................... 2,500 -- --
Write-off of offering and financing costs................................. -- 647 --
Changes in operating assets and liabilities:
Accounts receivable..................................................... (382) (22) (174)
Advances to equity holders.............................................. 112 -- --
Merchandise inventory................................................... 10 (796) (1,132)
Prepaid expenses and other current assets............................... 316 (187) (667)
Other assets............................................................ (1,130) 249 (915)
Accounts payable and accrued expenses................................... 1,234 1,649 1,734
Deferred rent........................................................... 227 181 874
--------- ---------- ----------
Net cash provided by (used in) operating activities................... 1,783 1,696 (781)
--------- ---------- ----------
Cash flows from investing activities:
Purchase of property and equipment, including construction-in-progress........ (653) (12,573) (21,621)
Purchase of nondepreciable assets............................................. (76) (344) (476)
Purchase of and payments under licensing agreement............................ (2,548) (200) (600)
Purchase of management contract............................................... (1,500) -- --
Acquisition of leasehold rights............................................... -- (338) --
Site development costs........................................................ (249) -- --
Transaction costs in connection with acquisition of minority interests........ (246) -- --
--------- ---------- ----------
Net cash used in investing activities................................. (5,272) (13,455) (22,697)
--------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, net.................... -- 19,380 --
Proceeds from issuance of common shares....................................... -- -- 251
Proceeds from issuance of long-term debt...................................... 7,397 4,683 14,393
Principal payments on loans................................................... (405) -- --
Principal payments of long-term debt.......................................... (175) (206) (804)
Redemption of common stock and capital withdrawals............................ (2,966) (3,489) --
Capital contributions......................................................... 689 335 --
Distributions................................................................. (1,851) (855) --
--------- ---------- ----------
Net cash provided by financing activities............................. 2,689 19,848 13,840
--------- ---------- ----------
</TABLE>
F-7
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
Years ended December 30, 1996, December 29, 1997
and December 28, 1998
(dollar amounts in thousands)
<TABLE>
<CAPTION>
1996 1997 1998
--------- ---------- ----------
<S> <C> <C> <C>
Net increase (decrease) in cash and cash equivalents............................ $ (800) $ 8,089 $ (9,638)
Cash at beginning of year....................................................... 2,349 1,549 9,638
--------- ---------- ----------
Cash at end of year............................................................. $ 1,549 $ 9,638 $ --
--------- ---------- ----------
--------- ---------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest.................................................................... $ 443 $ 525 $ 503
--------- ---------- ----------
--------- ---------- ----------
Income taxes................................................................ $ -- $ 5 $ 356
--------- ---------- ----------
--------- ---------- ----------
Unincorporated business tax................................................. $ 114 $ 102 $ 156
--------- ---------- ----------
--------- ---------- ----------
Noncash investing and financing activities: Acquisition of minority
interests................................................................... $ 8,455 $ -- $ --
--------- ---------- ----------
--------- ---------- ----------
Capital contribution--management contract................................... $ 2,500 $ -- $ --
--------- ---------- ----------
--------- ---------- ----------
Assumption of liabilities in connection with acquisition of leasehold
rights.................................................................... $ -- $ 3,038 $ --
--------- ---------- ----------
--------- ---------- ----------
Conversion of convertible notes into common shares.......................... $ -- $ 11,397 $ --
--------- ---------- ----------
--------- ---------- ----------
Accrued dividends on preferred shares....................................... $ -- $ 210 $ 1,257
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
The New York Restaurant Group, Inc. and subsidiaries operate in a single
segment which develops, operates, owns and manages a diversified portfolio of
upscale tablecloth restaurants. The Company also manages certain other
restaurants and the food and beverage service for a hotel operation. The
following table identifies the operating location and the date operations
commenced at each of these locations:
<TABLE>
<CAPTION>
OPERATIONS
COMMENCEMENT DATE
-------------------
<S> <C>
OWNED AND OPERATED
The Manhattan Ocean Club ("MOCA")........................................ January 1984
Cite..................................................................... December 1989
Park Avenue Cafe ("PAC")................................................. February 1992
Smith & Wollensky in Miami............................................... December 1997
Smith & Wollensky in Chicago............................................. April 1998
Smith & Wollensky in New Orleans......................................... October 1998
Smith & Wollensky in Las Vegas........................................... December 1998
MANAGEMENT AGREEMENTS
Smith & Wollensky in New York............................................ October 1977
The Post House........................................................... August 1980
Doubletree Hotel......................................................... October 1994
Maloney & Porcelli ("M&P")............................................... September 1996
</TABLE>
The New York Restaurant Group, Inc. (a C corporation) was formed in
connection with the consummation of the private placement offering described in
note 12. Upon consummation of such offering, The New York Restaurant Group, Inc.
was merged with The New York Restaurant Group, LLC, with The New York Restaurant
Group, Inc. surviving the merger (the "Merger"). References to "the Company"
refer to The New York Restaurant Group, LLC and subsidiaries prior to November
1, 1997 and The New York Restaurant Group, Inc. and subsidiaries on or after
November 1, 1997. Prior to the Merger, the Company effected a three-for-two
split of membership units. In connection with the Merger, members of The New
York Restaurant Group, LLC received one share of The New York Restaurant Group,
Inc. common stock for every membership unit held by them as of October 31, 1997.
The New York Restaurant Group, LLC was formed in August 1995 to act as a
holding Company for a series of partnerships and limited liability companies
affiliated by a common control group (the "Predecessor Company") which operated
the Company-owned restaurants. In addition, the Predecessor Company managed
restaurants and a hotel food service business. The control group is defined as
Alan Stillman (the "Company Chairman") and his spouse ("Control Group").
Pursuant to a Master Agreement dated September 29, 1995, in January 1996 the
Company and the operating entities entered into a group of related asset
contribution and merger agreements whereby the owners of the operating entities
exchanged their underlying equity interests or exchanged the operating net
assets of the businesses in exchange for either cash or membership interests in
the Company, at their option.
F-9
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)
Simultaneous with this transaction, the Company executed a Note Purchase
Agreement (the "Note Agreement") dated September 29, 1995, whereby the Company
sold to an investment group 6% convertible exchangeable subordinated notes for
$7,397, which notes were convertible into approximately 25% of the outstanding
membership units of the Company, representing a value of $10 per membership
unit. An additional $4,000 of these notes were sold in February 1997. In
connection with the consummation of the private placement offering described in
note 12, these notes were converted into common shares of the Company.
Pursuant to these agreements, certain owners sold their equity interests in
the Predecessor Company for approximately $2,966 in cash, at a value of $10 per
membership unit, and certain owners and new investors purchased additional
membership units at the same cost aggregating approximately $689.
In a related transaction, the Company Chairman assigned his rights to
receive management fees from certain Company-owned and managed restaurants in
exchange for 250,000 membership units. In the fiscal 1996 statement of
operations a charge of $2,500 was recorded relating to the assignment of this
agreement, utilizing the $10 per unit fair value established in the convertible
note sale discussed above.
The remaining Company membership units were allocated to the operating
entities owned at the proportional fair value of each individual operating
entity. The valuation of the Company was determined in conjunction with the
value assigned to the convertible note transaction discussed above and
valuations of the individual operating entities prepared by Company management.
This valuation incorporated numerous factors, including historical financial
results, projections of future operating earnings and cash flow, industry
conditions, as well as other economic factors. The transaction, including the
note purchase and creative management fee assignment agreements, closed on
January 11, 1996 and was deemed effective by the parties as of January 1, 1996.
This transaction has been accounted for, in part, as a purchase transaction,
whereby the portion of the net assets representing the minority interests of the
Predecessor Company was recorded utilizing a fair value of $10 per membership
unit. Accordingly, goodwill of approximately $8,700, including $246 of
transaction costs, was recorded at January 1, 1996. The portion of the net
assets attributable to the Control Group was recorded at its proportional
underlying book value at January 1, 1996.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) REPORTING PERIOD
The Company utilizes a 52- or 53-week reporting period ending on the Monday
nearest to December 31st. The periods ended December 30, 1996 ("Fiscal 1996"),
December 29, 1997 ("Fiscal 1997") and December 28, 1998 ("Fiscal 1998")
represent 52-week reporting periods.
F-10
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(B) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
(C) CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents. The Company had no cash equivalents as of
December 29, 1997 and December 28, 1998.
(D) ACCOUNTS RECEIVABLE
Accounts receivable consists primarily of bank credit card accounts
receivable and management fees receivable.
(E) INVENTORY
Merchandise inventory consists primarily of restaurant food and beverages
and are stated at the lower of cost or market value. Cost is determined using
the first-in, first-out method.
(F) PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Landlord allowances for leasehold
improvements, furniture, fixtures and equipment are offset against the related
property and equipment accounts. Depreciation is calculated primarily on the
straight-line basis over the estimated useful lives of the assets. Leasehold
improvements and rights are amortized on the straight-line basis over the
shorter of the lease term or the estimated useful life of the asset. The
estimated useful lives are as follows:
<TABLE>
<S> <C>
Building and building improvements............................ 30 years
Machinery and equipment....................................... 5 to 7 years
Furniture and fixtures........................................ 7 years
Leasehold improvements........................................ 5 to 27
years
Leasehold rights.............................................. 27 years
Banquet room.................................................. 40 years
Automobile.................................................... 3 years
</TABLE>
(G) ARTWORK
The Company occasionally purchases artwork and antiques for display in its
restaurants. The Company does not depreciate artwork and antiques since these
assets have cultural, aesthetic or historical value that is worth preserving
perpetually and the Company has the ability and intent to protect and preserve
these assets. Such assets are recorded at cost.
F-11
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(H) INTANGIBLE ASSETS
Goodwill, which represents the excess of fair value of minority interests
acquired in the formation of the Company over the book value of identifiable net
assets allocated to minority interests, is being amortized on a straight-line
basis over the expected periods to be benefited, 30 years. The Company assesses
the recoverability of this intangible asset in accordance with Statement of
Financial Accounting Standards No.121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" by determining
whether the amortization of the goodwill balance over its remaining life can be
recovered through undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future operating cash flows. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.
Costs attributable to a sale and licensing agreement ("Licensing Agreement")
consist of a $2,500 payment (plus any payments made upon the opening of
additional units) and legal fees made by the Company to acquire the rights and
license to use the names "Smith & Wollensky" and "Wollensky's Grill" (the
"Names") as described in note 4. The Licensing Agreement exists in perpetuity
and is being amortized over the 30-year estimated useful life of the Names,
using the straight-line method.
The cost of the acquisition of the management contract ("M&P Agreement") for
the M&P restaurant amounting to $1,500 is being amortized over the 15-year
period of the underlying operating lease, using the straight-line method.
Amortization of intangible assets aggregating $422, $506 and $544 in Fiscal
1996, 1997 and 1998, respectively, is included in general and administrative
expenses in the accompanying consolidated statements of operations.
(I) MARKETING AND PROMOTIONAL EXPENSES
Marketing and promotional expenses, including newspaper and magazine
advertisements, in the accompanying statements of operations include advertising
expenses of $738, $603 and $994 for Fiscal 1996, 1997 and 1998, respectively.
Marketing and promotional costs are recorded as expense in the period incurred.
(J) PRE-OPENING COSTS
Pre-opening costs incurred in connection with the opening of new restaurants
are expensed as incurred and are included in general and administrative expenses
in the accompanying consolidated statements of operations.
(K) DEBT FINANCING COSTS
Deferred debt financing costs, which are included in other assets (see note
6), relate to costs incurred in connection with bank borrowings and other
long-term debt and are amortized over the term
F-12
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of the related borrowings. Amortization expense of deferred financing costs was
$19, $56 and $100 in Fiscal 1996, 1997 and 1998, respectively.
(L) INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(M) STOCK-BASED COMPENSATION
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", which
permits entities to recognize as expense over the vesting period the fair value
of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to apply the provisions of APB Opinion No. 25, Accounting for
Stock Issued to Employees, under which compensation expense is recorded on the
date of grant only if the current market price of the underlying stock exceeds
the exercise price. Under the provisions of SFAS 123, the Company must provide
pro forma net income and pro forma earnings per share disclosures for employee
stock option grants made in fiscal 1995 and future years as if the fair value-
based method defined in SFAS No. 123 had been applied. The Company has elected
to apply the provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123.
(N) NET LOSS PER COMMON SHARE
The Company calculates earnings (loss) per common share in accordance with
SFAS No. 128, "Earnings Per Share". Basic earnings (loss) per common share are
computed by dividing the net loss applicable to common shares by the weighted
average number of common shares outstanding. Diluted earnings (loss) per common
share assumes the conversion of the convertible preferred shares as of the
beginning of the year and the exercise of stock options using the treasury stock
method, if dilutive. Dilutive net loss per common share for fiscal 1996, 1997
and 1998 are the same as basic net loss per common share due to the antidilutive
effect of the assumed conversion of preferred shares and exercise of stock
options.
(O) LONG-LIVED ASSETS
On January 1, 1996, the Company adopted the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", which requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.
F-13
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Adoption of SFAS No. 121 did not have a
material impact on the Company's financial position or results of operations.
(P) USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(Q) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's current assets and liabilities which are
financial instruments approximate their fair values based on the short-term
nature of such items. The carrying value of long-term debt approximates fair
value since the interest rate is variable at terms currently available to the
Company.
(R) COMPREHENSIVE INCOME (LOSS)
On January 1, 1998, the Company adopted SFAS No.130, "Reporting
Comprehensive Income", which establishes standards for the reporting and
presentation of comprehensive income (loss) and its components in the
consolidated financial statements. The Company does not have any components of
comprehensive income (loss) other than the net loss presented in the
consolidated statements of operations.
F-14
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(3) PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DEC. 29, DEC.28,
1997 1998
--------- ---------
<S> <C> <C>
Land, building and building improvements................................ $ 1,217 $ 6,346
Machinery and equipment................................................. 1,913 5,448
Furniture and fixtures.................................................. 2,934 3,787
Leasehold improvements.................................................. 9,263 25,708
Banquet room............................................................ 475 475
Automobile.............................................................. 15 15
Leasehold rights........................................................ 3,376 3,376
Construction-in-progress (note 9)....................................... 4,631 290
--------- ---------
23,824 45,445
Less accumulated depreciation and amortization.......................... 5,335 6,635
--------- ---------
$ 18,489 $ 38,810
--------- ---------
--------- ---------
</TABLE>
Depreciation and amortization expense of property and equipment was $527,
$373 and $1,300 in Fiscal 1996, 1997 and 1998, respectively.
(4) LICENSING AGREEMENT
On August 16, 1996, the Company entered into a Licensing Agreement with St.
James Associates ("St. James"), an entity related through common management and
ownership and the owner of the Smith & Wollensky restaurant in New York (note
13).
The Licensing Agreement provides the Company with the right to utilize the
Names throughout the United States and internationally, with the exception of a
reserved territory, as defined. Consequently, the Company may not open
additional Smith & Wollensky restaurants or otherwise utilize the Names in the
reserved territory. The Licensing Agreement requires the Company to make
additional payments to St. James as follows: (i) $200 for each new restaurant
opened during the period from the commencement date through December 31, 1998
(increasing annually commencing in 1999 by the lesser of the annual increase in
the Consumer Price Index or 105% of the fee required in the preceding year),
(ii) a royalty fee of 2% based upon annual gross sales for each restaurant
utilizing the Names, as defined, and (iii) a royalty fee of 1% of annual gross
sales for any steakhouses opened in the future by the Company which do not
utilize the Names. In addition, should the Company terminate or default on the
license, as defined, it is subject to a fee of $2,000 upon termination or $2,500
to be paid over four years.
F-15
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(4) LICENSING AGREEMENT (CONTINUED)
The future minimum royalty payments relating to (ii) and (iii) above are as
follows:
<TABLE>
<S> <C>
Fiscal year ending in:
1999............................................................. $ 300
2000............................................................. 400
2001............................................................. 500
2002............................................................. 600
2003............................................................. 700
2004 and thereafter.............................................. 800
</TABLE>
During Fiscal 1997, the Company paid $200 pursuant to the Licensing
Agreement in connection with the opening of Smith & Wollensky in Miami and
during Fiscal 1998 paid $600 in connection with the opening of Smith & Wollensky
units in Chicago, New Orleans and Las Vegas.
F-16
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(5) MANAGEMENT AGREEMENTS
Pursuant to the limited partnership agreement of St. James, the Company
manages the restaurant and receives annual management fees of 2.3% of restaurant
sales. However, there is no formal management contract between the Company and
St. James. The two general partners of St. James, one of which is the Company's
Chairman, may, acting together, terminate the management arrangement at any time
without cause. An unrelated general partner of St. James has the right to
terminate the management agreement if the Company Chairman no longer directs the
delivery of the management services.
Pursuant to the terms of a Restaurant Management Agreement ("Post
Agreement") dated October 29, 1996, as amended, the Company manages The Post
House Restaurant in the Lowell Hotel and the food and beverage service for the
Lowell Hotel. The Company receives a management fee of 6% of gross revenue, as
defined. The Post Agreement expires on January 23, 2001 and is subject to
cancellation by either party under specified conditions, including cancellation
by The Post House if the Company's Chairman no longer directs the delivery of
the management services. The agreement may also be terminated by either party
for cause or upon one year's notice.
The Company manages the operations of the Maloney & Porcelli restaurant
pursuant to the terms of a Restaurant Management Agreement ("Maloney Agreement")
dated April 18, 1996. The Company paid $1,500 for the right to provide these
management services, which amount is being amortized over the 15-year term of
the underlying operating lease of the restaurant. Under the provisions of the
Maloney Agreement, the Company will receive a management fee equal to the sum of
3% of restaurant sales and a percentage of net cash flows, as defined. The
Maloney Agreement can be terminated by either party for cause and the Company
has a right to purchase the restaurant under specified conditions and the
restaurant owner can preempt the purchase option by remitting a specified cash
payment to the Company.
The Maloney Agreement provides the restaurant owner with the following
minimum distributions (i.e., restaurant operating cash flow less the Company's
management fee):
<TABLE>
<S> <C>
Fiscal year ending in:
1999............................................................... $ 300
2000............................................................... 360
2001............................................................... 360
2002............................................................... 360
2003............................................................... 360
2004 and thereafter................................................ 480
</TABLE>
Pursuant to a Submanagement Agreement ("Doubletree Agreement") dated June 9,
1995, the Company manages the food and beverage service for the Doubletree Hotel
in Chicago, Illinois. The Company receives a management fee equal to the sum of
1.5% of sales and a percentage of earnings, as defined. The Doubletree Agreement
expires on the earlier of December 31, 2004 or the termination of a related
Hotel Management Agreement.
F-17
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(6) OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DEC. 29, DEC. 28,
1997 1998
----------- -----------
<S> <C> <C>
Artwork--nondepreciable assets............................................. $ 698 $ 1,174
Smallwares (a)............................................................. 172 595
Lease acquisition costs, net (b)........................................... 95 79
Deferred debt financing costs.............................................. 253 471
Deposits................................................................... 93 209
Other (c).................................................................. 349 395
----------- -----------
$ 1,660 $ 2,923
----------- -----------
----------- -----------
</TABLE>
- ------------------------
(a) Smallwares consist of tableware, supplies and other miscellaneous items.
The Company estimates the amount of such items at each restaurant.
(b) Upon the organization of MOCA, the general partner assigned its interest
in a lease in exchange for $67 in equity, at fair value, and the
assumption of $250 in debt. Such lease acquisition costs are being
amortized over the remaining life of the lease.
(c) In Fiscal 1996, the Company loaned $100 to an officer in connection with
a purchase of membership units. The note is unsecured, bears interest at
6% and is payable in quarterly installments. At December 29, 1997 and
December 28, 1998, $78 and $56, respectively, was outstanding.
(7) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DEC. 29, DEC. 28,
1997 1998
----------- -----------
<S> <C> <C>
Accounts payable........................................................... $ 998 $ 1,710
Accrued construction costs................................................. 2,078 1,235
Taxes payable.............................................................. 563 749
Accrued payroll and payroll taxes.......................................... 1,075 1,971
Gift certificates payable.................................................. 255 366
Insurance premium payable.................................................. 123 385
Other accrued expenses..................................................... 614 1,024
----------- -----------
$ 5,706 $ 7,440
----------- -----------
----------- -----------
</TABLE>
F-18
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(8) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DEC. 29, DEC. 28,
1997 1998
----------- ---------
<S> <C> <C>
Credit facility (a)...................................................... $ -- $ 14,393
Other (b)................................................................ 3,515 2,711
----------- ---------
3,515 17,104
Less current portion..................................................... 217 279
----------- ---------
$ 3,298 $ 16,825
----------- ---------
----------- ---------
</TABLE>
- ------------------------
(a) Pursuant to the terms of a loan agreement, dated September 1, 1998, as
amended on June 8, 1999 and June 29, 1999, with a financial institution, the
Company may borrow up to a maximum of $15,000. The credit facility can be
utilized for restaurant construction and to provide a maximum of $5,000 for
working capital purposes. The loan agreement provides the Company with the
option of selecting a rate of interest either at the prime rate or 3.25%
above the LIBOR rate, as defined. Under the provisions of the loan
agreement, the financial institution received a commitment fee of $160. The
facility will enable the Company to borrow up to 75% of the respective
restaurant's appraised value (as defined) for the construction of its Las
Vegas and New Orleans Smith & Wollensky restaurants. The agreement provides
for the conversion of up to $12,200 in new restaurant construction financing
to a three-year term loan on January 15, 2000.
The Company has provided the financial institution with a first security
interest in all personal property, except for the Names, specified
restaurant operating leases and the management agreements. In addition, the
Company has assigned to the financial institution the term life insurance
policy for the Company Chairman. The obligation under the loan agreement is
guaranteed by all Company subsidiaries. The loan agreement contains several
financial covenants, including, among other things, minimum annual levels of
net worth, earnings before interest, taxes, depreciation and amortization
and required fixed charge and leverage ratios, as well as quarterly
limitations on individual subsidiary's operating losses. As of December 28,
1998, the Company was not in compliance with certain financial covenants. On
June 29, 1999, the financial institution waived the covenant violations and
amended certain of the financial covenants. The Company believes it will
meet the revised financial covenants based on its projections for the
remainder of Fiscal 1999. Additionally, the loan agreement includes
restrictions and limitations on the payment of dividends and capital
expenditures.
(b) In Fiscal 1997, the Company assumed certain debt in connection with the
acquisition of leasehold rights relating to its Smith & Wollensky in Miami
location from two bankrupt corporations. Pursuant to the terms of the
bankruptcy resolution, the Company is obligated to make quarterly and annual
payments over a six-year period. These obligations bear interest at rates
ranging from 9% to 12%. The aggregate balance outstanding at December 29,
1997 and December 28, 1998 was $799 and $727, respectively.
F-19
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(8) LONG-TERM DEBT (CONTINUED)
In addition, the Company assumed a mortgage on the property that requires
monthly installments, expires in June 2004, and bears interest at 9.5%. The
Company also assumed a loan payable to a financing institution that requires
monthly installments, through the year 2014, which bears interest at 7.67%.
The aggregate balance of the mortgage and loan payable outstanding at
December 29, 1997 and December 28, 1998 was $2,033 and $1,985, respectively.
The Company also entered into a mortgage for property located in New Orleans
on which a Smith & Wollensky unit was constructed. This mortgage was paid in
full in Fiscal 1998 utilizing the borrowings available under the credit
facility discussed in note 8(a).
Principal payments on these obligations are as follows:
<TABLE>
<S> <C>
1999............................................................... $ 279
2000............................................................... 3,464
2001............................................................... 762
2002............................................................... 799
2003............................................................... 10,128
Thereafter......................................................... 1,672
---------
$ 17,104
---------
---------
</TABLE>
(c) On June 29, 1999, the Company entered into a senior subordinated note
purchase agreement with another lender. In connection with this agreement,
the Company issued $10,000 of senior subordinated notes bearing interest at
12.5%. The notes will become due in June 2006 and cannot be prepaid prior to
June 2002 unless prepayment is made from the proceeds of an offering of
securities of the Company's capital stock. In addition, prepayment of the
senior subordinated notes also requires the payment of a prepayment premium.
In connection with the issuance of the senior subordinated notes, the
Company also issued warrants to the lender to purchase up to 2% of the
outstanding shares of the Company's stock at a per share exercise price of
$0.01. The Company intends to utilize the proceeds from the senior
subordinated notes to finance its planned new restaurant construction.
(9) RESTAURANT RELATED COMMITMENTS
All of the Company's operations, except for the Smith & Wollensky restaurant
in New Orleans, are conducted in leased premises. Remaining lease terms range
from approximately 9 to 27 years, including anticipated renewal options. The
leases generally provide for minimum annual rental payments and are subject to
escalations based upon increases in the Consumer Price Index, real estate taxes
and other costs. In addition, certain leases contain contingent rental
provisions based upon the sales of the underlying restaurants. Certain leases
also provide for rent deferral during the initial term of such leases and/or
scheduled minimum rent increases during the terms of the leases. Included in
long-term liabilities in the accompanying consolidated balance sheets at the end
of Fiscal 1997 and 1998 are accruals related to such rent deferrals and
scheduled rent increases of approximately $2,321 and $3,196,
F-20
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(9) RESTAURANT RELATED COMMITMENTS (CONTINUED)
respectively. For financial reporting purposes, such leases are accounted for on
a straight-line rental basis. Future minimum annual rental commitments under
these leases are approximately as follows:
<TABLE>
<CAPTION>
Fiscal year:
<S> <C>
1999............................................................. $ 3,600
2000............................................................. 3,745
2001............................................................. 3,969
2002............................................................. 3,903
2003............................................................. 4,068
Thereafter....................................................... 60,484
---------
$ 79,769
---------
---------
</TABLE>
Rental expense consists of the following:
<TABLE>
<CAPTION>
FISCAL
-------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Minimum rentals.................................................. $ 1,136 $ 1,283 $ 2,238
Contingent rentals............................................... 421 349 645
--------- --------- ---------
$ 1,557 $ 1,632 $ 2,883
--------- --------- ---------
--------- --------- ---------
</TABLE>
As of December 28, 1998, the Company is in the process of constructing a new
Smith & Wollensky restaurant in Washington, D.C. In addition to lease
commitments, construction and other costs to complete such restaurant are
estimated to be approximately $4,300. In addition, subsequent to December 28,
1998, the Company entered into a lease relating to a planned Maloney and
Porcelli restaurant in Washington, D.C. Costs associated with new restaurants
are anticipated to be funded by existing cash balances, working capital
generated from 1999 operations and the proceeds from long-term debt (note 8).
F-21
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(10) INCOME TAXES
Prior to November 1, 1997, the Company was a limited liability company (LLC)
under the provisions of the Internal Revenue Code. As such, the taxable results
and available tax credits of the Company passed directly to the members' income
tax returns. As a C corporation beginning November 1, 1997, the Company's
taxable results will be directly subject to Federal and state income taxes.
In accordance with SFAS No.109, "Accounting for Income Taxes", the Company's
change in tax status from an LLC to a C corporation on October 31, 1997 resulted
in the creation of a net deferred tax asset of approximately $776.
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
FISCAL
-------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Federal:
Current............................................................. $ -- $ -- $ --
Deferred............................................................ -- -- --
--------- --------- ---------
-- -- --
State and local:
Current............................................................. 89 278 572
Deferred............................................................ (205) 205 --
--------- --------- ---------
(116) 483 572
--------- --------- ---------
$ (116) $ 483 $ 572
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-22
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(10) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
components of deferred tax assets and liabilities are presented below:
<TABLE>
<CAPTION>
DEC. 29, DEC. 28,
1997 1998
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards......................................... $ 65 $ 155
Deferred rent............................................................ 928 1,288
Accelerated depreciation and amortization for book purposes.............. 229 --
Book accruals in excess of tax........................................... 208 704
Historic rehabilitation and enterprise zone credits...................... -- 1,161
FICA tax credits......................................................... 232 615
----------- -----------
1,662 3,923
Less valuation allowance................................................... 975 3,097
----------- -----------
687 826
Deferred tax liabilities:
Difference between tax and book basis of leasehold rights acquired....... (687) (655)
Accelerated depreciation and amortization for tax purposes............... -- (171)
----------- -----------
(687) (826)
Net deferred tax assets.................................................... $ -- $ --
----------- -----------
----------- -----------
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which temporary differences become deductible and net operating losses and tax
credits can be carried forward. Management considers projected future taxable
income and tax planning strategies in making this assessment. In light of the
Company's losses in recent years, a valuation allowance has been established
against the Company's net deferred tax assets. The change in the Company's
valuation allowance was $975 and $2,122 in Fiscal 1997 and 1998, respectively.
Effective for the 1994 fiscal year, the Company implemented a FICA tip
reporting system in compliance with IRS guidelines. In the opinion of
management, settlement, if any, for any potential future liabilities for unpaid
FICA taxes for the 1991 through 1993 fiscal years would not have a material
adverse impact on the Company's financial position, results of operations or
liquidity.
(11) COMMON STOCK
Each holder of common stock is entitled to one vote for each share owned of
record on all matters submitted to a vote of stockholders. There are no
cumulative voting rights. Subject to the preferential rights of any outstanding
preferred stock (see note 12), the holders of common stock will be entitled to
such dividends as may be declared from time to time by the Board of Directors
from
F-23
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(11) COMMON STOCK (CONTINUED)
funds legally available therefore, and will be entitled, after payment of all
prior claims, to receive pro rata all assets of the Company upon the
liquidation, dissolution, winding up of the Company. Holders of common stock
have no redemption or conversion rights or preemptive rights to purchase or
subscribe for securities of the Company. Information in the remainder of this
note has been adjusted for the conversion of membership units to common shares
and the 3:2 split described in note 1.
In January 1996, the Company adopted the 1996 Option Plan (the "Plan"),
which provides for the issuance to officers and key employees of nonqualified
options to purchase up to 384,525 shares of common stock of the Company. The
Plan is currently administered by the Company Chairman. The term of the option
is generally ten years, subject to earlier termination upon cessation of
employment with the Company. Additionally, the option agreements contain
antidilution provisions and acceleration provisions for a change in control, as
defined. The exercise price of options granted in Fiscal 1996 was $6.67 per
share, the fair market value at the date of grant. The exercise price for all
other nonqualified options granted will be the fair market value of the
Company's shares at the date of grant. The options vest as follows: (i) 50% of
the total options granted vest ratably over a five-year period commencing from
the date of grant, (ii) the remaining 50% of the option award, defined as
performance-based units, are subject to certain restrictions, which may be
removed upon the attainment of defined operating earnings targets, as defined in
the agreement, but no later than December 31, 2000. If the earnings targets are
met, a charge to earnings based on the fair value of the shares will be
required.
The Company also adopted a 1997 Stock Option Plan which provides for the
issuance of incentive stock options to purchase up to 250,000 shares of common
stock. The option provisions are similar to those contained in the 1996 Option
Plan. However, if performance targets are not met related to the
performance--based options, the options will automatically vest after seven
years. The exercise price of options granted in Fiscal 1998 was $8.00 per share,
the fair market value at the date of grant.
Activity relating to the Company's option plans was as follows:
<TABLE>
<CAPTION>
OPTION
PRICE PER
SHARE OF
NUMBER COMMON
OF OPTIONS STOCK
----------- -----------
<S> <C> <C>
Options outstanding at January 1, 1996................................. -- --
Options granted........................................................ 313,050 $ 6.67
Options exercised...................................................... -- --
----------- -----
Options outstanding at December 30, 1996............................... 313,050 6.67
Options granted........................................................ -- --
Options exercised...................................................... -- --
----------- -----
Options outstanding at December 29, 1997............................... 313,050 6.67
Options granted........................................................ 87,100 8.00
Options exercised...................................................... --
----------- -----
Options outstanding at December 28, 1998............................... 400,150 $ 6.96
----------- -----
----------- -----
</TABLE>
F-24
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(11) COMMON STOCK (CONTINUED)
As of December 28, 1998, there were 62,610 options exercisable at $6.67 per
share.
During Fiscal 1998, the Company issued 26,000 common shares at $9.65 per
share.
The per share weighted average fair value of stock options granted during
fiscal 1996 and 1998 was $2.31 and $3.38, respectively. The fair values were
based on the Black-Scholes option-pricing model with the following assumptions:
Fiscal 1996--expected dividend yield of 0%, risk-free interest rate of 5.4% and
an expected life of 5 years; Fiscal 1998--expected dividend yield at 0%,
risk-free interest rate of 5.6% and an expected life of 6 years. Had the Company
determined compensation cost based on the fair value of the options at the date
of grant, the Company's pro forma net loss applicable to common shares and net
loss per common share would have been the following amounts:
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997 FISCAL 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net loss applicable to common shareholders:
As reported........................................... $ (2,063) $ (1,208) $ (3,932)
Pro forma............................................. (2,111) (1,256) (4,031)
Net loss per common share:
As reported........................................... $ (0.62) $ (0.34) $ (0.85)
Pro forma............................................. (0.63) (0.35) (0.87)
</TABLE>
(12) SERIES A CONVERTIBLE PREFERRED STOCK
On October 31, 1997, the Company completed a private placement offering (the
"Offering") of 2,172,794 shares of its Series A Convertible Preferred Stock (the
"Preferred Stock") at $9.65 per share. Net proceeds to the Company from the
Offering were $19,380 after deducting related expenses of $1,588. The Company
used $3,489 of the proceeds to redeem 361,569 shares of common stock held by the
Company Chairman.
The Preferred Stock provides for a cumulative annual dividend of 6.0%
payable in the event of the liquidation of the Company or the redemption of the
Preferred Stock. Holders of a majority of the outstanding shares of Preferred
Stock may elect, beginning on September 30, 2004, to have the Company redeem all
of the then outstanding shares of Preferred Stock at the original price plus
cumulative and unpaid dividends. As a result of this "put" provision, the
Preferred Stock has been classified outside of equity in the accompanying
consolidated balance sheet. In addition, the Offering related expenses are being
amortized directly to retained earnings on a straight-line basis through
September 30, 2004. Dividends of approximately $210 and $1,258 have been accrued
in Fiscal 1997 and Fiscal 1998, respectively, and are being charged directly to
retained earnings.
Upon liquidation, holders of the Preferred Stock are entitled to receive,
prior and in preference to the holders of common stock, the original purchase
price per share of Preferred Stock plus any cumulative unpaid dividends. Holders
of the Preferred Stock also have the right to convert, at any time, shares of
the Preferred Stock into an equal number of common shares, subject to the
anti-dilution provisions discussed below. The Preferred Stock will automatically
convert into common stock upon the
F-25
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(12) SERIES A CONVERTIBLE PREFERRED STOCK (CONTINUED)
completion by the Company of a public offering (subject to minimum proceeds
requirements) or upon the written consent of at least two-thirds of the shares
of Preferred Stock then outstanding.
The conversion price of shares of the Preferred Stock is subject to
adjustment in the event of (i) any subdivision or combination of the Company's
outstanding common stock, or (ii) any distribution by the Company of (a) a stock
dividend, or (b) assets (other than cash payable out of retained earnings) to
holders of common stock. The conversion price of shares of Preferred Stock may
also be adjusted upon the Company's issuance of additional common shares for
consideration per share which is less than the conversion price of the Preferred
Stock.
Holders of Preferred Stock generally have one vote for each
common-equivalent share and vote with holders of common shares as a single class
except as otherwise required by law and except for matters relating to
restrictive covenants. On such occasions, the Preferred Stock holders vote as a
separate class. As long as 20% or more of the Preferred Stock is outstanding,
the Company may not, without the consent of holders of at least a majority of
the outstanding Preferred Stock, (i) authorize or issue any class or series of
equity security having equal or superior rights as to payment upon liquidation,
dissolution or a winding up of the Company; (ii) redeem or repurchase
outstanding common stock in excess of an aggregate of 50,000 shares; (iii) amend
its Certificate of Incorporation or By-Laws in any way which adversely affects
the rights and preferences of the holders of Preferred Stock as a class (except
that the Company may complete a reverse-split of its common stock without the
consent of the holders of the Preferred Stock); (iv) sell or lease 25% or more
of the assets of the Company, except in the ordinary course of business; (v)
issue additional Company securities to employees, officers or directors, except
securities issuable upon the exercise of outstanding options and warrants, or
issuable upon the exercise of options granted in the future at fair market
value; (vi) issue any securities for a price less than fair market value; (vii)
enter into any transactions (or series of transactions), including loans, with
any officer or director of the Company or to or with their affiliates and family
members involving $100,000 or more per year individually or $500,000 or more per
year in the aggregate, except as may be contemplated by presently existing
contractual commitments; or (viii) adopt any additional stock option plans or
increase the number of shares available for issuance under existing plans
without the consent of the holders of the Preferred Stock.
Holders of the Preferred Stock also have certain registration rights (after
an initial public offering), co-sale rights (under certain conditions in the
event the Company Chairman or certain other common shareholders sell their
shares) and preemptive rights (to participate on a pro-rata basis in future
sales of equity securities prior to an initial public offering).
(13) RELATED PARTY TRANSACTIONS
Pursuant to the limited partnership agreement of St. James, the Company
manages the Smith & Wollensky restaurant and receives annual management fees of
2.3% of restaurant sales. Certain shareholders of the Company are also limited
partners of St. James, which owns the Smith & Wollensky restaurant in New York
and the Names in the reserved territory, as well as being limited partners of MW
Realty Associates, which owns the property on which the Smith & Wollensky
F-26
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER MEMBERSHIP UNIT AMOUNTS)
(13) RELATED PARTY TRANSACTIONS (CONTINUED)
restaurant is located. An affiliate of the Company Chairman is a general and
limited partner of St. James and MW Realty Associates. Management fee revenue
relating to this agreement amounted to approximately $513, $540 and $562 for
Fiscal 1996, 1997 and 1998, respectively.
Pursuant to the licensing agreement with St. James, the Company obtained the
rights and license to use the Names for $2,500. The agreement also provides for
additional payments to St. James relating to new restaurant openings and also
contains a provision for the payment of a specified termination fee.
In connection with the sale of the 6% convertible exchangeable subordinated
notes for $7,397, the Company Chairman assigned his existing rights to receive
creative management fees from certain Company owned and managed restaurants to
the Company in exchange for 250,000 membership units valued at $10 per
membership unit. Additionally, pursuant to the aforementioned sale, certain
owners sold all or a portion of their equity interest in the predecessor Company
for approximately $2,966 in cash, at a value of $10 per membership unit and
other owners purchased additional membership units at $10, aggregating $689.
The Company and the investment group which purchased the 6% convertible
exchangeable subordinated notes (note 1) entered into a management agreement
whereby the investment group receives $60 annually for the earlier of five years
or until the investment group reduces its ownership interest by more than 50%,
for consulting services rendered to the Company.
In Fiscal 1996, the Company loaned $100 to an officer in connection with the
purchase of membership units. The note is unsecured, bears interest at 6% and is
payable in quarterly installments. At December 29, 1997 and December 28, 1998,
$78 and $56, respectively, was outstanding.
(14) BENEFIT PLAN
The Company offers a 401(k) retirement savings plan to all full-time
employees age 21 or older upon completing one year of service (1,000 hours in
any 12-month period). Employees may contribute a percentage of their gross
salaries as defined in the plan, subject to limits prescribed by the IRS.
Company contributions are at the discretion of the board of directors.
Participants are fully vested upon joining the plan and officers of the Company
serve as Trustees of the plan. For Fiscal 1996, 1997 and 1998, the Company
contributions to the plan amounted to approximately $20, $21 and $23,
respectively.
(15) LEGAL MATTERS
The Company is a defendant in litigation arising from the normal course of
its affairs. Management is of the opinion, pursuant to the advice of counsel,
that settlement, if any, of the aforementioned litigation will not have a
material adverse effect on the consolidated financial position, results of
operations or liquidity of the Company.
F-27
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
March 29, 1999
(dollar amounts in thousands, except per share amounts)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash............................................................................. $ --
Accounts receivable, net......................................................... 1,304
Merchandise inventory............................................................ 2,382
Prepaid expenses and other current assets........................................ 976
---------
Total current assets......................................................... 4,662
Property and equipment, net........................................................ 39,546
Goodwill, net...................................................................... 7,758
Licensing agreement, net........................................................... 3,109
Management contract, net........................................................... 1,204
Other assets....................................................................... 2,748
---------
Total assets................................................................. $ 59,027
---------
---------
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt................................................ $ 530
Accounts payable and accrued expenses............................................ 7,765
---------
Total current liabilities.................................................... 8,295
Long-term debt, net of current portion............................................. 17,070
Deferred rent...................................................................... 3,461
---------
Total liabilities............................................................ 28,826
Convertible redeemable preferred stock (par value $.01; authorized
5,000,000 shares; 2,172,794 shares issued and outstanding)....................... 21,487
Equity:
Common stock (par value $.01; authorized 10,000,000 shares;
4,625,891 shares issued and outstanding)....................................... 46
Additional paid-in capital....................................................... 14,248
Accumulated deficit.............................................................. (5,580)
---------
8,714
---------
Commitments and contingencies
Total liabilities and equity................................................. $ 59,027
---------
---------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-28
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Three months ended March 30, 1998 and March 29, 1999
(dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Owned restaurant sales................................................................ $ 9,212 $ 16,988
------------ ------------
Cost of owned restaurant sales:
Food and beverage costs............................................................. 2,699 4,970
Salaries and related benefits....................................................... 2,844 5,143
Restaurant operating expenses....................................................... 1,437 2,782
Occupancy and related expenses...................................................... 570 1,064
Marketing and promotional expenses.................................................. 498 1,125
Depreciation and amortization....................................................... 215 630
------------ ------------
Total cost of owned restaurant sales............................................ 8,263 15,714
------------ ------------
Income from owned restaurant operations............................................... 949 1,274
Management fee income................................................................. 576 648
------------ ------------
Income from owned and managed restaurants............................................. 1,525 1,922
General and administrative expenses................................................... 1,405 1,625
Royalty expense....................................................................... 50 207
------------ ------------
Operating income...................................................................... 70 90
Interest expense...................................................................... (63) (364)
Interest income....................................................................... 80 2
------------ ------------
17 (362)
Income (loss) before provision for income taxes....................................... 87 (272)
Provision for income taxes............................................................ 135 138
------------ ------------
Net loss.............................................................................. $ (48) $ (410)
Accrual of dividends and amortization of issuance costs on preferred shares........... (372) (372)
------------ ------------
Net loss applicable to common shares.................................................. $ (420) $ (782)
------------ ------------
------------ ------------
Net loss per common share:
Basic and diluted..................................................................... $ (0.09) $ (0.17)
------------ ------------
------------ ------------
Weighted average common shares outstanding:
Basic and diluted..................................................................... 4,599,891 4,625,891
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-29
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Three months ended March 30, 1998 and March 29, 1999
(dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................................................... $ (48) $ (410)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization............................................................ 370 828
Changes in operating assets and liabilities:
Accounts receivable.................................................................... (198) (308)
Merchandise inventory.................................................................. (121) 64
Prepaid expenses and other current assets.............................................. (318) 28
Other assets........................................................................... (13) 164
Accounts payable and accrued expenses.................................................. (2,455) 325
Deferred rent.......................................................................... 24 233
--------- ---------
Net cash provided by (used in) operating activities.................................. (2,759) 924
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment, including construction-in-progress..................... (3,726) (1,366)
Purchase of nondepreciable assets.......................................................... (231) (54)
--------- ---------
Net cash used in investing activities................................................ (3,957) (1,420)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common shares.................................................... 251 --
Proceeds from issuance of long-term debt................................................... -- 607
Principal payments of long-term debt....................................................... (31) (111)
--------- ---------
Net cash provided by financing activities............................................ 220 496
--------- ---------
Net increase (decrease) in cash and cash equivalents......................................... $ (6,496) $ --
Cash at beginning of period.................................................................. 9,638 --
--------- ---------
Cash at end of period........................................................................ $ 3,142 $ --
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest................................................................................. $ 63 $ 364
--------- ---------
--------- ---------
Income taxes............................................................................. $ 129 $ 80
--------- ---------
--------- ---------
Unincorporated business tax.............................................................. $ 23 $ 27
--------- ---------
--------- ---------
Noncash investing and financing activity:
Accrued dividends on preferred shares.................................................... $ 315 $ 315
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-30
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK
RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL
The accompanying consolidated financial statements have been prepared by The
New York Restaurant Group, Inc. and its wholly-owned subsidiaries (collectively,
the "Company") and have not been audited. They do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in accordance with generally accepted accounting
principles. In the opinion of management, the unaudited consolidated financial
statements for the interim periods presented reflect all adjustments, consisting
of only normal recurring adjustments, necessary for a fair presentation of the
financial position and results of operations as of and for such periods
indicated. These unaudited consolidated financial statements and notes thereto
should be read in conjunction with the consolidated financial statements and
notes thereto included elsewhere in this prospectus for each of the years in the
three year period ended December 28, 1998. Results for the interim periods
presented herein are not necessarily indicative of the results which may be
reported for any other interim period or for the entire fiscal year.
The Company utilizes a 52- or 53-week reporting period ending on the Monday
nearest to December 31st. The periods ended March 30, 1998 and March 29, 1999
represent 13-week reporting periods.
(2) NET LOSS PER SHARE
The Company calculates loss per common share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share". Basic earnings
(loss) per common share are computed by dividing the net loss applicable to
common shares by the weighted average number of common shares outstanding.
Diluted earnings (loss) per common share assumes the conversion of the
convertible preferred shares as of the beginning of the year and the exercise of
stock options using the treasury stock method, if dilutive. Diluted net loss per
common share for the three months ended March 30, 1998 and March 29, 1999 are
the same as basic net loss per common share due to the antidilutive effect of
the assumed conversion of preferred shares and exercise of stock options.
F-31
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK
RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(3) PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
MARCH 29,
1999
-----------
<S> <C>
Property and equipment consists of the following:
Land, building and building improvements............................................. $ 6,361
Machinery and equipment.............................................................. 5,597
Furniture and fixtures............................................................... 3,914
Leasehold improvements............................................................... 25,918
Banquet room......................................................................... 475
Automobile........................................................................... 15
Leasehold rights..................................................................... 3,376
Construction-in-progress............................................................. 1,155
-----------
46,811
Less accumulated depreciation and amortization....................................... 7,265
-----------
$ 39,546
-----------
-----------
</TABLE>
Depreciation and amortization expense of property and equipment was $215 and
$630 for the three months ended March 30, 1998 and March 29, 1999, respectively.
(4) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
MARCH 29,
1999
-----------
<S> <C>
Accounts payable and accrued expenses consist of the following:
Accounts payable..................................................................... $ 3,533
Accrued construction costs........................................................... 238
Taxes payable........................................................................ 794
Accrued payroll and payroll taxes.................................................... 1,729
Gift certificates payable............................................................ 302
Insurance premium payable............................................................ 382
Other accrued expenses............................................................... 787
-----------
$ 7,765
-----------
-----------
</TABLE>
(5) SUBSEQUENT EVENT
As described in note 8(a) to the audited consolidated financial statements
for the years ended December 30, 1996, December 29, 1997 and December 28, 1998,
the Company has a $15,000 credit facility with a financial institution. On June
29, 1999 the financial institution waived certain debt covenant violations and
amended certain financial covenants related to this credit facility. The Company
believes it will meet the revised financial covenants based on its projections
for the next twelve months.
F-32
<PAGE>
THE NEW YORK RESTAURANT GROUP, INC.
(FORMERLY THE NEW YORK
RESTAURANT GROUP, LLC)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
On June 29, 1999, the Company entered into a senior subordinated note
purchase agreement with another lender. In connection with this agreement, the
Company issued $10,000 of senior subordinated notes bearing interest at 12.5%.
The notes will become due in June 2006 and cannot be prepaid prior to June 2002
unless prepayment is made from the proceeds of an offering of securities of the
Company's capital stock. In addition, prepayment of the senior subordinated
notes also requires the payment of a prepayment premium. In connection with the
issuance of the senior subordinated notes, the Company also issued warrants to
the lender to purchase up to 2% of the outstanding shares of the Company's stock
at a per share exercise price of $0.01.
(6) LEGAL MATTERS
The Company is a defendant in litigation arising from the normal course of
its affairs. Management is of the opinion, pursuant to the advice of counsel,
that settlement, if any, of the aforementioned litigation will not have a
material adverse effect on the consolidated financial position, results of
operations or liquidity of the Company.
F-33
<PAGE>
The New York Restaurant Group, Inc.
AWARDS AND STAR REVIEWS
SMITH & WOLLENSKY
- 1999 ZAGAT SURVEY--Top Food, Steak Houses
- 1999 ZAGAT SURVEY--Top Food, Hamburgers
- 1999 ZAGAT SURVEY--Top Food, Pub Dining
- 1999 ZAGAT SURVEY--Top Food, Late Dining
- Three Beans from NEW ORLEANS TIMES-PICAYUNE--March 5, 1999
- Three and A Half Stars from MIAMI SUN SENTINEL--December 25, 1998
- Two Stars from CHICAGO TRIBUNE--June 5, 1998
- WINE SPECTATOR Grand Award 1987-1995
- WINE SPECTATOR Award of Excellence 1996-1998
- WINE ENTHUSIAST Restaurant Award 1996
- DiRoNA--Distinguished Restaurants of North America--1994
- Two Stars from NEW YORK TIMES--December 24, 1997
- Best Steakhouse from LAS VEGAS REVIEW-JOURNAL--March 21, 1999
PARK AVENUE CAFE
- 1999 ZAGAT SURVEY--One of the Most Popular Restaurants
- 1999 ZAGAT SURVEY--Top 50 Food Ranking
- 1999 ZAGAT SURVEY--Tops by Cuisine, Brunch
- 1999 ZAGAT SURVEY--Top Food by Neighborhood, Upper East Side
- WINE SPECTATOR Award of Excellence 1994-1998
- JAMES BEARD AWARDS--Richard Leach for Outstanding Pastry Chef of the Year
for 1997
- CHEF Magazine--David Burke for Best Chef of the Year for 1997
- Robert Mondavi Culinary Award of Excellence in 1996 to Chef/Partner David
Burke
- VATEL CLUB--CHEF OF THE YEAR, 1998
- DiRoNA--Distinguished Restaurants of North America--1997
- Five Star Diamond Award from the American Academy of Hospitality Sciences
for 1997
- Culinary Institute of America--Auggie Award (named for Auguste Escoffier)
- Three Stars from CHICAGO SUN TIMES--June 20, 1997
- Three Stars from CHICAGO TRIBUNE--April 12, 1995 and June 10, 1997
- Three Stars from FORBES Magazine in 1996
- WINE ENTHUSIAST Restaurant Award 1996
- For Best Restaurant Design: Gold Key Awards Finalist, HOSPITALITY DESIGN
in 1993
- Two Stars from NEW YORK TIMES--December 26, 1993
<PAGE>
AWARDS AND STAR REVIEWS (CONTINUED)
- National Advisory Committee of Chefs in America--Best Chef of the Year for
1991
- Les Meilleurs Ouvriers de France (Burke was first non-Frenchman to
receive) for 1988
- Nippon Award of Excellence for Distinguished Skill and Technique, 1988
THE POST HOUSE
- 1999 ZAGAT SURVEY--Top Food, Steak Houses
- DiRoNA-Distinguished Restaurants of North America-1996
- One of the Top Ten Steakhouses in America, WINE SPECTATOR--March 31, 1996
- WINE ENTHUSIAST Restaurant Award 1996
- Two Stars from NEW YORK OBSERVER--May 17, 1993
- Two Stars from NEW YORK TIMES--August 26, 1988
- WINE SPECTATOR Award of Excellence 1989 - 1998
- WINE ENTHUSIAST Restaurant Award 1995 - 1996
THE MANHATTAN OCEAN CLUB
- 1999 ZAGAT SURVEY--One of the Most Popular Restaurants
- 1999 ZAGAT SURVEY--Top 50 Food Ranking
- 1999 ZAGAT SURVEY--Top Food, Seafood
- 1999 ZAGAT SURVEY--Top Food by Neighborhood, Midtown
- DiRoNA-Distinguished Restaurants of North America--1998
- WINE SPECTATOR Award of Excellence 1989 - 1998
- WINE ENTHUSIAST Restaurant Award 1996
- Three Stars from CRAIN'S NEW YORK--June 3, 1996
- Two Stars from NEW YORK OBSERVER--Sept. 25, 1995
- Two Stars from NEW YORK TIMES--August 12, 1994
MALONEY & PORCELLI
- WINE SPECTATOR Award of Excellence 1997 - 1998
- GOURMET "Tops for Business Lunch", 1998
- Top 10 Dish in America--Crackling Pork Shank, USA TODAY--July 18, 1997
- WINE ENTHUSIAST Restaurant Award March 1997
- Two Half Stars from NEW YORK OBSERVER--Sept. 30, 1996
- Three Stars from CRAIN'S NEW YORK--Sept. 1996
CITE
- WINE SPECTATOR Award of Excellence 1990 - 1998
- WINE ENTHUSIAST Restaurant Award 1995 - 1996
- DiRoNA--Distinguished Restaurants of North America--1995
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT
RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR
BUY ANY SHARES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE
TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
------------------------
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................ 3
Risk Factors.................................. 9
Use of Proceeds............................... 17
Dividend Policy............................... 17
Dilution...................................... 18
Capitalization................................ 19
Selected Historical Consolidated Financial
Data........................................ 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 22
Business...................................... 34
Management.................................... 48
Certain Relationships and Related
Transactions................................ 58
Principal Stockholders........................ 61
Description of Capital Stock.................. 63
Shares Eligible for Future Sale............... 66
Underwriting.................................. 68
Legal Matters................................. 69
Experts....................................... 70
Where You Can Find More
Information................................. 70
Index to Consolidated Financial Statements.... F-1
</TABLE>
------------------------
UNTIL (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
THE NEW YORK
RESTAURANT GROUP, INC.
_______ SHARES
COMMON STOCK
------------
PROSPECTUS
------------
BEAR, STEARNS & CO. INC.
THOMAS WEISEL PARTNERS LLC
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses (other than underwriting discount and commissions) payable in
connection with the sale of the common stock offered hereby (including the
common stock which may be sold pursuant to the underwriters' over-allotment
option) are as follows, all of which will be paid by the Company:
<TABLE>
<CAPTION>
AMOUNT
------------
<S> <C>
Commission registration fee......................................................................... $ 9,730
NASD filing fee..................................................................................... $ 4,000
Nasdaq National Market fee.......................................................................... $ 66,875
Printing expenses...................................................................................
Legal fees and expenses.............................................................................
Accounting fees and expenses........................................................................
Blue sky fees and expenses (including legal fees and expenses)......................................
Transfer agent and registrar fees and expenses......................................................
Miscellaneous.......................................................................................
------------
Total............................................................................................. $
------------
------------
</TABLE>
- ------------------------
* All amounts are estimated, except Commission Registration, NASD and Nasdaq
National Market Fees.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware provides as
follows:
A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall
II-1
<PAGE>
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
In addition, pursuant to our Certificate of Incorporation and Bylaws, we
shall indemnify our directors and officers against expenses (including judgments
or amounts paid in settlement) incurred in any action, civil or criminal, to
which any such person is a party by reason of any alleged act or failure to act
in his capacity as such, except as to a matter as to which such director or
officer shall have been finally adjudged not to have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation.
The Underwriting Agreement provides that the underwriters are obligated,
under certain circumstances, to indemnify our directors, officers and
controlling persons against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of Underwriting Agreement filed as
Exhibit 1.1 hereto.
We maintain directors and officers liability insurance for the benefit of
its directors and certain of its officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
For the three year period ending June 30, 1999, we have issued the following
securities, none of which have been registered under the Securities Act:
1. In 1997, we authorized 10,000,000 shares of our common stock. In
February 1997, we sold to Thomas H. Lee Equity Partners, L.P. and THL-CCI
Limited Partnership 6.0% convertible exchangeable subordinated notes for $4.0
million. In October 1997, these notes, along with $7.4 million of 6.0% notes
previously issued were converted into 1,589,550 shares of our common stock.
2. In October 1997, in connection with our recapitalization, the
outstanding membership units held in our predecessor company were exchanged for
an aggregate of 366,969 shares of our common stock.
3. On October 31, 1997, we issued and sold an aggregate of 2,172,794 shares
of Series A Convertible Preferred Stock, which is convertible into an equal
number of shares of our common stock, for an aggregate purchase price of
approximately $21.0 million, or $9.65 per share, to a total of 116 accredited
investors.
4. On March 18, 1998, we issued and sold 26,000 shares of common stock for
an aggregate purchase price of approximately $250,900, or $9.65 per share, to a
total of 2 accredited investors.
5. On June 29, 1999, we issued to Magnetite Asset Investors, L.L.C., a
$10.0 million senior subordinated note bearing interest at 12.5%. In connection
with this financing, on June 29, 1999, we issued a warrant to purchase an
aggregate of 107,983 shares of our common stock to Magnetite Asset Investors,
L.L.C. with an exercise price of $0.01 per share.
6. From January 1, 1999 to June 30, 1999, we issued to our employees,
officers, directors and consultants options to purchase an aggregate of 400,150
shares of our common stock, at exercise prices ranging from $6.67 per share to
$8.00 per share.
The sales of securities set forth in paragraphs 1-5 above are deemed to be
exempt from the registration requirements of the Securities Act in reliance on
Section 4(2) thereof as transactions by an issuer not involving a public
offering. The granting of stock options described in paragraph 6 above did
II-2
<PAGE>
not require registration under the Securities Act, or an exemption therefrom,
insofar as such grants did not involve a "sale" of securities as such term is
used in Section 2(3) of the Securities Act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
NO. DESCRIPTION OF DOCUMENTS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Form of Amended and Restated Certificate of Incorporation of the Registrant
3.2 Form of Amended and Restated Bylaws of the Registrant
4.1* Form of Stock Certificate
5.1 Form of Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation
10.1 Lease by and between Holrod Associates and Thursday's Supper Pub, Inc. assigned to Manhattan Ocean Club
Associates, dated August 31, 1983, including all amendments thereto.
10.2 Lease by and between Beekman Tenants Corporation and White &Witkowsky, Inc., dated November 1, 1991
10.3 Lease by and between Rockefeller Center North, Inc. and White & Witkowsky, Inc., dated June 21, 1988
10.4 Lease by and between the City of Miami Beach and Specialty Restaurants Corporation, dated February 8,
1985, including all addendums thereto
10.5 Lease by and between Marina City Hotel Enterprises, L.L.C. and S&W Chicago, L.L.C., dated July 31, 1997
10.6 Lease with an option to purchase by and between The Somphone Limited Partnership and S&W of Las Vegas,
L.L.C., dated February 9, 1998, including amendments, guaranty and exhibits thereto
10.7 Specific Assignment, Subordination and Attornment Agreement by and among S&W D.C., L.L.C., 1112
Nineteenth Street Associates and Aid Associates for Lutherans, dated September 18, 1998
10.8 Lease Agreement by and between 1112 Nineteenth Street Associates and S&W D.C., L.L.C., dated July 8,
1998, including amendments, guaranty and exhibits thereto.
10.9 Lease Agreement by and between Pennsylvania Plaza Associates
10.10 Management Agreement by and between 37 East 50th Street Corporation and Restaurant Group Management
Services, L.L.C., dated April 18, 1996
10.11 Sale and License Agreement by and between St. James Associates and The New York Restaurant Group, LLC,
dated August 16, 1996
10.12 Limited Partnership Agreement of St. James Associates by and between Smith & Wollensky Operating
Corporation, Chamblair Realty Inc. and those individuals listed in Amendment 6 thereto, dated September
12, 1997
10.13 Management Agreement dated February 26, 1991, among Stillman's First and Nabil Chartouni and Fouad
Chartouni, the owners of The Post House, as amended
10.14 Sub-management Agreement dated June 9, 1995 between Mrs. Parks Management Company, L.L.C., our wholly
owned subsidiary, and Doubletree Partners, the manager of the Doubletree Hotel
10.15 $15,000,000 Loan Agreement between The New York Restaurant Group, Inc. and Fleet Bank, N.A., dated
September 1, 1998, as amended.
10.16 $10,000,000 Senior Subordinated Note Purchase Agreement between The New York Restaurant Group, Inc. and
Magnetite Asset Investors, L.L.C., dated June 29, 1999
10.17 Registration Rights Agreement by and among The New York Restaurant Group, L.L.C., affiliates of the
Thomas H. Lee Company, and Management Stockholders, dated January 1, 1996
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
NO. DESCRIPTION OF DOCUMENTS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.18* Shareholders' Agreement by and among The New York Restaurant Group, Inc., Alan Stillman, Thomas H. Lee
Equity Partners, L.P., THL-CCI Limited Partnership and persons listed as shareholders on the counterpart
signature pages thereto, dated October 31, 1997
10.19 Employment Agreement with Alan Stillman
10.20 Non-Competition Agreement with Alan Stillman
10.21 1996 Option Plan
10.22 1997 Stock Option Plan
10.23* 1999 Stock Option Plan
10.24* 1999 Employee Stock Purchase Plan
10.25* 1999 Non-Employee Director Stock Option Plan
21.1* Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
23.2 Consent of Goldstein Golub Kessler LLP
23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-4)
27.1 Financial Data Schedule
99.1* Consent of Prospective Director
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing the specified in the underwriting agreement, certificates in such
denomination and registered in such names as required by the underwriter to
permit proper delivery to each purchaser.
The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of his registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective; and (2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it, The New York Restaurant Group, Inc. meets all of
the requirements for filing on Form S-1 and has duly caused this registration
statement on Form S-1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in New York, NY, on July 26, 1999.
<TABLE>
<S> <C> <C>
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ ALAN N. STILLMAN
------------------------------------------
Alan N. Stillman, Chief Executive Officer
</TABLE>
We, the undersigned officers and directors of The New York Restaurant Group,
Inc. hereby severally constitute and appoint Alan Stillman and Mark Levine and
each of them singly, to sign for us and in our names in the capacities indicated
below, the Registration Statement on Form S-1 filed herewith and any and all
pre-effective and post-effective amendments to said Registration Statement, and,
in connection with any registration of additional securities pursuant to Rule
462(b) under the Securities Act of 1933, to sign any abbreviated registration
statement and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, in each case, with
the Securities and Exchange Commission, and generally to do all such things in
our names and on our behalf in our capacities with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ ALAN N. STILLMAN Chairman of the Board,
- ------------------------------ Chief Executive Officer July 26, 1999
Alan N. Stillman and Director (principal
executive officer)
/s/ MARK K. LEVINE Chief Financial Officer,
- ------------------------------ Treasurer and Executive July 26, 1999
Mark K. Levine Vice President Finance
(principal financial and
accounting officer)
/s/ JAMES M. DUNN Director
- ------------------------------ July 26, 1999
James M. Dunn
/s/ THOMAS H. LEE Director
- ------------------------------ July 26, 1999
Thomas H. Lee
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ EUGENE I. ZURIFF Director
- ------------------------------ July 26, 1999
Eugene I. Zuriff
/s/ RICHARD S. LEFRAK Director
- ------------------------------ July 26, 1999
Richard S. LeFrak
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
NO. DESCRIPTION OF DOCUMENTS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Form of Amended and Restated Certificate of Incorporation of the Registrant
3.2 Form of Amended and Restated Bylaws of the Registrant
4.1* Form of Stock Certificate
5.1 Form of Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation
10.1 Lease by and between Holrod Associates and Thursday's Supper Pub, Inc. assigned to Manhattan Ocean Club
Associates, dated August 31, 1983, including all amendments thereto.
10.2 Lease by and between Beekman Tenants Corporation and White &Witkowsky, Inc., dated November 1, 1991
10.3 Lease by and between Rockefeller Center North, Inc. and White & Witkowsky, Inc., dated June 21, 1988
10.4 Lease by and between the City of Miami Beach and Specialty Restaurants Corporation, dated February 8,
1985, including all addendums thereto
10.5 Lease by and between Marina City Hotel Enterprises, L.L.C. and S&W Chicago, L.L.C., dated July 31, 1997
10.6 Lease with an option to purchase by and between The Somphone Limited Partnership and S&W of Las Vegas,
L.L.C., dated February 9, 1998, including amendments, guaranty and exhibits thereto
10.7 Specific Assignment, Subordination and Attornment Agreement by and among S&W D.C., L.L.C., 1112
Nineteenth Street Associates and Aid Associates for Lutherans, dated September 18, 1998
10.8 Lease Agreement by and between 1112 Nineteenth Street Associates and S&W D.C., L.L.C., dated July 8,
1998, including amendments, guaranty and exhibits thereto.
10.9 Lease Agreement by and between Pennsylvania Plaza Associates
10.10 Management Agreement by and between 37 East 50th Street Corporation and Restaurant Group Management
Services, L.L.C., dated April 18, 1996
10.11 Sale and License Agreement by and between St. James Associates and The New York Restaurant Group, LLC,
dated August 16, 1996
10.12 Limited Partnership Agreement of St. James Associates by and between Smith & Wollensky Operating
Corporation, Chamblair Realty Inc. and those individuals listed in Amendment 6 thereto, dated September
12, 1997
10.13 Management Agreement dated February 26, 1991, among Stillman's First and Nabil Chartouni and Fouad
Chartouni, the owners of The Post House, as amended
10.14 Sub-management Agreement dated June 9, 1995 between Mrs. Parks Management Company, L.L.C., our wholly
owned subsidiary, and Doubletree Partners, the manager of the Doubletree Hotel
10.15 $15,000,000 Loan Agreement between The New York Restaurant Group, Inc. and Fleet Bank, N.A., dated
September 1, 1998, as amended.
10.16 $10,000,000 Senior Subordinated Note Purchase Agreement between The New York Restaurant Group, Inc. and
Magnetite Asset Investors, L.L.C., dated June 29, 1999
10.17 Registration Rights Agreement by and among The New York Restaurant Group, L.L.C., affiliates of the
Thomas H. Lee Company, and Management Stockholders, dated January 1, 1996
10.18* Shareholders' Agreement by and among The New York Restaurant Group, Inc., Alan Stillman, Thomas H. Lee
Equity Partners, L.P., THL-CCI Limited Partnership and persons listed as shareholders on the counterpart
signature pages thereto, dated October 31, 1997
10.19 Employment Agreement with Alan Stillman
10.20 Non-Competition Agreement with Alan Stillman
10.21 1996 Option Plan
10.22 1997 Stock Option Plan
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
NO. DESCRIPTION OF DOCUMENTS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.23* 1999 Stock Option Plan
10.24* 1999 Employee Stock Purchase Plan
10.25* Non-Employee Director Stock Option Plan
21.1* Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
23.2 Consent of Goldstein Golub Kessler LLP
23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-4)
27.1 Financial Data Schedule
99.1* Consent of Prospective Director
</TABLE>
<PAGE>
Exhibit 3.2
FORM OF AMENDED AND RESTATED
BY-LAWS
OF
THE NEW YORK RESTAURANT GROUP, INC.
(A Delaware Corporation)
<PAGE>
Effective Date: ____________
FORM OF AMENDED AND RESTATED
BY-LAWS
OF
THE NEW YORK RESTAURANT GROUP, INC.
(A Delaware Corporation)
ARTICLE 1 4
SECTION 1.1 CONTENTS 4
SECTION 1.2 CERTIFICATE IN EFFECT 4
ARTICLE 2 4
SECTION 2.1 PLACE 4
SECTION 2.2 ANNUAL MEETING 5
SECTION 2.3 NOTICE OF STOCKHOLDER BUSINESS 5
SECTION 2.4 SPECIAL MEETINGS 6
SECTION 2.5 NOTICE OF MEETINGS 7
SECTION 2.6 AFFIDAVIT OF NOTICE 7
SECTION 2.7 QUORUM 7
SECTION 2.8 VOTING REQUIREMENTS 8
SECTION 2.9 PROXIES AND VOTING 8
SECTION 2.10 ACTION WITHOUT MEETING 8
SECTION 2.11 STOCKHOLDER LIST 9
SECTION 2.12 RECORD DATE 10
ARTICLE 3 11
SECTION 3.1 NUMBER; ELECTION AND TERM OF OFFICE 11
SECTION 3.2 DUTIES 11
SECTION 3.3 COMPENSATION 12
SECTION 3.4 RELIANCE ON BOOKS 12
ARTICLE 4 12
SECTION 4.1 PLACE 12
SECTION 4.2 ANNUAL MEETING 12
SECTION 4.3 REGULAR MEETINGS 13
SECTION 4.4 SPECIAL MEETINGS 13
SECTION 4.5 QUORUM 13
SECTION 4.6 ACTION WITHOUT MEETING 13
SECTION 4.7 TELEPHONE MEETINGS 14
ARTICLE 5 15
SECTION 5.1 DESIGNATION 15
SECTION 5.2 RECORDS OF MEETINGS 16
ARTICLE 6 16
SECTION 6.1 METHOD OF GIVING NOTICE 16
SECTION 6.2 WAIVER 16
ARTICLE 7 18
SECTION 7.1 IN GENERAL 18
SECTION 7.2 ELECTION OF PRESIDENT, SECRETARY AND TREASURER 18
SECTION 7.3 ELECTION OF OTHER OFFICERS 18
SECTION 7.4 SALARIES 18
SECTION 7.5 TERM OF OFFICE 18
SECTION 7.6 DUTIES OF PRESIDENT AND CHAIRMAN OF THE BOARD 18
SECTION 7.7 DUTIES OF VICE PRESIDENT 19
SECTION 7.8 DUTIES OF SECRETARY 20
SECTION 7.9 DUTIES OF ASSISTANT SECRETARY 20
SECTION 7.10 DUTIES OF TREASURER 20
SECTION 7.11 DUTIES OF ASSISTANT TREASURER 21
ARTICLE 8 21
SECTION 8.1 DIRECTORS 21
SECTION 8.2 OFFICERS 22
ARTICLE 9 23
SECTION 9.1 ISSUANCE OF STOCK 23
SECTION 9.2 RIGHT TO CERTIFICATE; FORM 23
SECTION 9.3 FACSIMILE SIGNATURE 24
SECTION 9.4 LOST CERTIFICATES 24
SECTION 9.5 TRANSFER OF STOCK 24
SECTION 9.6 REGISTERED STOCKHOLDERS 25
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ARTICLE 10 25
SECTION 10.1 THIRD PARTY ACTIONS 25
SECTION 10.2 DERIVATIVE ACTIONS 26
SECTION 10.3 EXPENSES 27
SECTION 10.4 AUTHORIZATION 27
SECTION 10.5 ADVANCE PAYMENT OF EXPENSES 27
SECTION 10.6 NON-EXCLUSIVENESS 28
SECTION 10.7 INSURANCE 28
SECTION 10.8 CONSTITUENT CORPORATIONS 28
SECTION 10.9 ADDITIONAL INDEMNIFICATION 29
ARTICLE 11 29
ARTICLE 12 29
ARTICLE 13 29
ARTICLE 14 30
ARTICLE 15 30
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THE NEW YORK RESTAURANT GROUP, INC.
FORM OF AMENDED AND RESTATED BY-LAWS
ARTICLE 1
CERTIFICATE OF INCORPORATION
SECTION 1.1 CONTENTS. The name, location of principal office and purposes
of the Corporation shall be as set forth in its Certificate of Incorporation.
These By-Laws, the powers of the Corporation and of its Directors and
stockholders, and all matters concerning the conduct and regulation of the
business of the Corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in said Certificate of Incorporation.
The Certificate of Incorporation is hereby made a part of these By-Laws.
SECTION 1.2 CERTIFICATE IN EFFECT. All references in these By-Laws to the
Certificate of Incorporation shall be construed to mean the Certificate of
Incorporation of the Corporation as from time to time amended, including (unless
the context shall otherwise require) all certificates and any agreement of
consolidation or merger filed pursuant to the Delaware General Corporation Law,
as amended.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 2.1 PLACE. All meetings of the stockholders may be held at such
place either within or without the State of Delaware as shall be designated from
time to time by the Board of Directors, the Chairman of the Board of Directors
or the President and stated in the notice of the meeting or in any duly executed
waiver of notice thereof.
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SECTION 2.2 ANNUAL MEETING. Annual meetings of stock holders, shall be
held on the 2nd Tuesday of April in each year, if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 10:00 A.M., or at such
other date and time as shall be designated from time to time by the Board of
Directors, the Chairman of the Board of Directors or the President and stated in
the notice of the meeting. If such annual meeting has not been held on the day
herein provided therefor, a special meeting of the stockholders in lieu of the
annual meeting may be held, and any business transacted or elections held at
such special meeting shall have the same effect as if transacted or held at the
annual meeting, and in such case all references in these By-Laws, except in this
Section 2.2, to the annual meeting of the stockholders shall be deemed to refer
to such special meeting.
SECTION 2.3 NOTICE OF STOCKHOLDER BUSINESS. To be properly brought before
the meeting, business must be of a nature that is appropriate for consideration
at an Annual Meeting and must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, or
(ii) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before the Annual Meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, each such notice must be given either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (1) with respect to a matter to be brought before an
Annual Meeting of Stockholders or a Special Meeting in Lieu of an Annual
Meeting, sixty (60) days prior to the date set forth in the By-Laws for the
Annual Meeting and (2) with respect to a
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matter to be brought before a Special Meeting of the Stockholders not in lieu of
an Annual Meeting, the close of business on the tenth day following the date on
which notice of such meeting is first given to stockholders. The notice shall
set forth (i) information concerning the stockholder, including his or her name
and address, (ii) a representation that the stockholder is entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
present the matter specified in the notice, and (iii) such other information as
would be required to be included in a proxy statement soliciting proxies for the
presentation of such matter to the meeting.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be transacted at the Annual Meeting except in accordance with the
procedures set forth in this section; provided, however, that nothing in this
section shall be deemed to preclude discussion by any stockholder of any
business properly brought before the Annual Meeting in accordance with these
By-Laws.
SECTION 2.4 SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President, the Chairman of
the Board, or by the Board of Directors and shall be called by the President or
Secretary at the request in writing of a majority of the Directors then in
office. Such request shall state the purpose or purposes of the proposed
meeting, which need not be the exclusive purposes for which the meeting is
called. The stockholder shall not have the right, in their capacity as
stockholders, to call a special meeting of the stockholders.
SECTION 2.5 NOTICE OF MEETINGS. A written notice of all meetings of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or
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purposes for which the special meeting is called, shall be given to each
stockholder entitled to vote at such meeting. Except as otherwise provided by
law, such notice shall be given not less than ten nor more than sixty days
before the date of the meeting. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
SECTION 2.6 AFFIDAVIT OF NOTICE. An affidavit of the Secretary or an
Assistant Secretary or the transfer agent of the Corporation that notice of a
stockholders meeting has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
SECTION 2.7 QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented by proxy at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, except as hereinafter provided, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 2.8 VOTING REQUIREMENTS. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon
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which by express provision of any applicable statute or of the Certificate of
Incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.
SECTION 2.9 PROXIES AND VOTING. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote the pledged shares, unless in the transfer by the pledgor on the books
of the Corporation he shall have expressly empowered the Pledgee to vote said
shares, in which case only the pledgee, or his proxy, may represent and vote
such shares. Shares of the capital stock of the Corporation owned by the
Corporation shall not be voted, directly or indirectly.
SECTION 2.10 ACTION WITHOUT MEETING. Unless otherwise provided in the
Certificate of Incorporation, until the closing of an underwritten public
offering of the Corporation's Common Stock (a "Public Offering") any action
referred or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without
vote, if a consent in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote on such action were present and voted. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
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Effective upon the closing of a Public Offering, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without vote, only if all
stockholders entitled to vote on the matter consent to the action in writing and
written consents are filed with the records of the meetings of the stockholders.
Such consents shall be treated for all purposes as a vote at a meeting.
SECTION 2.11 STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The original or duplicate stock ledger shall be the only evidence as to
who are the stockholders entitled to examine such list, the stock ledger or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 2.12 RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
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in respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
If no record date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
ARTICLE 3
DIRECTORS
SECTION 3.1 NUMBER; ELECTION AND TERM OF OFFICE. There shall be a Board
of Directors of the Corporation consisting of not less than one member, the
number of members to be determined by resolution of the Board of Directors,
unless the Certificate of Incorporation fixes
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the number of Directors, in which case a change in the number of Directors shall
be made only by amendment of the Certificate. The Board of Directors shall be
divided into such classes for such terms as are provided for in the Certificate
of Incorporation. Subject to any limitation which may be contained within the
Certificate of Incorporation, the number of the Board of Directors may be
increased at any time by vote of a majority of the Directors then in office. The
Directors shall be elected at the annual meeting of the stockholders at which
the term of office of the class to which they have been elected expires, except
as provided in paragraph (c) of Section 8.1, and each Director elected shall
hold office until his successor is elected and qualified or until his earlier
resignation or removal. Directors need not be stockholders.
SECTION 3.2 DUTIES. The business of the Corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
SECTION 3.3 COMPENSATION. Unless otherwise restricted by the Certificate
of Incorporation or these By-Laws, the Board of Directors shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as Directors. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
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SECTION 3.4 RELIANCE ON BOOKS. A member of the Board of Directors or a
member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any committee, or in relying in
good faith upon other records of the Corporation.
ARTICLE 4
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4.1 PLACE. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
SECTION 4.2 ANNUAL MEETING. The first meeting of each newly elected Board
of Directors shall be held immediately following the annual meeting of
stockholders or any special meeting held in lieu thereof, and no notice of such
meeting shall be necessary to the newly elected Directors in order legally to
constitute the meeting.
SECTION 4.3 REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board.
SECTION 4.4 SPECIAL MEETINGS. Special meetings of the Board may be called
by the President on two days' notice to each Director either personally or by
mail or by telegram; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of two
Directors unless the Board consists of only one Director, in which
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case special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of the sole Director.
SECTION 4.5 QUORUM. At all meetings of the Board a majority of the
Directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be Present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 4.6 ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
SECTION 4.7 TELEPHONE MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
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ARTICLE 5
COMMITTEES OF DIRECTORS
SECTION 5.1 DESIGNATION.
(a) The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the Directors of the Corporation. The Board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
(b) In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution
of the Board of Directors designating the committee, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-Laws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or
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authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
SECTION 5.2 RECORDS OF MEETINGS. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
ARTICLE 6
NOTICES
SECTION 6.1 METHOD OF GIVING NOTICE. Whenever, under any provision of the
law or of the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any Director or stockholder, such notice shall be given
in writing by the Secretary or the person or persons calling the meeting by
leaving such notice with such Director or stockholder at his residence or usual
place of business or by mailing it addressed to such Director or stockholder, at
his address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice to Directors may
also be given by telegram.
SECTION 6.2 WAIVER. Whenever any notice is required to be given under any
provision of law or of the Certificate of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
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ARTICLE 7
OFFICERS
SECTION 7.1 IN GENERAL. The officers of the Corporation shall be chosen
by the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Board of Directors may also choose a Chairman of the Board, one
or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. Any
number of offices may be held by the same person, unless the Certificate of
Incorporation or these By-Laws otherwise provide.
SECTION 7.2 ELECTION OF PRESIDENT, SECRETARY AND TREASURER. The Board of
Directors at its first meeting after each annual meeting of stockholders shall
choose a President, a Secretary and a Treasurer.
SECTION 7.3 ELECTION OF OTHER OFFICERS. The Board of Directors may
appoint such other officers and agents as it shall deem appropriate who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board.
SECTION 7.4 SALARIES. The salaries of all officers and agents of the
Corporation may be fixed by the Board of Directors.
SECTION 7.5 TERM OF OFFICE. The officers of the Corporation shall hold
office until their successors are chosen and qualify or until their earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time in the manner specified in Section 8.2.
SECTION 7.6 DUTIES OF PRESIDENT AND CHAIRMAN OF THE BOARD. The President
shall be the chief executive officer of the Corporation, shall preside at all
meetings of the stockholders and, if
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he is a Director, at all meetings of the Board of Directors if there shall be no
Chairman of the Board or in the absence of the Chairman of the Board, shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. The Chairman of the
Board, if any, shall make his counsel available to the other officers of the
Corporation, shall be authorized to sign stock certificates on behalf of the
Corporation, shall preside at all meetings of the Directors at which he is
present, and, in the absence of the President at all meetings of the
stockholders, and shall have such other duties and powers as may from time to
time be conferred upon him by the Directors.
SECTION 7.7 DUTIES OF VICE PRESIDENT. In the absence of the President or
in the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the President not otherwise
conferred upon the Chairman of the Board, if any, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President. The
Vice Presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
SECTION 7.8 DUTIES OF SECRETARY. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of
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the Corporation and of the Board of Directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when required.
He shall give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors, except as otherwise provided in
these By-Laws, and shall perform such other duties as may be prescribed by the
Board of Directors or President, under whose supervision he shall be. He shall
have charge of the stock ledger (which may, however, be kept by any transfer
agent or agents of the Corporation under his direction) and of the corporate
seal of the Corporation.
SECTION 7.9 DUTIES OF ASSISTANT SECRETARY. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
SECTION 7.10 DUTIES OF TREASURER. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all of his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond in such
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sum and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of this office and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
SECTION 7.11 DUTIES OF ASSISTANT TREASURER. The Assistant Treasurer, or
if there shall be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (or if there be no such determination, then
in the order of their election), shall, in the absence of the Treasurer or in
the event of his inability or refusal to act, perform the duties and exercise
the powers of the Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
ARTICLE 8
RESIGNATIONS, REMOVALS AND VACANCIES
SECTION 8.1 DIRECTORS.
(a) RESIGNATIONS. Any Director may resign at any time by giving
written notice to the Board of Directors or the President or the Secretary. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
(b) REMOVALS. Subject to any provisions of the Certificate of
Incorporation, any Director or the entire Board of Directors may be removed with
or without cause, at any meeting called for the purpose, by vote of the holders
of a majority of the shares entitled to vote for the election of Directors, or a
majority vote of the Board of Directors. This Section 8.1(b) may not
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be altered, amended or repealed except by the holders of a majority of the
shares of stock issued and outstanding and entitled to vote for the election of
the Directors.
(c) VACANCIES. Vacancies occurring in the office of Director and
newly created Directorships resulting from any increase in the authorized number
of Directors shall be filled by a majority of the Directors then in office,
though less than a quorum, unless previously filled by the stockholders entitled
to vote for the election of Directors, and the Directors so chosen shall hold
office subject to the By-Laws until the next annual meeting of Stockholders at
which the term of office of the class to which they have been elected expires
and until their successors are duly elected and qualify or until their earlier
resignation or removal. If there are no Directors in office, then an election of
Directors may be held in the manner provided by statute.
SECTION 8.2 OFFICERS. Any officer may resign at any time by giving
written notice to the Board of Directors or the President or the Secretary. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. The Board of Directors may, at any meeting
called for the purpose, by vote of a majority of their entire number, remove
from office any officer of the Corporation or any member of a committee, with or
without cause. Any vacancy occurring in the office of President, Secretary or
Treasurer shall be filled by the Board of Directors and the officers so chosen
shall hold office subject to the By-Laws for the unexpired term in respect of
which the vacancy occurred and until their successors shall be elected and
qualify or until their earlier resignation or removal.
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ARTICLE 9
CERTIFICATE OF STOCK
SECTION 9.1 ISSUANCE OF STOCK. The Directors may, at any time and from
time to time, if all of the shares of capital stock which the Corporation is
authorized by its Certificate of Incorporation to issue have not been issued,
subscribed for, or otherwise committed to be issued, issue or take subscriptions
for additional shares of its capital stock up to the amount authorized in its
Certificate of Incorporation. Such stock shall be issued and the consideration
paid therefor in the manner prescribed by law.
SECTION 9.2 RIGHT TO CERTIFICATE; FORM. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a Vice
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation; provided that the Directors may provide by one or more
resolutions that some or all of any or all classes or series of the
Corporation's stock shall be uncertified shares. Certificates may be issued for
partly paid shares and in such case upon the face or back of the certificates
issued to represent any such partly paid shares, the total amount of the
consideration to be paid therefor, and the amount paid thereon shall be
specified.
SECTION 9.3 FACSIMILE SIGNATURE. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
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SECTION 9.4 LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
SECTION 9.5 TRANSFER OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 9.6 REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
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<PAGE>
ARTICLE 10
INDEMNIFICATION
SECTION 10.1 THIRD PARTY ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
SECTION 10.2 DERIVATIVE ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation,
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<PAGE>
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 10.3 EXPENSES. To the extent that a Director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
SECTION 10.4 AUTHORIZATION. Any indemnification under Sections 10.1 and
10.2 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
Director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 10.1 and 10.2.
Such determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or proceeding, or (b) if
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<PAGE>
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested Directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
SECTION 10.5 ADVANCE PAYMENT OF EXPENSES. Expenses incurred by an officer
or Director in defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of such officer or Director to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article 10. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
SECTION 10.6 NON-EXCLUSIVENESS. The indemnification provided by this
Article 10 shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 10.7 INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
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<PAGE>
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article 10.
SECTION 10.8 CONSTITUENT CORPORATIONS. The Corporation shall have power
to indemnify any person who is or was a director, officer, employee or agent of
a constituent corporation absorbed in a consolidation or merger with this
Corporation or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in the same manner as hereinabove
provided for any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
SECTION 10.9 ADDITIONAL INDEMNIFICATION. In addition to the foregoing
provisions of this Article 10, the Corporation shall have the power, to the full
extent provided by law, to indemnify any person for any act or omission of such
person against all loss, cost, damage and expense (including attorney's fees) if
such person is determined (in the manner prescribed in Section 10.4 hereof) to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the Corporation.
ARTICLE 11
EXECUTION OF PAPERS
Except as otherwise provided in these By-Laws or as the Board of
Directors may generally or in particular cases otherwise determine, all deeds,
leases, transfers, contracts, bonds, notes, checks, drafts and other instruments
authorized to be executed on behalf of the Corporation shall be executed by the
President or the Treasurer.
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<PAGE>
ARTICLE 12
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE 13
SEAL
The Corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the word "Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE 14
OFFICES
In addition to its principal office, the Corporation may have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE 15
AMENDMENTS
Except as otherwise provided herein, these By-Laws may be altered,
amended or repealed or new By-Laws may be adopted by the stockholders or by the
Board of Directors, when such power is conferred upon the Board of Directors by
the Certificate of Incorporation, at any regular meeting of the stockholders or
of the Board of Directors, or at any special meeting of the stockholders or of
the Board of Directors if notice of such alteration, amendment, repeal or
adoption of new By-Laws is contained in the notice of such special meeting, or
by the written consent of a majority in interest of the outstanding voting stock
of the Corporation or by the
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<PAGE>
unanimous written consent of the Directors. If the power to adopt, amend or
repeal by-laws is conferred upon the Board of Directors by the Certificate of
Incorporation, it shall not divest or limit the power of the stockholders to
adopt, amend or repeal by-laws. HWD: 393499-1
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<PAGE>
Exhibit 5.1
__________, 1999
The New York Restaurant Group, Inc.
1114 First Avenue
New York, NY 10021
Ladies and Gentlemen:
We have acted as counsel to The New York Restaurant Group, Inc., a
Delaware corporation (the "Company"), in connection with proceedings being taken
to register under the Securities Act of 1933, as amended, up to __________
shares of the Company's Common Stock, $.01 par value per share (the "Common
Stock") pursuant to a Registration Statement on Form S-1 (File No. 333- ) (the
"Registration Statement").
As such counsel, we have examined (i) certain corporate records of the
Company, including its Amended and Restated Certificate of Incorporation, its
Amended and Restated Bylaws, stock records and Minutes of Meetings of its Board
of Directors; (ii) a Certificate of the Secretary of State of the State of
Delaware as to the legal existence of the Company; and (iii) such other
documents as we have deemed necessary as a basis for the opinions hereinafter
expressed.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that:
1. The Company is a validly existing corporation under the laws
of the State of Delaware.
2. The Company, as of the effective date of the foregoing
Articles of Amendment, will be authorized to issue 20,000,000
shares of Common Stock, par value $.01 per share, and
1,000,000 shares of Preferred Stock, par value $.01 per share.
3. When issued and sold under the circumstances contemplated in
the Registration Statement, the shares of Common Stock offered
by the Company will be duly authorized, validly issued, fully
paid and nonassessable.
<PAGE>
The New York Restaurant Group, Inc.
_________, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement.
Very truly yours,
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
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<PAGE>
Exhibit 10.1
[The Real Estate Board of New York, Inc.]
Agreement of Lease, made as of the 31st day of August 1983, between HOLROD
ASSOCIATES, a New York Limited partnership, having an office at 643 Madison
Avenue, New York, New York 10022 party of the first part, hereinafter referred
to as OWNER and THURSDAY'S SUPPER PUB, INC., a New York limited partnership,
having an office at 57 West 58th Street, New York party of the second part,
hereinafter referred to as TENANT.
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner the
premises described in Article 40 hereof (hereinafter called the "demised
premises") and shown on Exhibit A annexed hereto and made a part hereof in the
building known as 57 West 58th Street, in the Borough of Manhattan, City of New
York, for the term of twenty (20) years (or until such term shall sooner cease
and expire as hereinafter provided) to commence on the first (1st) day of
September nineteen hundred and eighty-three, and to end on the thirty-first
(31st) day of August two thousand and three both dates inclusive, at an annual
rental (herein called "Fixed Minimum Rent") of TWO HUNDRED TWENTY-FIVE
($225,000) DOLLARS subject to adjustment as hereinafter provided in Article 43
of this lease
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent: 1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy: 2. Tenant shall use and occupy demised premises for the use and
purposes set forth in Article 41 of this lease,
and for no other purpose. Tenant shall at all times conduct its business in a
high grade and reputable manner, shall not violate Article 37 hereof, and shall
keep show windows and signs in a neat and clean condition.
Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent. Subject to the prior written consent
of Owner, (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED) and
to the provisions of this article, Tenant at Tenant's expense, may make
alterations, installations, additions or improvements which are
non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved by Owner (WHICH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD OR DELAYED) Tenant shall, before making any
alterations, additions, installations or improvements, at its expense, (WITH
OWNER'S COOPERATION, IF OWNER PREVIOUSLY APPROVED SAID ALTERATIONS,
ADDITIONS, INSTALLATIONS [ILLEGIBLE]) obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Owner and
Tenant agrees to carry and will cause Tenant's contractors and
sub-contractors to carry such workman's compensation, general liability,
personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of
which the same forms a part, for work claimed to have done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within ten days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon
installation become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner shall inform Tenant when
such installations are approved by Owner that Owner elects to relinquish
Owner's rights thereto and to have them removed by Tenant, in which event,
the same shall be removed from the premises by Tenant prior to the expiration
of the lease, at Tenant's expense. Nothing in this article shall be construed
to give Owner title to or to prevent Tenant's removal of trade fixtures owned
by Tenant moveable office furniture and equipment, but upon removal of any
such from the premises or upon removal of other installations as may be
required by Owner, Tenant shall immediately and at its expense, repair and
store the premises to the condition existing prior to installation and repair
any damage to the demised premises or the building due to such removal. All
property permitted or required to be removed by Tenant at the end of the term
remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Owner, either be retained as Owner's property or
may be removed from the premises by Owner at Tenant's expense.
Reports:
4. Owner shall maintain and repair the public portions of the building, both
exterior and interior except that if Owner allows Tenant to erect on the outside
of the building a sign or signs, or a hoist, lift or sidewalk elevator for the
exclusive use of Tenant. Tenant shall maintain such exterior installations in
good appearance and shall cause the same to be operated in a good and
workmanlike manner and shall make all repairs thereto necessary to keep same in
good order and condition, at Tenant's own cost and expense, and shall cause the
same to be covered by the insurance provided for hereafter in Article 8. Tenant
shall, throughout the term of this lease, take good care of the demised premises
and the fixtures and appurtenances therein, and the sidewalks adjacent thereto,
and it its sole cost and expense, make all non-structural repairs thereto
(except such repairs as are necessitated by Owner's improper actions) and when
needed to preserve them in good working order and condition, reasonable wear and
tear, obsolescence and damage from the elements, fire or other casualty,
excepted. If the demised premises be or become infested with vermin, Tenant
shall at Tenant's expense, cause the same to be exterminated from time to time
to the satisfaction of Owner. Except as specifically provide in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for the
diminuation of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. The provisions of this
article 4 with respect to the making of repairs shall not apply in the case of
fire or other casualty which are dealt with in article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the New York State Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
Requirements of Law, Fire Insurance:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
<PAGE>
rules and regulations of the New York Board of Fire Underwriters or the
Insurance Services Office, or any similar body which shall impose any violation,
order or duty upon Owner or Tenant with respect to the demised premises, and
with respect to the portion of the sidewalk adjacent to the premises, if the
premises are on the street level, whether or not arising out of Tenant's use or
manner of use thereof, or with respect to the building if arising out of
Tenant's use or manner of use thereof, or with respect to the building if
arising out of Tenant's use or manner of use of the premises or the building
(including the use permitted under the lease). Except as provided in Article 29
hereof, nothing herein shall require Tenant to make structure repairs or
alterations unless Tenant has by its manner of use of the demised premises or
method of operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or permit
any act or thing to be done in or to the demised premises which is contrary to
law, or which will invalidate or be in conflict with public liability, fire or
other policies or insurance at any time carried by or for the benefit of Owner.
Tenant shall pay all costs, expenses, fines, penalties or damages, which may be
imposed upon Owner by reason of Tenant's failure to comply with the provisions
of this article. If the fire insurance rate shall, at the beginning of the lease
or at any time thereafter, be higher than it otherwise would be, then Tenant
shall reimburse Owner, as additional rent hereunder, for that portion of all
fire insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant, to comply with the terms of this article. In
any action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" of rate for the building or demised premises issued by a body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rate then applicable to said premises.
Tenant's Liability Insurance Property Loss, Damage, Indemnity:
8. Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees. Owner
or its agents will not be liable for any such damage caused by other tenants or
person in, upon or about said building or caused by operations in construction
of any private, public or quasi public work. Tenant agrees, at Tenant's sole
cost and expense, to maintain general public liability insurance in standard
form in favor of Owner and Tenant against claims for bodily injury or death or
property damage occurring in or upon the demised premises, effective from the
date Tenant enters into possession and during the term of this lease. Such
insurance shall be in an amount and with carriers acceptable to the Owner. Such
policy or policies shall be delivered to the Owner. On Tenant's default in
obtaining or delivering any such policy or policies or failure to pay the
charges therefor, Owner may secure or pay the charges for any such policy or
policies and charge the Tenant as additional rent therefor. Tenant shall
indemnify and save harmless Owner against and from all liabilities, obligations,
damages, penalties, claims, costs and expenses for which Owner shall not be
reimbursed by insurance, including reasonable attorneys fees, paid, suffered or
incurred as a result of any breach by Tenant, Tenant's agents, contractors,
employees, invitees, or licensees, of any covenant on condition of this lease,
or the carelessness, negligence or improper conduct of the Tenant, Tenant's
agents, contractors, employees, invitees or licensees. Tenant's liability under
this lease extends to the acts and omissions of any subtenant, and any agent,
contractor, employee, invitee or licensee of any sub-tenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding by Counsel approved by Owner in writing, such approval not
to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give immediate notice thereof to Owner and
this lease shall continue in full force and effect except as hereinafter set
forth. (b) If the demised premises are partially damaged or rendered
partially unusable by fire or other casualty, the damages thereto shall be
repaired by and at the expense of Owner and the rent, until such repair shall
be substantially completed, shall be apportioned from the day following the
casualty according to the part of the premises which is usable. (c) If the
demised premises are totally damaged or rendered wholly unusable by fire or
other casualty or if Tenant is denied access to all of the demised premises,
then the rent shall be proportionately paid up to the time of the casualty
and thenceforth shall cease until the date when the premises shall have been
repaired and restored by Owner or subject to Owner's right to elect not to
restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised premises are damaged
in whole or in part) if the building shall be so damaged the Owner shall
decide to demolish it or to rebuild it, then, in any of [ILLEGIBLE] events,
Owner may elect to terminate this lease by written notice [ILLEGIBLE] Tenant
given within 90 days after such fire or casualty specifying [ILLEGIBLE] date
for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified such notice the
term of this lease shall expire as fully and compl[ILLEGIBLE] as if such date
were the date set forth above for the termination [ILLEGIBLE] this lease and
Tenant shall forthwith quit, surrender and vacate [ILLEGIBLE] premises
without prejudice however, to Owner's rights and reme[ILLEGIBLE] against
Tenant under the lease provisions in effect prior to [ILLEGIBLE] termination,
and any rent owing shall be paid up to such date [ILLEGIBLE] any payments of
rent made by Tenant which were on account of [ILLEGIBLE] period subsequent to
such date shall be returned to Tenant. Un[ILLEGIBLE] Owner shall serve a
termination notice as provided for her[ILLEGIBLE] Owner shall make the
repairs and restorations under the conditi[ILLEGIBLE] of (b) and (c) hereof,
with all reasonable expedition subject to de[ILLEGIBLE] due to adjustment of
insurance claims, labor troubles and ca[ILLEGIBLE] beyond Owner's control.
After any such casualty, Tenant s[ILLEGIBLE] cooperate with Owner's
restoration by removing from the prem[ILLEGIBLE] as promptly as reasonably
possible, all of Tenant's salvagable [ILLEGIBLE] inventory and movable
equipment, furniture, and other property. Tenant's liability for the rent
shall resume five (5) days after written notice from Owner that the premises
are substantially ready for Tenant's occupancy. (e) Nothing contained
hereinabove shall relieve Tenant from liability that may exist as a result of
damage from fire or other casualty. Notwithstanding the foregoing, each party
shall look first to any insurance in its favor before making [ILLEGIBLE]
claim against the other party for recovery for loss or damage resulting from
fire or other casualty, and to the extent that such insurance is in force and
collectible and to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right[ILLEGIBLE] recovery against the other or any
one claiming through or un[ILLEGIBLE] each of them by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if both
releasors' insurance policies contain a clause providing that such a release
or waiver shall not invalidate the insurance and also, provided that such a
policy [ILLEGIBLE] be obtained without additional premiums or, if such policy
may only be obtained after payment of an additional premium if Tenant
acknowledges that Owner will not carry insurance on Tenant's furniture and/or
furnishings or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Owner will not be obligated to repair any
damage thereto or replace the same. (f) Tenant hereby waives the provisions
of Section 227 of the Real Property Law and agrees that the provisions of
this article shall govern and control in lieu thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose,
then and in that event, the term of this lease shall cease and terminate from
the date of title vesting in such proceeding and Tenant shall have no claim
for the value of any unexpired term of said lease.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributes, executors, administrators,
legal representatives, successors and assigns expressly covenants that it
shall not assign, mortgage or encumber this agreement, nor underlet, or
suffer or permit the demised premises or any part thereof to be used by
others, without the prior written consent of Owner in each instance. If this
lease be assigned, or if the demised premises or any part thereof be underlet
or occupied by anybody other than Tenant, Owner may, after default by Tenant,
collect rent from the assignee, under-tenant or occupant, and apply the net
amount collected to the rent herein reserved, but no such assignment,
underletting, occupancy or collection shall be deemed a waiver of the
covenant, or the acceptance of the assignee, under tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve
Tenant from obtaining the express consent in writing of Owner to any further
assignment or underletting.
Electric Current:
[GRAPHIC OMITTED] Rider to be added if necessary.
12. Rates and conditions in respect to submer[ILLEGIBLE] or rent inclusion, as
the case may be, to be added in[ILLEGIBLE] RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to any portion
of the building or which Owner may elect to perform, in the premises, following
Tenant's failure to make repairs or perform any work which Tenant is obligated
to
<PAGE>
perform under this lease, or for the purpose of complying with laws, regulations
and other directions of governmental authorities. Tenant shall permit Owner to
use and maintain and replace pipes and conduits in and through the demised
premises and to erect new pipes and conduits. Owner may, during the progress
of any work in the demised premises, take all necessary materials and
equipment into said premises without the same constituting an eviction nor
shall the Tenant be entitled to any abatement of rent while such work is in
progress nor to any damages by reason of loss or interruption of business or
otherwise. Throughout the term hereof Owner shall have the right to enter the
demised premises at reasonable hours for the purpose of showing the same to
prospective purchasers or mortgagees of the building, and during the last six
months of the term for the purpose of showing the same to prospective
tenants. If the Tenant is not present to open and permit an entry into the
premises, Owner or Owner's agents may enter the same whenever such entry may
be necessary or permissible by master key or forcibly and provided reasonable
care is exercised to safeguard Tenant's property and such entry shall not
render Owner or its agents liable therefor, nor in any event shall the
obligations of Tenant hereunder be affected. Owner shall have the right at
any time, without the same constituting an eviction and without incurring
liability to Tenant therefor to change the arrangement and/or location of
public entrances, passageways, doors, doorways, corridors, elevators, stairs,
toilets, or other public parts of the building and to change the name, number
or designation by which the building may be known.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of, Articles 2 or 37 hereof, or of, the certificate of occupancy issued for the
building of which the demised premises are a part. Tenant has inspected the
premises and accepts them as is, subject to the riders annexed hereto with
respect to Owner's work, if any. In any event, Owner makes no representation as
to the condition of the premises and Tenant agrees to accept the same subject to
violations whether or not of record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Landlord by the sending of a written notice to Tenant
within a reasonable time after the happening of any one or more of the following
events; (1) the commencement of a case in bankruptcy or under the laws of any
state naming Tenant as the debtor; or (2) the making by Tenant of an assignment
or any other arrangement for the benefit of creditors under any state statute.
Neither Tenant nor any person claiming through or under Tenant, or by reason of
any statute or order of court, shall thereafter be entitled to possession of the
premises demised but shall forthwith quit and surrender the premises. If this
lease shall be assigned in accordance with its terms, the provisions of this
Article 16 shall be applicable only to the party then owning Tenant's interest
in this lease.
(b) It is stipulated and agreed that in the event of the termination of this
lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other
provisions of this lease, to the contrary, be entitled to recover from Tenant as
and for liquidated damages an amount equal to the difference between the rent
reserved hereunder for the unexpired portion of the term demised and the fair
and reasonable rental value of the demised premises for the same period. In the
computation of such damages the difference between any installment of rent
becoming due hereunder after the date of termination and the fair and reasonable
rental value of the demised premises for the period for which such installment
was payable shall be discounted to the date of termination at the rate of four
per cent (4%) per annum. If such premises or any part thereof be re-let by the
Owner for the unexpired term of said lease, or any part thereof, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of rent reserved upon such re-letting shall be deemed to be
the fair and reasonable rental value for the part or the whole of the premises
so re-let during the term of the re-letting. Nothing herein contained shall
limit or prejudice the right of the Owner to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed by
any statute or rule of law in effect at the time when, and governing the
proceedings in which, such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if
the demised premises become deserted; or if any execution or attachment shall
be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under Section 365 of Title 11 of the U.S. Code (Bankruptcy
Code); then, in any one or more of such events, upon Owner serving a written
(10) days notice upon Tenant specifying the nature of said default and upon
the expiration of said (10) days, if Tenant shall have failed to comply with
or remedy such default, or if the said default or omission complained of
shall be of a nature that the same cannot be completely cured or remedied
within said (10) day period, and if Tenant shall not have diligently
commenced curing such default within such (10) day period, and shall not
thereafter with reasonable diligence and in good faith proceed to remedy or
cure such default, then Owner may serve a written six (6) days notice of
cancellation of this lease upon Tenant, and upon the expiration of said six
(6) days, this lease and the term thereunder shall end and expire as fully
and completely as if the expiration of such six (6) day period were the day
herein definitely fixed for the end and expiration of this lease and the term
thereof and Tenant shall then quit and surrender the demised premises to
Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid: or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein
required after 5 days' written notice that such payment is due then and in
any of such events Owner may without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had
not been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. * after 5 days
written notice that such payment is due
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent, and additional rent, shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, (b) Owner may re-let the premises or any part or parts
thereof, either in the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in this lease,
and/or (c) Tenant or the legal representatives of Tenant shall also pay Owner
as liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the
rents collected on account of the subsequent lease or leases of the demised
premises for each month of the period which would otherwise have constituted
the balance of the term of this lease. The failure of Owner to re-let the
premises or any part or parts thereof shall not release or affect Tenant's
liability for damages. In computing such liquidated damages there shall be
added to the said deficiency such expenses as Owner may incur in connection
with re-letting, such as legal expenses, reasonable attorneys' fees,
brokerage, advertising and for keeping the demised premises in good order or
for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in this
lease. Owner, in putting the demised premises in good order or preparing the
same for re-rental may, at Owner's option, make such alterations, repairs,
replacements, and, or decorations in the demised premises as Owner, in
Owner's sole judgement, considers advisable and necessary for the purpose of
re-letting the demised premises, and the making of such alterations, repairs,
replacements, and or decorations shall not operate or be construed to release
Tenant from liability. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that
the demised premises are re-let, for failure to collect the rent thereof
under such re-letting, and in no event shall Tenant be entitled to receive
any excess, if any, of such net rent collected over the sums payable by
Tenant to Owner hereunder. In the event of a breach or threatened breach by
Tenant or any of the covenants or provisions hereof, Owner shall have the
right of injunction and the right to invoke any remedy allowed at law or in
equity as if re-entry, summary proceedings and other remedies were not herein
provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws.
<PAGE>
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of
any of the terms or provisions in any article of this lease, then, unless
otherwise provided elsewhere in this lease, Owner may immediately or at any
time thereafter and without notice perform the obligation of Tenant
thereunder, and if Owner, in connection therewith or in connection with any
default by Tenant in the covenant to pay rent hereunder, makes any
expenditures or incurs any obligations for the payment of money, including
but not limited to reasonable attorney's fees, in instituting, prosecuting or
defending any actions or proceeding, such sums so paid or obligations
incurred with interest and costs shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Owner within five (5) days of
rendition of any bill or statement to Tenant therefor, and if Tenant's lease
term shall have expired at the time of making of such expenditures or
incurring of such obligations, such sums shall be recoverable by Owner as
damages.
No Representations by Owner:
20. Neither Owner nor Owner's agents have made any representations or
promises with respect to the physical condition of the building, the land
upon which it is erected or the demised premises, the rents, leases, expenses
of operation, or any other matter or thing affecting or related to the
premises except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise except as
expressly set forth in the provisions of this lease. Tenant has inspected the
building and the demised premises and is thoroughly acquainted with their
condition, and agrees to take the same "as is" and acknowledges that the
taking of possession of the demised premises by Tenant shall be conclusive
evidence that the said premises and the building of which the same form a
part were in good and satisfactory condition at the time such possession was
so taken, except as to latent defects. All understandings and agreements
heretofore made between the parties hereto are merged in this contract, which
alone fully and completely expresses the agreement between Owner and Tenant
and any executory agreement hereafter made shall be ineffective to change,
modify, discharge or effect an abandonment of it in whole or in part, unless
such executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
End of Term:
21. Upon the expiration or other termination of the term of this lease,
Tenant shall quit and surrender to Owner the demised premises, broom clean,
in good order and condition, ordinary wear (and damage by fire or other
casualty, which are to be governed by Article 9 hereof) excepted, and Tenant
shall remove all its property. Tenant's obligation to observe or perform this
covenant shall survive the expiration or other termination of this lease. If
the last day of the term of this lease or any renewal thereof, falls on
Sunday, this lease shall expire at noon on the preceding Saturday unless it
be a legal holiday in which case it shall expire at noon on the preceding
business day.
Quiet Enjoyment:
22. Owner covenants and agrees with Tenant that upon Tenant paying the rent
and additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 33 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
Failure to Give Possession:
23. If Owner is unable to give possession of the demised premises on the date
of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants, or if the
premises are located in a building being constructed, because such building
has not been sufficiently completed to make the premises ready for occupancy
or because of the fact that a certificate of occupancy has not been procured
or for any other reason, Owner shall not be subject to any liability for
failure to give possession on said date and the validity of the lease shall
not be impaired under such circumstances, nor shall the same be construed in
any wise to extend the term of this lease, but the rent payable hereunder
shall be abated (provided Tenant is not responsible for the inability to
obtain possession) until after Owner shall have given Tenant written notice
that the premises are substantially ready for Tenant's occupancy. If
permission is given to Tenant to enter into the possession of the demised
premises or to occupy premises other than the demised premises prior to the
date specified as the commencement of the term of this lease. Tenant
covenants and agrees that such occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this lease, except as to the
covenant to pay rent. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of
Section 223-a of the New York Real Property Law.
No Waiver:
24. The failure of Owner to seek redress for violation of, or to insist upon
the strict performance of any covenant or condition of this lease or of any
of the Rules or Regulations set forth or hereafter adopted by Owner, shall
not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this
lease shall be deemed to have been waived by Owner unless such waiver be in
writing signed by Owner. No payment by Tenant or receipt by Owner of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other
than on account of the earliest stipulated rent, nor shall any endorsement or
statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such
rent or pursue any other remedy in this lease provided. No act or thing done
by Owner or Owner's agents during the term hereby demised shall be deemed in
acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of
Owner or Owner's agent shall have any power to accept the keys of said
premises prior to the termination of the lease and the delivery of keys to
any such agent or employee shall not operate as a termination of the lease or
a surrender of the premises.
Waiver of Trial by Jury:
25. It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against
the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant. Tenant's use of or occupancy of said
premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Owner commences any summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding.
Inability to Perform:
26. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenant and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment
or fixtures if Owner is prevented or delayed from so doing by reason of
strike or labor troubles, government preemption in connection with a National
Emergency or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions
of supply and demand which have been or are affected by war or other
emergency, or when, in the judgement of Owner, temporary interruption of such
services is necessary by reason of accident, mechanical breakdown, or to make
repairs, alterations or improvements.
Bills and Notices
27. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall
be deemed sufficiently given or rendered if, in writing, delivered to Tenant
or sent by registered or certified mail addressed to Tenant and the time of
the rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant or mailed, as herein provided. Any notice by Tenant to Owner must be
served by registered or certified mail addressed to Owner at the address
first hereinabove given or at such other address as Owner shall designate by
written notice.
Water Charges:
28. If there is not currently a water meter in the demised premise which
measures all of Tenant's consumption of water in the Building then and in
that event, Tenant shall, as part of Tenant's Work (hereinafter defined) and
at Tenant's sole cost and expense install such Throughout the duration of
Tenant's occupancy Tenant shall keep said meter and installation equipment in
good working order and repair at Tenant's own cost and expense. Tenant agrees
to pay for water consumed, as shown on said meter as and when bills are
rendered. Tenant covenants and agrees to pay the sewer rent, charge or any
other tax, rent, levy or charge which now or hereafter is assessed, imposed
or a lien upon the demised premises or the realty of which they art part
pursuant to law, order or regulation made or issued in connection with the
use, consumption, maintenance or supply of water, water system or sewage or
sewage connection or system.
Sprinklers:
29. Anything elsewhere in this lease to the contrary notwithstanding, if the
New York Board of Fire Underwriters or the Insurance Services Office or any
bureau, department or official of the federal, state or city government
require or recommend the installation of a sprinkler system or that any
changes, modifications, alterations, or additional sprinkler heads or other
equipment be made or supplied in an existing sprinkler system by reason of
Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, changes, modifications, alterations,
additional sprinkler heads or other such equipment, become necessary to
prevent the imposition of a penalty or charge against the full allowance for
a sprinkler system in the fire insurance rate set by any said Exchange or by
any fire insurance company. Tenant shall, at Tenant's expense, promptly make
such sprinkler system installations, changes, modifications, alterations, and
supply additional sprinkler heads or other equipment as
<PAGE>
required whether the work involved shall be structural or non-structural in
nature. Tenant shall pay to Owner as additional rent 36% of the contract
price for sprinkler supervisory service on the first day of each month during
the term of this lease.
Heat, Cleaning:
30. As long as this lease is in full force and effect. Owner shall, if and
insofar as existing facilities permit furnish heat to the demised premises,
during the hours that the demised premises are open to the public.
Tenant shall at Tenant's expense, keep demised premises clean and in order,
to the satisfaction to Owner, and if demised premises are situated on the
street floor, Tenant shall, at Tenant's own expense, make all repairs and
replacements to the sidewalks and curbs adjacent thereto, and keep said
sidewalks and curbs free from snow, ice, dirt and rubbish. Tenant shall
independently, contracting for the removal of Tenant's refuse and rubbish and
the removal of such refuse and rubbish shall be subject to such rules and
regulations as, in the judgement of Owner, are necessary for the proper
operation of the building.
Security:
31. If, as and when Tenant deposits any money with Owner as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease, the same shall be held by Owner in accordance with
the terms and provisions of this Article. It is agreed that in the event
Tenant defaults in respect of any of the terms, provisions and conditions of
this lease, including, but not limited to, the payment of rent and additional
rent. Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional
rent or any other sum as to which Tenant is in default or for any sum which
Owner may expend or may be required to expend by reason of Tenant's default
in respect of any of the terms, covenants and conditions of this lease,
including but not limited to, any damages or deficiency in the re-letting of
the premises, whether such damages or deficiency accrued before or after
summary proceedings or other re-entry by Owner. In the event that Tenant
shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this lease, the security shall be returned to
Tenant after the date fixed as the end of the lease and after delivery of
entire possession of the demised premises to Owner. In the event of the sale
of the land and building or leasing of the building, of which the demised
premises form a part, Owner shall have the right to transfer the security to
the vendor or lessee and Owner shall thereupon be released by Tenant from all
liability for the return of such security, and Tenant agrees to look to the
new Owner solely for the return of said security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
Caption:
32. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
Definitions:
33. The term "Owner" as used in this lease means only the Owner, or the
mortgages in possession, for the time being of the land and building (or the
Owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of
said land and building or of said lease, or in the event of the lease of said
building, or of the land and building, the said Owner shall be and hereby is
entirely freed and relieved of all covenants and obligations of Owner
hereunder, and it shall be deemed and construed without further agreement
between the parties or their successors in interest, or between the parties
and the purchaser, as any such sale, or the said lessee of the building, or
of the land and building, that the purchaser or the lessee of the building
has assumed and agreed to carry out any and all covenants and obligations of
Owner hereunder. The words "re-enter" and "re-entry" as used in this lease
are not restricted to their technical legal meaning. The term "business days"
as used in this lease shall exclude Saturdays (except such portion thereof as
is covered by specific hours in Article 30 hereof), Sundays and all days
designated as holidays by the applicable building service union employees
service contract or by the applicable Operating Engineers contract with
respect to HVAC service.
Adjacent Excavation - Sharing
34. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made. Tenant shall afford to the
person causing or authorized to cause such excavation, license to enter upon
the demised premises for the purpose of doing such work as said person shall
deem necessary to preserve the wall or the building of which demised premises
form a part from injury or damage and to support the same by proper
foundations without any claim for damages or indemnity against Owner, or
diminution or abatement or rent.
Rules and Regulations:
35. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully, and comply strictly with the Rules and Regulations
and such other and further reasonable Rules and Regulations as Owner or
Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter
made or adopted by Owner or Owner's agents, the parties hereto agree to
submit the question of reasonableness of such Rule or Regulation for decision
to the New York office of the American Arbitration Association, whose
determination shall be final and conclusive upon the parties hereto. The
right to dispute the reasonableness of any additional Rule or Regulation upon
Tenants part shall be deemed waived unless the same shall be asserted by
service of a notice, in writing upon Owner within ten (10) days after the
giving of notice thereof. Nothing in this lease contained shall be construed
to impose upon Owner any duty or obligation to enforce the Rules and
Regulation or terms, covenants or conditions in any other lease, as against
any other tenant and Owner shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees.
Glass:
36. Tenant shall replace, at the expense of Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the
demised premises. Tenant shall insure, and keep insured, at Tenant's expense,
all plate and other glass in the demised premises for and in the name of
Owner.
Pornographic Uses Prohibited:
37. Tenant agrees that the value of the demised premises and the reputation
of the Owner will be seriously injured if the premises are used for any
obscene or pornographic purposes of any sort of commercial sex establishment.
Tenant agrees that Tenant will not bring or permit any obscene or
pornographic material on the premises, and shall not permit or conduct any
obscene, nude, or semi-nude live performances on the premises, nor permit use
of the premises for nude modeling, rap sessions, or as a so-called rubber
goods shops, or as a sex club of any sort, or as a "massage parlor." Tenant
agrees further that Tenant will not permit any of these uses by any sublessee
or assignee of the premises. This Article shall directly bind any successors
in interest to the Tenant. Tenant agrees that if at any time Tenant violates
any of the provisions of this Article, such violation shall be deemed a
breach of a substantial obligation of the terms of this lease and
objectionable conduct. Pornographic material is defined for purposes of this
Article as any written or pictorial matter with prurient appeal or any
objects of instrument that are primarily concerned with lewd or prurient
sexual activity. Obscene material defined here as it is in Penal Law
Section 235.00.
Estoppel Certificate:
38. Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and or to
any other person, firm or corporation specified by Owner, a statement
certifying that this lease is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates which the rent and
additional rent have been paid, and stating whether or not there exists any
defaults by Owner under this lease, and, if so, specifying each such default.
Successors and Assigns:
39. The covenants, conditions and agreements contained in this lease shall
bind and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
In Witness Whereof, Owner and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
[CORP SEAL]
Witness for Owner: HOLROD ASSOCIATES
By:
- ------------------------------- ------------------------------[L.S.]
Witness for Tenant THURSDAY'S SUPPER PUB, INC. [L.S.]
By:
- ------------------------------- ------------------------------
[CORP SEAL]
<PAGE>
RIDER ANNEXED TO AND FORMING PART OF
AGREEMENT OF LEASE DATED AS OF AUGUST 31,
1983 BETWEEN HOLROD ASSOCIATES, AS OWNER,
AND THURSDAY'S SUPPER PUB, INC., AS
TENANT, RESPECTING SPACE AT 57 WEST 58th
STREET, NEW YORK, NEW YORK
-----------------------------------------
40. The demised premises shall consist of the portions of the basement,
first floor and second floor of the Building shown and designated on the plan
annexed hereto as Exhibit A and made a part hereof.
41. (a) Tenant shall use and occupy the demised premises for the following
purpose and no other purpose: the operation of a first-class restaurant serving:
(i) a full range of food items for consumption on the demised premises only; and
(ii) alcoholic beverages for consumption on the demised premises only. Tenant
warrants and covenants that the entire demised premises shall be open for
business not less than five days per week, including holidays and Saturdays,
fifty-two weeks per year, serving food items and alcoholic beverages during all
usual and customary business hours during which competitive restaurants in the
general vicinity of the demised premises (which do not serve breakfast) are open
for business each day (but not more than five days per week) except when
prevented from doing so by strikes, fires, casualties or other causes beyond
Tenant's reasonable control. Tenant agrees to operate the aforesaid restaurant
on the demised premises during the entire term of this lease and agrees to
conduct its activities and any such use in a manner consistent with the
character and setting of the Building as a first-class residence.
(b) Tenant agrees not to cause, suffer or permit any cooking or like
odors to emanate from the demised premises. Tenant agrees to provide and
maintain, at its own expense, an adequate ventilating system for this purpose.
Owner will permit Tenant to use any existing exhaust ducts serving the demised
premises, but Owner makes no representation to Tenant with respect to the
existence, adequacy or condition of any such ducts. Tenant agrees to keep such
ventilating system (and all other fixtures) in good order and repair at all
times, to provide approved grease filters and other devices to prevent the
accumulation of grease and other foreign substances in such system, and to cause
the ducts thereof to be cleaned as often as may be required to keep the same
free from grease and other foreign substances. Tenant agrees, at its own cost
and expense, to use all reasonable diligence in accordance with the best
prevailing accepted methods to prevent and exterminate vermin, rats, flies and
other insects in the demised premises. If Tenant shall fail so to do after five
(5) days notice to that effect, or shall fail to adopt and employ proper methods
therefor, Owner may, in addition to any of its other rights and/or remedies,
take such steps as it, in its sole discretion, determines are reasonably
necessary or desirable to effect such purpose; and any amounts expended by Owner
therefor plus ten percent thereof shall be repayable to it by Tenant upon demand
in accordance with statements thereof or bills or invoices therefor rendered by
Owner to Tenant and the amount of such statement, bill or invoice shall be
deemed to be and shall be paid as additional rent.
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Tenant agrees not to cause, suffer or permit: (i) any undesirable
vibrations, noises or other undesirable effects that were not previously extant
to exist in or emanate from the demised premises or any equipment or
installation therein into other portions of the Building; (ii) the demised
premises or any use thereof to constitute a nuisance or otherwise unreasonably
to interfere with or disturb in any manner the safety, comfort or enjoyment of
the Building by the other tenants and occupants thereof.
(c) Tenant shall do all things that may be required to maintain
harmonious relations with any unions representing any employees of Owner or its
underlying lessor or any other employees at the Building.
(d) Tenant, at its own cost and expense, agrees diligently to make
application for and to obtain any necessary licenses and permits in any wise
required in respect of the demised premises and/or in order that the demised
premises may be used for the purposes set forth in this Article and shall cause
all such licenses and permits to be and remain in full force and effect and not
to be violated throughout the term of this lease, including, without limitation,
the sale and consumption of liquor, beer and wine in the demised premises, and
will in good faith exercise its best efforts to obtain, and will diligently
prosecute the application therefor.
Tenant shall cause all such licenses and permits to be and remain in
full force and effect throughout the term of this lease and the suspension,
revocation or cancellation of any such license or permit without reinstatement
by Tenant after a period of 30 days shall constitute a default under this lease
(unless Tenant shall commence reinstatement proceedings within such 30 day
period and shall diligently and continuously prosecute same to successful
completion).
Tenant represents that: (i) none of its officers, directors or
shareholders have ever been denied any license by the State Liquor Authority,
and that they have not ever had any such license suspended or revoked; and (ii)
it knows of no reason why it would not be able to obtain any licenses required
to be obtained by Tenant so that the demised premises could be used for the
purposes set forth in this Article.
(e) Tenant, at its sole expense, shall comply with the rules,
regulations and orders of insurance companies, the Board of Fire Underwriters
and all governmental and quasi-governmental departments, agencies and other
entities in respect of the demised premises and/or said use or occupancy thereof
including, without limitation, rules, orders and regulations of the State Liquor
Authority and the Alcoholic Beverage Control Board, and shall indemnify and save
harmless Owner, Owner's agents and employees, of and from any claim, violation,
crime, penalty or offense arising out of the violation or alleged violation of
any law, ordinance, rule or regulation of the Board of Health, New York State
Liquor Authority or any other state or municipal Department or Agency having
jurisdiction over the demised premises or the operation by Tenant of its
business therein.
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42. (a) (1) Owner hereby consents, subject nevertheless to the provisions
of this Article and Article 3 hereof, to the making by Tenant at the
commencement of the term of this lease of certain permanent leasehold
improvements and other non-structural alterations to the demised premises and to
the performance of such work (hereinafter collectively "Tenant's Work") in
accordance with the provisions of this Article; and Tenant hereby agrees to
perform and (subject to strikes, material shortages, acts of God and similar
events beyond Tenant's control) to complete Tenant's Work before January 31,
1984 and that Tenant's Work shall include the creation and installation of a
first-class restaurant within the demised premises.
(2) Promptly after the date hereof and prior to Tenant
undertaking any work in or alterations to the demised premises, Tenant agrees to
submit to Owner for its approval (which shall not be unreasonably withheld or
delayed) two sets of complete working drawings, plans and specifications
(collectively "Tenant's Plans"), including, but not limited to all mechanical,
electrical, air conditioning and other utility systems and facilities, for the
proposed Tenant's Work, prepared by an architect and/or engineer duly licensed
as such in the State of New York. Promptly following Owner's receipt of Tenant's
Plans Owner shall review or cause to be reviewed Tenant's Plans and shall
thereupon return to Tenant one set of the same with Owner's approval or
disapproval noted thereon, and if the same shall be disapproved in any respect
Owner shall state the reason for such disapproval. In case of any such
disapproval Tenant shall, promptly after receipt thereof, cause its architect or
engineer to make such changes to Tenant's Plans as Owner shall require and
thereupon resubmit the same to Owner for its approval. Following the approval of
Tenant's Plans, as aforesaid, the same shall be final and shall not be changed
by Tenant without the prior approval of Owner (which shall not be unreasonably
withheld or delayed) except as may be required by law, and Tenant shall give
prior notice to Owner of any such changes as may be required by law and shall
promptly furnish Owner with copies of all such required changes in Tenant's
Plans. Owner's approval of Tenant's Plans or of any revisions thereto do not and
shall not constitute an opinion or agreement by Owner that the same are
structurally sufficient or that Tenant's Plans are in compliance with law, nor
shall such approval impose any present or future liability on Owner or waive any
of Owner's rights hereunder. Tenant acknowledges and agrees that Owner's
approval of Tenant's Plans shall be conditioned upon Tenant employing licensed
persons and firms (where required by law) and such labor for the performance of
Tenant's Work as will not cause any jurisdictional or other labor disputes in
the Building. In any event, all contractors and subcontractors Tenant proposes
to employ shall be bondable and shall be subject to Owner's prior approval.
(b) (1) Promptly following Owner's approval of Tenant's Plans,
Tenant shall (with Owner's cooperation) secure or cause to be secured, at
Tenant's sole cost and expense, all necessary approvals of Tenant's Plans from
all governmental authorities having jurisdiction thereover and Tenant shall also
secure or cause to be secured all permits and licenses necessary to perform
Tenant's Work and shall furnish Owner with copies of Tenant's Plans as approved
by such governmental authorities and copies of such permits and licenses. If
required, Owner shall
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join in such applications to governmental bodies as are necessary to obtain the
aforesaid licenses, approvals or permits, provided Tenant pays all costs and
expenses incurred in connection therewith and first indemnifies Owner and its
partners (in an agreement satisfactory to Owner in form and content) of, from
and against any and all liability, damage, expense or any other matter or thing
in any way relating to any such application and/or any proposed alteration.
(2) Promptly after having secured the approvals from Owner and
from the governmental authorities required under subdivision (1) of this
paragraph (b), Tenant shall enter into a construction contract which includes,
among other terms, indemnification, insurance, bonding and retainage provisions
reasonably satisfactory to Owner, and which otherwise is in compliance with the
terms of this lease, with a general contractor previously approved by Owner
(which approval shall not be unreasonably withheld or delayed) and Tenant shall
furnish Owner with a copy of such executed contract.
(3) Concurrently with the execution and delivery of this lease
by Tenant to Owner, Tenant shall deliver to Owner a personal and irrevocable
guaranty of the performance by Tenant and Tenant's agents, employees,
independent contractors and subcontractors of their responsibility to remove all
liens, of the prompt payment by Tenant for all work, labor and materials
employed in connection with Tenant's Work and of the prompt, expeditious and
workmanlike completion of Tenant's Work executed by Alan Stillman, residing at
322 East 57th Street, New York, New York, that is in the form annexed hereto as
Exhibit B and made a part hereof.
Any default by Tenant under the terms and provisions of this Article or
under Article 3 hereof shall be and be deemed to be a default by Alan Stillman
under the terms and provisions of said guaranty and any default by Alan Stillman
under the terms and provisions of said guaranty shall be and be deemed to be a
default by Tenant under the terms and provisions of this lease.
(4) Prior to commencing any work pursuant to any provisions of
this lease, Tenant shall, in addition to the other items set forth in this
paragraph or elsewhere in this Lease, furnish to Owner:
(i) a certificate evidencing that Tenant (or Tenant's
contractor) has procured worker's compensation insurance covering
all persons employed in connection with Tenant's Work who might
assert claims for death or bodily injury against Owner, Tenant or
such contractor.
(ii) such additional personal and bodily injury, property
damage and other insurance (in addition to the insurance required to
be carried by Tenant pursuant to the provisions of Article 52
hereof) as Owner may reasonably require because of the nature of
Tenant's Work.
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<PAGE>
(c) Following compliance by Tenant with its obligation under the
foregoing paragraph (b), Tenant shall promptly commence or cause to be commenced
Tenant's Work and shall complete or cause the same to be completed with
reasonable diligence and in any event (subject to strikes, material shortages,
acts of God and similar events beyond Tenant's control) before January 31, 1984,
substantially in accordance with Tenant's Plans (as approved), in a first-class,
good and workmanlike manner, and in accordance with all applicable laws,
ordinances and regulations of all governmental and insurance authorities and
with all requirements of the Board of Fire Underwriters governing the same. All
of Tenant's Work shall be performed in a manner so as to cause as little
inconvenience and disturbance as is reasonably possible to other tenants or
contractors in the Building. Tenant shall cause all construction work to be
performed in a reasonable manner; any heavy pounding or demolition work to be
performed by Tenant as part of Tenant's Work shall be performed at such times as
Owner shall specify. At all times during the progress of Tenant's Work Tenant
shall permit Owner, its architect and other representatives of Owner access to
the demised premises for the purpose of inspecting the same, verifying
conformance of Tenant's Work with Tenant's Plans and otherwise viewing the
progress of Tenant's Work.
(d) Tenant's Work shall not entail any structural changes to the
demised premises or to the Building nor shall it impair the structural soundness
of the demised premises or the Building. All of Tenant's Work shall be performed
within the demised premises and shall not interfere with or impair the use of
other portions of the Building or the services available therein, including,
without limitation, the plumbing, heating, ventilating, air conditioning and
electrical systems, by Owner or other occupants of the Building or guests
therein. All reasonable architects', engineers' or attorneys' fees incurred by
Owner in respect of this Article and any fees, costs or expenses incurred by
Owner in respect of Tenant's default under this Article shall be paid by Tenant
on demand. If Tenant shall at any time claim that Owner unreasonably withheld
its approval to any submissions under this Article or Article 3 hereof contrary
to the terms and provisions of said Articles, that question shall be determined
by arbitration and if Tenant prevails, Owner's sole liability or obligation
shall be to approve same.
(e) (1) Tenant shall pay its contractors, laborers, subcontractors,
materialmen and suppliers in accordance with their respective agreements with
Tenant, and shall not cause or suffer any liens, mortgages, chattel liens, or
other title retention or security agreements to be placed on the demised
premises, any part thereof or any fixtures attached thereto. Nothing contained
in this Article or elsewhere in this lease shall be construed in any way as
constituting any consent or authorization to Tenant to subject the land or the
Building or any part of the Building or any improvements or other personal
property therein or the interest or estate of Owner or of the lessor under any
underlying lease to any lien or charge in respect of Tenant's Work. All
contracts or agreements made by Tenant with any third party or parties in
connection with Tenant's Work (or any other alterations by Tenant which Owner
may at any time approve) shall, to the fullest extent permitted by law,
expressly provide that said third party or parties shall
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<PAGE>
look solely to Tenant for any and all payments to be made pursuant to such
contract or agreement and that neither Owner nor the lessor under any underlying
lease shall have any responsibility or liability for the payment thereof.
(2) Promptly following the completion of Tenant's Work, Tenant
shall obtain and submit to Owner copies of: (i) all final governmental and fire
underwriters' approvals or certificates evidencing the completion thereof in
compliance with all governmental and fire underwriters' requirements; (ii) the
final Certificate for Payment issued by Tenant's architect certifying that, on
the basis of an on-site inspection, Tenant's Work has been fully completed and
that the entire balance of the contract sum due the general contractor, as noted
in said final Certificate for Payment, is due and payable; (iii) the general
contractor's affidavit to the effect that all work and materials covered by the
final Application for Payment has been completed and/or installed substantially
in accordance with Tenant's Plans, or such changes thereto which Owner may have
previously approved and that the general contractor and all laborers,
materialmen and subcontractors employed by the general contractor have been paid
in full and have no claim or claims for money or otherwise against the general
contractor or Tenant, which affidavit shall be accompanied by lien releases or
such other data establishing payment or satisfaction of all obligations as Owner
may reasonably request; and (iv) Tenant's affidavit to the effect that Tenant
paid not less than $250,000 for Tenant's Work.
(f) Nothing contained in this Article shall limit or qualify the
terms, covenants, agreements, provisions and conditions of Article 3 hereof,
except as expressly and specifically set forth in this Article. The terms,
covenants, agreements, provisions and conditions of this Article are in addition
to the terms, covenants, agreements, provisions and conditions contained in
Article 3 hereof.
43. (a) (1) In addition to and not in limitation of any other provision of
this lease, it is expressly understood, acknowledged and agreed that: (i)
commencing on January 1, 1985 and annually thereafter (said date and each
anniversary thereof being herein called an "Adjustment Date") until and
including December 31, 1993 the Fixed Minimum Rent reserved hereunder shall
automatically be increased by an amount equal to fifty percent (50%) of the
product derived by multiplying the Fixed Minimum Rent reserved hereunder on the
day immediately preceding the Adjustment Date by the percentage increase, if
any, in the Consumer Price Index for the month preceding each such Adjustment
Date over the Consumer Price Index for the month immediately preceding the
preceding Adjustment Date or, in the case of the first Adjustment Date (when
there is no preceding Adjustment Date), over the Consumer Price Index for the
month of August, 1983; (ii) the Fixed Minimum Rent reserved under this lease
beginning on January 1, 1994 shall be and be deemed to be the fair market rental
value of the demised premises (the "Fair Market Rent") as the same shall be
determined in accordance with the terms and provisions of paragraph (c) of this
Article; provided, however, that if the Fair Market Rent does not exceed the sum
of the Fixed Minimum Rent as adjusted on January 1, 1993 plus the amount equal
to seventy-five (75%) of the product derived by multiplying the Fixed Minimum
Rent in effect on January 1, 1993
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<PAGE>
by the percentage increase, if any, in the Consumer Price Index for the month of
December, 1993 over the Consumer Price Index for the month of December, 1992
(the "1994 Rent") by more than ten (10%) percent thereof, then the Fixed Minimum
Rent reserved hereunder beginning on January 1, 1994 shall equal the 1994 Rent;
and (iii) commencing on January 1, 1995 and annually thereafter for the
remainder of the term of this lease (said date and each anniversary thereof
being herein called a "Change Date"), the Fixed Minimum Rent reserved hereunder
shall automatically be increased by an amount equal to seventy-five percent
(75%) of the product derived by multiplying the Fixed Minimum Rent reserved
hereunder on the day immediately preceding the Change Date by the percentage
increase, if any, in the Consumer Price Index for the month preceding each such
Change Date over the Consumer Price Index for the month immediately preceding
the preceding Change Date or, in the case of the first Change Date (when there
is no preceding Change Date), over the Consumer Price Index for the month of
December, 1993.
(2) As used in this Article, "Consumer Price Index" shall mean
the Consumer Price Index for all Urban Consumers published by the Bureau of
Labor Statistics of the United States Department of Labor for the New York
Northeastern New Jersey Area, all items (1967=100), or any successor thereto.
In the event that the Consumer Price Index is converted to a different standard
reference base or otherwise revised in the terms or number of kind or items
contained therein or otherwise, the determination of the increased Fixed Minimum
Rent shall be made with the use of such conversion factor, formula or table for
converting the Consumer Price Index as may be published by the Bureau of Labor
Statistics or, if said Bureau shall not publish the same, then with the use of
such conversion factor, formula or table as may be published by Prentice-Hall,
Inc. or any other nationally recognized publisher or similar statistical
information, or if a conversion factor, formula or table is unavailable, Owner
shall use any other method to adjust the Consumer Price Index, or any successor
thereto, to the figure that would have been arrived at had the manner of
computing the Consumer Price Index not been altered. If the Consumer Price Index
ceases to be published on a monthly basis, then the shortest period for which
the Consumer Price Index is published which includes the relevant months shall
be used. If the Consumer Price Index ceases to be published, and there is no
successor thereto, such other index as Owner and Tenant shall agree upon in
writing shall be substituted for, the Consumer Price Index. If Owner and Tenant
cannot agree on an index within sixty (60) days after the Consumer Price Index
ceases to be published then the index to be used in its stead shall be
established by arbitration.
(3) In no event shall the Fixed Minimum Rent, as originally
provided to be paid under this lease or as thereafter increased pursuant to
adjustments under this paragraph or otherwise, be reduced for any reason
whatsoever.
(4) Any delay or failure of Owner in computing or billing for
the adjustments of Fixed Minimum Rent hereinabove set forth shall not constitute
a waiver of or in any way impair the continuing obligation of Tenant to pay such
adjustments hereunder from and after the date the same become effective in
accordance with the terms of this lease and for the period in this lease set
forth.
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<PAGE>
(b) Notwithstanding anything hereinbefore to the contrary contained:
(i) Tenant's obligation to pay Fixed Minimum Rent shall not commence until
November 1, 1983 (the rent that would have been due for the months of September
and October, 1983 being hereinafter sometimes referred to as the "Waived Rent");
and (ii) Tenant shall be entitled to defer payment of the Fixed Minimum Rent
reserved under this lease for November and December, 1983, and January, l984,
(the "Deferred Rent") such that the Deferred Rent shall become due and payable
in twelve (12) equal monthly installments beginning on February 1, 1984 and on
the first day of each month thereafter until and including January 1, 1985
provided, however, that: (x) if Tenant shall have defaulted beyond any
applicable grace or cure period in the performance of any of its obligations
hereunder, including without limitation, its obligations under Article 42
hereof, respecting Tenant's Work, then the Waived Rent shall become immediately
due and payable and the provision in this paragraph contained respecting the
deferral of rent shall not apply; and/or (y) if the demised premises are open to
the public at any time prior to January 31, 1984 (the "Opening Date"), then and
under such circumstances, notwithstanding anything in this paragraph (b) to the
contrary, Fixed Minimum Rent shall be due and payable from and after the Opening
Date.
(c) (1) If Owner and Tenant are unable, on or before November 15,
1993 to: (i) reach agreement as to the Fair Market Rent; and (ii) mutually
execute and deliver a supplementary agreement, in form and content reasonably
satisfactory to Owner's attorneys, specifying the Fair Market Rent, then such
rent shall be determined as in this paragraph (c) provided. In no case, however,
shall the Fair Market Rent be less than the 1994 Rent.
(2) In the event that the Fair Market Rent is to be determined
in accordance with the provisions of this subdivision, the following procedure
shall be utilized: Tenant shall appoint a disinterested person with at least ten
(10) years professional service as a licensed real estate broker in the State of
New York who has been involved in the appraisal and rental of retail restaurant
space in the Borough of Manhattan for not less than five (5) years to serve as
an appraiser on its behalf and shall give notice thereof to Owner on or before
November 15, 1993. Owner shall, within fifteen (15) days after receiving said
notice appoint a second disinterested person having qualifications similar to
those of the appraiser appointed by Tenant to serve as appraiser on its behalf
and shall give written notice thereof to Tenant. If either Owner or Tenant fails
or neglects to timely appoint an appraiser, pursuant to the foregoing, then and
in such event the other party shall select a person to serve as the appraiser
not so selected by the first party, and upon such selection, such appraiser
shall be deemed to have been selected by the first party. The appraisers thus
appointed shall appoint a third disinterested person, who shall be a real estate
broker licensed as such in the State of New York actively engaged in the rental,
sale and appraisal of restaurant space in the Borough of Manhattan for not less
than ten (10) years. If the appraisers thus appointed by Owner and Tenant shall
fail to appoint such third disinterested appraiser (who is amenable to serving
as such) within fifteen (15) days after the appointment of two appraisers, then
either Owner or Tenant may,
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by application to the president of The Real Estate Board of New York, Inc. seek
the appointment of such third disinterested person. Upon such appointment, such
person shall be the third appraiser as if appointed by the original two
appraisers. Each appraiser shall, after the appointment of the third appraiser,
render in writing to Owner and Tenant its own independent appraisal of what the
annual fair market rental value of the demised premises would be were the same
then ready to be leased and dedicated as a first class restaurant free of all
liens and encumbrances of any kind for the remainder of the term together with
an affidavit that his appraisal is an independently determined bona fide
estimate. The sum of the amounts specified in each of the three appraisals shall
be divided by three and the quotient of such division shall be the annual Fair
Market Rent. Said quotient shall conclusively be and be deemed to be the Fair
Market Rent and shall be binding on Owner and Tenant. The cost and expense of
each of the appraisers appointed (or which should have been appointed) by Owner
and Tenant shall be borne by Owner and Tenant respectively and the cost and
expense of the third appraiser shall be shared equally by Owner and Tenant,
unless this lease expressly provides otherwise. Owner and Tenant agree to sign
all documents and to do all other things necessary to submit the question of the
amount of the Fair Market Rent to the appraisers and further agree to, and
hereby do, waive any and all rights they or either of them may at any time have
to revoke their agreement under this Article.
(3) If, for any reason whatsoever, the Fair Market Rent shall
not have been determined on or before January 1, 1994, then in that event,
pending the determination of the Fair Market Rent, Tenant shall pay rent in an
amount equal to the 1994 Rent (as the same shall be determined in accordance
with the terms and provisions of item (ii) of subdivision (1) of paragraph (a)
of this Article without regard to subdivisions (1) and (2) of this paragraph
(c)), without prejudice to the rights of Owner to claim a deficiency in the rent
so paid following the determination of the Fair Market Rent, and such deficiency
shall be paid by Tenant to Owner on the date when the next succeeding
installment of Fixed Minimum Rent shall become due following the rendition by
Owner to Tenant of a written statement setting forth such deficiency.
44. (a) For the purposes of this Article, the following quoted words,
terms, or phrases shall have the meaning in this paragraph (a) ascribed to them:
(1) "Base Tax Year" shall mean the calendar year 1983; (2) "Building" shall mean
the building in which the premises hereby demised are located and the land upon
which such building is situated; and (3) "Tenant's Percentage" shall mean
eighteen percent (18%); except, however, if the Building is converted to
condominium ownership then, and in that event, from and after the date of such
conversion, Tenant's Percentage shall mean thirty-six percent (36%).
(b) (1) In the event that the real estate taxes payable with respect
to the Building for any fiscal tax year (July 1 through June 30) in which this
lease shall be in effect (or a portion of such fiscal tax year, on a pro rata
basis when appropriate), shall be greater than the amount of such taxes (on a
pro rata basis, when appropriate) due and payable during the Base Tax Year,
whether by reason of an increase in either the tax
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rate or the assessed valuation, or both, or by reason of the levy, assessment or
imposition of any tax on real estate as such, ordinary or extraordinary, not now
levied, assessed or imposed, or for any other reason, Tenant shall pay and does
covenant to pay to Owner upon being billed therefor, as additional rent, an
amount equal to Tenant's Percentage of the increase in the amount of such tax or
installment over the corresponding tax or installment for the Base Tax Year.
Tenant shall also pay and does covenant to pay to Owner, as additional rent,
upon being billed therefor, an amount equal to Tenant's Percentage of any
assessment or installment thereof for public betterments or improvements which
may be levied upon or in respect of the Building. Owner may take the benefit of
the provisions of any statute or ordinance permitting any such assessment to be
paid over a period of time and in such event Tenant shall be obligated to pay
Tenant's Percentage of the installments of any such assessments which shall
become due and payable during the term of this lease. Upon request, Owner shall
furnish Tenant with a copy of the real estate tax bill for any fiscal tax year
in which Tenant is hereunder required to pay additional rent.
Notwithstanding the foregoing, if at any time during the term
of this lease the Building is converted to condominium ownership or the retail
and commercial areas of the Building (the "Lower Unit") are assessed separately
from the residential portions of the Building, then from and after such separate
assessment, Tenant shall pay Tenant's Percentage of any increase in the amount
of real estate taxes payable with respect to the Lower Unit for any fiscal tax
year over the amount of such taxes due and payable with respect to the Lower
Unit during the Base Tax Year. For the purposes of the foregoing calculation,
the amount of real estate taxes payable with respect to the Lower Unit during
the Base Tax Year shall be deemed to equal the product of: (i) the amount of
real estate taxes payable with respect to the entire Building during the Base
Tax Year; and (ii) the fraction, the numerator of which is the amount of real
estate taxes payable with respect to the Lower Unit during the first full fiscal
tax year in which the Lower Unit is separately assessed and the denominator of
which is the amount of real estate taxes payable with respect to the Lower Unit
and all other units in the Building during the first full fiscal year in which
the Lower Unit is separately assessed.
(2) Notwithstanding anything in subdivision (1) of this
paragraph (b) to the contrary, it is understood and agreed that if Owner shall
receive a refund of any portion of real estate taxes in respect of which Tenant
shall have paid additional rent under subdivision (1) of this paragraph (b),
then and under such circumstances and if this lease shall then be in full force
and effect without default on the part of Tenant beyond any applicable grace and
cure period, Tenant shall be entitled to a credit against future payments of
additional rent under subdivision (1) of this paragraph (b) in an amount equal
to Tenant's Percentage of such refund, after first deducting from such total
refund all fees, costs and expenses incurred by Owner in collecting same. If at
the expiration of the term of this lease any credit to which Tenant might be
entitled pursuant to the preceding sentence shall not have been used as a credit
as in such sentence provided, then and under such circumstances and subsequent
to Tenant properly vacating the demised premises as
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herein provided and as long as Tenant is not otherwise in default hereunder
beyond any applicable grace or cure period, Tenant shall be entitled to a
payment equal to the amount of any such remaining credit. If the taxes for the
Base Tax Year shall be reduced by certiorari proceedings or otherwise, Owner
shall be entitled to recalculate the additional rent in respect of any fiscal
tax year after the Base Tax Year that would have been payable by Tenant
hereunder in accordance with subdivision (1) of this paragraph (b) had such
reduction occurred or been known at or prior to the time additional rent for
any such fiscal tax year was being originally calculated, and Tenant agrees to
pay any additional rent resulting from such recalculation.
(c) If this lease shall commence on a date other than the beginning
of a fiscal tax year or shall end on a date other than the end of a fiscal tax
year, then the additional rent payable under this Article for such years shall
be prorated. Tenant's obligation to pay such additional rent shall survive the
expiration or sooner termination of the term of this lease. For the nonpayment
of any additional rent Owner shall have the same remedies, rights and privileges
that Owner has for the non-payment of the Fixed Minimum Rent reserved hereunder.
Receipt and acceptance by Owner of any installment of Fixed Minimum Rent
reserved under this lease or any of the additional rent that may be required to
be paid by Tenant under this lease, shall not be or be deemed to be a waiver of
any other additional rent or Fixed Minimum Rent then or thereafter due and no
delay in determining the amount of any additional rent due pursuant to this
Article or otherwise shall be or be deemed to be a waiver of Owner's rights
thereto.
(d) (1) Owner, at its option, shall be entitled to charge, receive
and collect from Tenant and Tenant agrees to pay to Owner on the first day of
each month during each fiscal tax year an amount equal to 1/12th of 110% of the
additional rent (considered as an annualized figure) hereunder required to be
paid by Tenant to Owner for the preceding fiscal tax year, it being further
understood and agreed that if the precise amount of additional rent required to
be paid by Tenant for such fiscal tax year shall ultimately be determined to be
in excess of the amount theretofore paid by Tenant hereunder, Tenant shall
forthwith pay to Owner the amount of such excess, and if such determination
shall be that Tenant paid more than the precise amount of additional rent
required to be paid by Tenant for such fiscal tax year, the amount of such
excess shall be credited to future payments of additional rent required to be
paid by Tenant hereunder or, if the term hereof shall have ended and no
additional rent shall be due or owing, then subsequent to Tenant properly
vacating the demised premises as herein provided and as long as Tenant is not
otherwise in default hereunder beyond any applicable grace or cure period, such
excess shall be paid to Tenant.
(2) Additionally, any time that it becomes evident to Owner
that monthly payments under this paragraph (d) will be insufficient to satisfy
Tenant's additional rental obligations under this lease, Owner, on notice to
Tenant may appropriately increase the monthly payments hereunder and Tenant
agrees to pay same.
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45. Tenant acknowledges and represents to Owner that it has inspected and
examined, or caused to be inspected and examined, the Building and the demised
premises and that it is fully familiar and satisfied with the physical condition
thereof, and Tenant does hereby agree to accept the same in their existing
condition and state of repair "as is", and Owner shall have no obligation to do
any work or make any installation or alteration of any kind to the Building or
the demised premises to prepare the same for Tenant's occupancy or otherwise.
Nor shall Owner at any time during the term of this lease have any obligation to
make any repairs within the demised premises, and all such repairs of any kind
or nature shall be made by Tenant at its sole cost and expense; but nothing in
this sentence shall alter any express obligations of Owner as same may be
elsewhere set forth in this lease.
46. Anything contained in Article 30 hereof to the contrary
notwithstanding, Tenant agrees to keep and cause to be kept closed all windows
in the demised premises and at all times to cooperate fully with Owner and to
otherwise abide by all reasonable regulations and requirements which Owner may
prescribe to permit the proper functioning and protection of the heating system
of the Building. Owner reserves the right to stop such system when necessary by
reason of accident or emergency or for repairs, alterations, replacements or
improvements which in the reasonable judgment of Owner are desirable or
necessary to be made and until said repairs, alterations, replacements or
improvements shall have been completed, Owner shall have no responsibility or
liability for failure to supply heat during said period, or when prevented from
so doing by any cause beyond Owner's control or by any laws, orders, rules,
requirements or regulations of any governmental authority having jurisdiction
thereover and Tenant shall not be entitled to any diminution or abatement of
rent by reason of the stoppage of such heat for any of the aforesaid reasons or
for any other reason whatsoever nor shall the same in any wise affect the
obligation of Tenant to perform and fulfill its covenants and agreements under
this lease. Tenant shall furnish air conditioning for the demised premises at
its sole cost and expense and Owner shall have no obligation or liability with
respect thereto to any extent whatsoever.
47. Tenant shall purchase and receive gas and electricity for the demised
premises directly from the public utility company serving the Building, and
Tenant shall pay directly to such utility company all charges for Tenant's gas
and electricity consumption as measured by separate meter(s). Unless meter(s)
are already installed, same shall be installed by and at the expense of Tenant.
Owner shall permit Owner's pipes, conduits and electrical conductors, to the
extent available and suitably and safely capable, to be used for the purpose of
supplying gas and electricity to the demised premises. Owner shall not in any
way be liable or responsible to Tenant for any loss, damage or expense which
Tenant may sustain or incur if during the term of this lease, either the quality
or type of gas or electricity is changed or is no longer available for Tenant's
requirements. Tenant represents that it has inspected and is satisfied with the
gas service and electrical power now available within and for the demised
premises.
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48. Whenever Owner is required or desires to send any notice or other
communication to Tenant under or pursuant to this lease, it is understood and
agreed that such notice or communication, if sent by Owner's attorneys or any
other of Owner's agents (of whose agency Owner shall have advised Tenant in
writing), shall, for all purposes, be deemed to have been sent by Owner. A copy
of all such notices shall be sent to Tenant's attorney provided Owner shall have
received written notice of said attorney's name and address. No notice or other
communication to Owner under or pursuant to this lease shall be effective unless
a copy thereof is sent by registered or certified mail to Owner's attorney
(provided Tenant shall receive written notice of said attorney's name and
address). Until further notice, for the purposes hereof Owner's attorney is:
Kramer, Levin, Nessen, Kamin & Frankel, 919 Third Avenue, New York, New York
10022, attn: Michael Paul Korotkin, Esq.
49. (a) Anything contained in Article 11 hereof to the contrary
notwithstanding, Owner agrees that it will not unreasonably withhold or delay
its consent to an assignment of this lease made in connection with a bona fide
sale by Tenant of the restaurant business operated in the demised premises,
provided proof shall have been furnished to Owner, in form reasonably
satisfactory to Owner, that: (i) the proposed purchaser is an established
restaurant operator; (ii) such sale shall have been duly approved by all
licensing authorities whose approval is a legal prerequisite to such sale and/or
the operation of a first class restaurant in the demised premises by the
assignee; and (iii) the proposed purchaser will agree (in a writing reasonably
satisfactory to Owner's counsel) to operate a first class restaurant serving a
full range of food items and alcoholic beverages for the balance of the term of
this lease.
(b) (1) The granting of Owner's consent to an assignment of this
lease pursuant to paragraph (a) of this Article and the effectiveness of any
such assignment shall be conditioned upon Tenant delivering or causing to be
delivered to Owner: (i) a duly executed and acknowledged assignment of this
lease, in form reasonably satisfactory to Owner, by the terms of which Tenant
shall assign to the assignee its entire interest in this lease, together with
all prepaid rents hereunder; (ii) a duly executed and acknowledged assumption
agreement executed by the assignee, in form reasonably satisfactory to Owner, by
the terms of which the assignee shall: (x) expressly assume and agree to
perform, directly for the benefit of Owner, all of the terms, convenants and
conditions of this lease on the part of the Tenant to be performed; (y) consent
to all of the provisions of this lease; and (z) acknowledge and agree that the
demised premises shall be used and occupied for the purposes set forth in
Article 41 hereof and for no other purpose; (iii) affidavits from Tenant and the
assignee stating that the lease is in full force and effect without default of
any kind on the part of Owner (or setting forth any claimed default) and setting
forth the amount of the Fixed Minimum Rent in effect on the day before and the
day after the effective date of such assignment; and (iv) a clean,
unconditional, irrevocable, transferable commercial letter of credit in form
reasonably acceptable to Owner, issued by a bank in The City of New York,
acceptable to Owner, in the amount of $100,000 to be held by Owner in accordance
with the terms and provisions of Article 31 hereof as security for the faithful
per-
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formance and observance by Tenant of the terms, provisions and conditions of
this lease. Said letter of credit shall provide for payment thereunder upon
presentation by Owner or any partner or officer of Owner, or any successor in
interest to Owner, to such bank of a sight draft and shall also provide for the
continuance of such credit for a period of at least one year from the date of
issuance. Tenant agrees to deliver to Owner, at least thirty (30) days prior to
the date on which said letter of credit expires, an extension of said letter of
credit or a new or substitute letter of credit from year to year, which
extended, new or substitute letter of credit shall be alike in substance and
issued by a bank acceptable to Owner. If Tenant fails to deliver any such
extended, new or substitute letter of credit as aforesaid, such failure will be
a default under this lease and Owner may elect to draw on the letter of credit
then in effect and hold the proceeds thereof (less any and all reasonable costs
incurred by Owner in drawing on or cashing said letter of credit) in accordance
with the provisions of Article 31 hereof and pursue any and all other rights and
remedies under this lease or at law, in equity or otherwise. In the event that
any default beyond any applicable grace or cure period occurs as provided in
this lease, Owner may draw on said letter of credit, and the unexpended proceeds
of said letter of credit (less any and all reasonable costs incurred by Owner in
drawing on or cashing said letter of credit), if any, shall then be held as
security as provided in Article 31 hereof. If Owner at any time utilizes any
portion of the security in respect or by reason of a default by Tenant, Tenant
shall, within ten (10) days after demand, restore and pay Owner the amount so
utilized.
(2) Upon the granting of Owner's consent to an assignment of
this lease pursuant to paragraph (a) of this Article and the delivery to Owner
of the items referred to in subdivision (1) of paragraph (b) of this Article and
provided Tenant is not in default hereunder, Owner shall, on the effective date
of the aforesaid assignment, deliver to Tenant a certificate stating that to the
best of Owner's knowledge Tenant is not in default hereunder. From and after the
effective date of the assignment and provided Tenant has complied with each and
every one of its obligations under Article 42 hereof and completed Tenant's
Work, the assignor shall be released from liability under this lease except with
respect to its obligations under this Article, and Articles 57 and 62 hereof.
(c) If there is an assignment of this lease at any time prior to the
fulfillment by Tenant of every one of its obligations under Article 42 hereof
then, in addition to the other terms and conditions in this Article and in
Article 11 hereof set forth, as a further condition to the effectiveness of such
assignment, Owner shall be paid (prior to the date on which it is contemplated
that such assignment is to become effective) an amount equal to forty (40%)
percent of the total consideration (less the bona fide and reasonable brokerage
commission and legal fees paid by Tenant in connection with such assignment) to
be paid by the assignee in connection with such assignment to the extent that
said consideration exceeds $300,000 plus the New Business Loss Factor. The New
Business Loss Factor shall be equal to the lesser of: (i) $100,000 or (ii) the
product of (a) $25,000; and (b) the number of months in which Owner has received
the total amount of Fixed Minimum Rent and additional rent due
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hereunder. The effectiveness of any such assignment shall be further conditioned
upon the delivery to Owner prior to the effective date of such assignment of
certifications by Tenant and the assignee (in the form of affidavits) stating
the total consideration paid and payable to Tenant in respect of the assignment.
(d) The term "assignment" as used in this lease: (i) shall include
any dissolution, merger, consolidation or other reorganization of any corporate
Tenant, or any pledge of its capital stock, or any sale or transfer of a
controlling interest in its capital stock; (ii) shall not include an assignment
to a corporation in which Alan Stillman, his wife or children (or a trust of
which they are the sole beneficiaries) have a controlling interest; (iii) shall,
if Tenant is a partnership, include any change in the general partner in such
partnership; (iv) shall, if Tenant is a partnership, include any change in the
limited partners in such partnership that results in Alan Stillman, his wife or
children (or a trust of which they are the sole beneficiaries) having less than
a 25% interest in such partnership; and (v) shall not include an assignment to a
partnership in which Alan Stillman (or a corporation in which Alan Stillman, his
wife or children have the controlling interest) is the sole general partner and
in which he or said corporation has a 25% or larger interest. The term
"controlling interest", as used herein, shall mean the direct ownership of stock
possessing, and of the right to exercise, fifty (50%) percent of the total
combined voting power of all classes of stock of such corporation, issued,
outstanding and entitled to vote for the election of directors. No consent to an
assignment shall relieve Tenant from the requirement that it obtain consent to
each subsequent purported assignment. If a dispute arises as to whether Owner
has withheld its consent hereunder unreasonably, that question shall be
submitted to arbitration and if Tenant prevails, Owner's sole liability will be
to grant such consent.
(e) Tenant acknowledges and agrees that if there is an assignment of
this lease (except an assignment to Alan Stillman individually) before July 1,
1988: (i) then from and after the effective date of such assignment the Fixed
Minimum Rent shall be the greater of: (x) the then applicable Fixed Minimum
Rent; and (y) the Fair Market Rent as the same shall have been determined by
agreement between Owner and Tenant prior to the date that is thirty (30)
business days before the effective date of the assignment or in accordance with
the procedure set forth in subdivision (2) of paragraph (c) of Article 43 hereof
provided, however, that if the Fair Market Rent does not exceed the then Fixed
Minimum Rent by more than ten percent (10%) thereof, the Fixed Minimum Rent then
in effect, subject to the adjustments set forth in subdivision (i) of paragraph
(a) of Article 43 hereof, will remain in effect without regard to the Fair
Market Rent; and (ii) the date "January 1, 1985" and the words "of August, 1983"
appearing in item (i) of subdivision (1) of paragraph (a) of Article 43 of this
lease will be altered to read "the first day of the month immediately preceeding
the date that this lease is assigned" and "that is twelve (12) months prior to
the month in which this lease is assigned" respectively.
(f) (1) Owner and Tenant agree that concurrently, with the execution
and delivery of this lease a memorandum of
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this lease (the "Memorandum of Lease") in the form annexed hereto as Exhibit C
and made a part hereof shall be executed by the parties hereto and delivered to
Owner's attorneys to be held in escrow pursuant to the escrow agreement annexed
hereto as Exhibit D and made a part hereof.
(2) Notwithstanding any provision of this lease to the
contrary, in connection with the initial assignment of this lease pursuant to
paragraph (a) of this Article in connection with a bona fide sale by Tenant of
its entire business, Owner agrees to the recordation of the Memorandum of Lease
and the placement thereon of a leasehold mortgage solely for the purpose of
better-securing the purchase-money obligation which is owing to Tenant in
connection with such sale of the business provided that: (i) Tenant is not in
default hereunder beyond any applicable grace or cure period and has complied
with all of its obligations under this Article; (ii) Tenant is the payee of a
note given by the purchaser to Tenant as part of the consideration for said sale
and seeks to record the Memorandum of Lease in connection with a leasehold
mortgage given solely to secure said note; (iii) the Memorandum of Lease shall
be forever subject and subordinate to any and all declarations of condominium
affecting the Building or any part thereof which includes the demised premises;
and (iv) all costs and expenses (including any taxes, recording or filing costs
and reasonable attorney's fees) incurred by Owner in connection with the
Memorandum of Lease shall be borne and paid for by Tenant.
(3) The term "leasehold mortgage" as used in this subdivision
refers exclusively to the type of mortgage contemplated and sanctioned in
subdivision (2) of this paragraph. The holder of a leasehold mortgage is
hereinafter referred to as a "leasehold mortgagee". If, before any default shall
have occurred under this lease, Owner shall receive a notice specifying the name
and address of a leasehold mortgagee, thereafter Owner shall, when notifying
Tenant of a default hereunder, notify such leasehold mortgagee of the same at
the address set forth in the notice received from such leasehold mortgagee.
Owner shall accept performance by any such leasehold mortgagee (within the
applicable grace or cure period) of any covenant, condition, or agreement on
Tenant's part to be performed hereunder if, at the time of such performance,
Owner shall be furnished with evidence reasonably satisfactory to Owner that the
party tendering such performance is a leasehold mortgagee. No modification of
this lease shall be effective as against a leasehold mortgagee unless said
leasehold mortgagee consents in writing thereto, which consent shall not be
unreasonably withheld or delayed. If this lease shall be cancelled or
terminated, Owner shall give notice thereof to any leasehold mortgagee who shall
have notified Owner of its name and address prior to such cancellation or
termination. Owner shall, if request is received from a leasehold mortgagee
within twenty (20) days after notice is given to such leasehold mortgagee that
this lease is cancelled or terminated, enter into a lease (the "New Lease") with
said leasehold mortgagee for the remainder of the term of this lease upon the
covenants, terms, conditions, limitations and agreements herein contained
provided that: (i) not more than one leasehold mortgagee requests to so enter
into a lease with Owner; (ii) said leasehold mortgagee shall have cured any and
all defaults which would then exist under this lease which could be cured with
the
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payment of money or the performance of work or both including, without
limitation, defaults in the payment of all Fixed Minimum Rent and additional
rent to the end of the first month after the commencement date of the New Lease
were this lease still in full force and effect; (iii) said leasehold mortgagee
shall have paid to Owner all of the costs and expenses, including without
limitation, reasonable legal fees and disbursements, incurred by Owner in
connection with the cancellation or termination of this lease and the
preparation, execution and delivery of the New Lease; and (iv) nothing contained
herein or in the New Lease shall or shall be deemed to impose any obligation on
Owner to deliver possession of the demised premises to any leasehold mortgagee.
(g) Except as expressly modified by this Article all of the terms
and provisions of Article 11 hereof shall remain unchanged and in full force and
effect.
50. Anything contained in this lease to the contrary notwithstanding, it
is specifically agreed that there shall be no personal liability on Owner or on
any disclosed or undisclosed principal of Owner or on any limited or general
partner, officer, director or shareholder of Owner in respect of any of the
terms, covenants and provisions of this lease; in the event of a breach or
default by Owner in any of its obligations under this lease, Tenant agrees to
look solely to the equity of Owner in the Building for the satisfaction of
Tenant's remedies or for the collection of any judgment (or other judicial award
to Tenant) requiring the payment of money by Owner, and no other assets or
property of Owner and no assets or property of any partner (limited or general),
officer, director, shareholder or principal (disclosed or undisclosed) of Owner
shall be subject to levy, execution or other procedure for the satisfaction of
same.
51. This lease and all rights of the Tenant hereunder are subject and
subordinate to any and all mortgages or deeds of trust now affecting the demised
premises or the real property of which the demised premises forms a part, and to
any institutional renewals, modifications, consolidations, replacements or
extensions of any mortgages as well as to any declaration of condominium or
institutional mortgages or deeds of trust which may hereafter affect the demised
premises or the Building. This Article is self-operative and no further
instrument of subordination is required. Tenant shall, however, within five (5)
days following request therefor execute, acknowledge and deliver to Owner an
instrument evidencing or confirming this subordination and, if Tenant shall fail
to do so, Owner is hereby irrevocably authorized (as attorney-in-fact, coupled
with an interest) to execute, acknowledge and deliver any such instrument for
and on behalf of and in the name of Tenant.
Without limiting or otherwise affecting the above and/or other
subordination provisions of this lease, Owner shall use its best efforts to
obtain a written agreement, in form and substance reasonably satisfactory to the
holder of a mortgage or deed of trust now or hereafter affecting the demised
premises to which this lease is or shall be subordinate, from the holder of said
mortgage or deed of trust to the effect that as long as Tenant is not in default
under the provisions of this lease, notwithstanding any default in such mortgage
and any foreclosure thereof, the enforcement by the holder thereof of any rights
thereunder or otherwise, this lease shall remain in full force and effect and
Tenant shall be permitted to remain in possession of the demised
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premises through the term of this lease, subject to the rights of Owner
contained in this lease in the event of any default of Tenant hereunder,
provided Tenant executes such instrument to confirm its obligations hereunder
and Tenant agrees to enter into any such agreement so obtained by Owner and to
attorn to any such mortgagee or a purchaser at a foreclosure sale. In the event
Owner is unsuccessful in obtaining such agreement from the holders of
institutional mortgages or deeds of trust which may hereafter affect the demised
premises or the Building, Tenant may, at its sole cost and expense, seek to
obtain the same. In the event Owner is successful in obtaining such agreement
from the holders of non-institutional mortgages or deeds of trust which may
hereafter affect the demised premises or the Building then this lease and all of
Tenant's rights hereunder shall be subject and subordinate to such mortgages or
deeds of trust but if Owner is unsuccessful in obtaining such agreement from the
holders of non-institutional mortgages or deeds of trust which may hereafter
affect the demised premises or the Building then this lease shall not be
subordinate to such non-institutional mortgages or deeds of trust. For the
purpose of this Article institutional refers to: savings banks, savings and loan
associations, commercial banks or trust companies (whether acting individually
or in a fiduciary capacity), insurance companies (whether acting individually or
in a fiduciary capacity) organized and existing under the laws of the United
States, any state thereof or a foreign state, real estate investment trusts
(that are publicly held or controlled), religious, educational or eleemonsynary
institutions having a net worth of $100,000,000.00 or more, employee benefit,
pension or retirement plans or funds having a net worth of $100,000,000.00 or
more, any combination of the foregoing or any other institution which at the
time in question is generally regarded in the financial community as an
institutional lender.
Owner confirms that on the date as of which this lease has been executed,
Owner is the fee title owner of the Building.
52. (a) Tenant shall provide and keep in force for the benefit of Owner
and Tenant jointly, as their respective interests may appear, insurance covering
all personal property, trade fixtures, equipment and contents owned by Tenant
and located in the demised premises, against loss or damage by fire, casualty,
and all risks comprehended within the so-called extended coverage endorsements
on fire policies (as such endorsements may from time to time be customarily
written for properties of the same or similar type) to the extent of the full
replacement cost thereof.
(b) Tenant shall provide and keep in force for the benefit of Owner
and Tenant, comprehensive general public liability insurance protecting Owner
and Tenant, as their respective interests may appear, against any and all
liability (including, without limitation, loss or liability under the Dram Shop
Act) in amounts of not less than $3,000,000.00 in respect of injuries or death
to any one person, $5,000,000.00 in respect of any one accident or disaster, and
in the amount of not less than $2,000,000.00 in respect of destruction or damage
to property, and such policies shall cover the entire demised premises as well
as the sidewalks in front thereof and adjacent thereto.
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(c) Tenant shall provide and keep in force workmen's compensation
and disability insurance subject to statutory limits covering all of Tenant's
employees.
(d) Tenant shall provide and keep in force for the benefit of Owner
and Tenant such other insurance as Owner may, from time to time, reasonably
require.
(e) At least twenty (20) days prior to the expiration of each such
policy, Tenant shall pay the premiums for renewal insurance and within such
period shall deliver to Owner the original policy with the endorsement thereon
marked "PAID" and/or duplicate receipts evidencing payment thereof. All such
policies shall be written by insurers licensed to do business in the State of
New York, shall be in form reasonably acceptable to Owner and shall contain
agreements by the insurers that such policies shall not be cancelled or
materially altered, except upon ten (10) days prior written notice to Owner.
(f) Tenant shall pay all premiums and charges for all of such
policies, and if Tenant shall fail to make any such payment when due, or carry
any such policy, Owner may, but shall not be obligated to make such payment, or
carry such policy and the amounts paid by Owner, with interest thereon from the
date of payment, shall become due and payable by Tenant as additional rent with
the next succeeding installment of Fixed Minimum Rent which shall become due
after such payment by Owner; but payment by Owner of any such premiums or the
carrying by Owner of any such policy shall not be deemed to waive or release the
default of Tenant with respect thereto, or the right of Owner to take such
action as may be permissible hereunder as in the case of default in the payment
of Fixed Minimum Rent.
(g) Tenant and Owner shall cooperate in connection with the
collection of any insurance proceeds that may be due, including the execution,
acknowledgment and delivery by Tenant to Owner of such proofs of loss and other
instruments which may be required for the purpose of obtaining the recovery of
any such insurance proceeds. In the event that either party hereto is paid by
its insurance carrier for any work paid for by the other party hereto, the
amount so received (less the cost of collection thereof) shall be paid to the
party incurring the expense of the work, but in no event shall such payment
exceed the sum actually paid for such work.
53. All cleaning and janitorial services in respect of the demised
premises, its windows and the sidewalks adjoining the demised premises shall be
done by (and shall be the sole responsibility of) Tenant at its sole expense.
54. Tenant shall give prompt notice to Owner of any fire, accident, loss,
damage, dangerous or defective condition in, to or of the demised premises or
any part thereof or the fixtures or other property of Owner therein. Such notice
shall not, however, be deemed or construed to impose upon Owner any obligation
to perform any work to be performed by Tenant under this lease.
55. (a) (1) Tenant acknowledges that Tenant has been informed by Owner
that the Building and the respective apartments
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and commercial space therein are or may be undergoing substantial renovation,
repairs and rehabilitation during the term hereof and that such renovation,
repairs and rehabilitation may result in certain inconveniences or disturbances
to Tenant and other occupants of the Building. Tenant agrees that the
performance of any of such work shall not constitute or be deemed to be a
constructive eviction or be grounds for a termination of this lease or the term
hereof, nor shall the same in any way affect the obligations of Tenant under
this lease, including, without limitation, the obligation to pay the rents
reserved herein, or give Tenant the right to claim damages from Owner or Owner's
agents or contractors. Owner reserves the right to make any changes to the
Building, and Tenant agrees it shall at no time raise any objection thereto or
make any claim by reason thereof. Owner shall use reasonable efforts to minimize
any interruption of Tenant's business caused by such work.
(2) Notwithstanding the provisions of subdivision (1) of this
paragraph, if Owner commences exterior renovation work on the 58th Street side
of the Building which requires a sidewalk bridge or scaffolding in front of the
main entrance to the demised premises and said scaffolding is not removed at or
prior to the Opening Date and causes Tenant to defer the Opening Date then,
provided Tenant shall have completed Tenant's Work and otherwise complied with
and fulfilled each and every one of its obligations under Article 42 hereof,
Tenant shall not be required to pay Fixed Minimum Rent until such sidewalk
bridge or scaffolding is removed from in front of said main entrance.
(b) Neither Owner nor Owner's agents shall incur any liability to
Tenant for failure to abate any nuisance or noise created or permitted by any
other occupant of the Building, and no act or thing done by any other occupant
shall constitute or be deemed to be a constructive eviction, in whole or in
part, or shall in any way affect the obligations of Tenant under this lease,
including, but not limited to, the obligation to pay the rents reserved herein.
56. Owner's right to enter the demised premises to perform work, make
repairs and to install and maintain pipes and conduits therein (which right is
hereby confirmed without imposing any duties or obligations on Owner to so enter
the demised premises, perform work, make repairs or install or maintain pipes
and conduits) shall be subject to the following conditions except in emergencies
(when such right shall be unconditional and unrestricted):
(a) any pipes or conduits so installed shall, where practicable, be
concealed under floors, behind walls or in ceilings or closets, provided that if
such concealment adds to the cost of the installation, the additional cost shall
be borne or paid for by Tenant on demand;
(b) Owner shall give Tenant prior oral notice of its intent to enter
the demised premises;
(c) Owner shall perform all work, make all repairs and install all
pipes and conduits that it is otherwise obligated to perform, make or install in
a manner designed to minimize
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interference with Tenant's permitted business operations (although Owner shall
not thereby be required to incur any additional cost or expense whatsoever
unless Tenant requests Owner to do so and, promptly upon demand, pays or
reimburses Owner for all of such costs and expenses); and
(d) any work, repairs and installations Owner elects to make shall
not materially reduce the usable floor area of the demised premises.
57. Tenant represents and warrants to Owner that no broker was consulted
by Tenant in connection herewith nor had any part in bringing about this lease
transaction. Tenant agrees to hold harmless and indemnify Owner from and against
any and all liabilities and expenses, including (without limitation) legal fees,
in connection with any claim for commissions, compensation or otherwise in
connection with the bringing about of this lease transaction and/or the
consummation thereof, which may be made by any person, firm or corporation
claiming to have dealt with Tenant.
58. In such cases where this lease expressly provides for the settlement
of a dispute or question by arbitration, and only in such cases, the same shall
be settled by arbitration in the Borough of Manhattan, City and State of New
York, in accordance with the rules then obtaining of the American Arbitration
Association, governing commercial arbitration. In the event that the American
Arbitration Association shall not be then in existence, the party desiring
arbitration shall appoint a disinterested person as arbitrator on its behalf and
give notice thereof to the other party who shall, within fifteen (15) days
thereafter, appoint a second disinterested person as arbitrator on its behalf
and give written notice thereof to the first party. The arbitrators thus
appointed shall appoint a third disinterested person, who shall be an attorney
at law admitted to the practice of his or her profession for not less than ten
(10) years. If the arbitrators thus appointed shall fail to appoint such third
disinterested person, then either party may, by application to the Presiding
Justice of the Appellate Division of the Supreme Court of the State of New York
for the First Judicial Department, seek to appoint such third disinterested
person. Upon such appointment, such person shall be the third arbitrator as if
appointed by the original two arbitrators. The decision of the majority of the
arbitrators shall be conclusive and binding on all parties and judgment upon the
award may be entered in any court having jurisdiction. If a party who shall have
the right pursuant to the foregoing, to appoint an arbitrator, fails or neglects
to do so, then and in such event the other party shall select the arbitrators
not so selected by the first party, and upon such selection, such arbitrator
shall be deemed to have been selected by the first party. The expenses of
arbitration shall be shared equally by Owner and Tenant, but each party shall
pay and be separately responsible for its own counsel and witness fees. Owner
and Tenant agree to sign all documents and to do all other things necessary to
submit any such matter to arbitration and further agree to, and hereby do, waive
any and all rights they or either of them may at any time have to revoke their
agreement hereunder to submit to arbitration and to abide by the decision
rendered thereunder and agree that a judgment or order may be entered in any
court of competent jurisdiction based on an arbitration award (including the
granting of injunctive relief).
-21-
<PAGE>
The arbitrators shall have the right to retain and consult expert and
competent authorities skilled in the matters under arbitration, but any such
consultation shall be made in the presence of both parties, with full right on
their part to cross-examine such experts and authorities. The arbitrators shall
render their decision and award not later than sixty (60) days after the
appointment of the third arbitrator. Their decision and award shall be in
writing and counterpart copies thereof shall be delivered to each of the
parties. In rendering their decision and award, the arbitrators shall have no
power to modify or in any manner alter or reform any of the provisions of this
lease, and the jurisdiction of the arbitrators is limited accordingly.
59. Supplementing Article 3 hereof, it is agreed that (except as otherwise
set forth in Article 42 hereof with respect to Tenant's Work) Tenant may make
non-structural interior alterations to the demised premises provided such
alterations: (i) cost less than $25,000 in the aggregate during any calendar
year during the term hereof; (ii) do not in any wise or manner adversely affect
the operating systems or facilities of the Building; (iii) are otherwise
performed in compliance with all provisions of this lease relating to
alterations by Tenant; (iv) Tenant is not otherwise in default under this lease
and at least twenty days prior to commencing any work pursuant to this Article,
Tenant sends Owner written notice thereof together with such additional
information as would be reasonably calculated to fully apprise Owner as to the
nature, extent and other details of such proposed alteration.
60. Supplementing Article 9 hereof, it is agreed that if the demised
premises are totally damaged or rendered wholly unusable by fire or other
casualty and are not substantially repaired within one year after such fire or
other casualty then either Owner or Tenant shall have the right, exercisable
within thirty (30) days after the first anniversary of such fire or other
casualty, to terminate this lease as of the date ten (10) days after written
notice of such election is given to the other party.
61. Article 10 hereof is hereby supplemented to add the following:
"Tenant may, if permitted by law, make a separate claim with the
condemning authority for the value of such of its trade fixtures and
business machines and equipment as are not nor ever were Owner's property
and which are taken in condemnation, provided such claim: (i) is entirely
and totally subordinate to any and all claims by Owner and/or
groundlessees or mortgagees; and (ii) in no wise or manner, to any extent
whatsoever, adversely affects the claim or claims by Owner and/or such
groundlesses or mortgagees."
62. Neither the submission of this lease form to Tenant nor the execution
of this lease by Tenant shall constitute an offer by Owner to lease the demised
premises to anyone nor to restate, modify, or amend that certain lease (the "Pub
Lease") dated as of May 19, 1976 by and between Owner, as landlord, and Tenant.
This lease shall not be or become binding upon Owner to any extent or for any
purpose unless and until it is executed by
-22-
<PAGE>
Owner and a fully executed copy thereof is delivered to Tenant. If this lease
shall be fully executed and delivered as aforesaid, then, and in that event,
this lease shall be and be deemed to be a modification and amendment of the Pub
Lease as a result of which the Pub Lease shall be restated so that the
relationship between the parties and the tenancy in respect of the demised
premises shall be governed solely by this instrument and the Pub Lease shall
have no further force or effect except that neither the execution and delivery
of this lease nor anything contained herein or otherwise shall operate to
discharge Tenant of any of its obligations to Owner under the Pub Lease and/or
in respect of the demised premises with respect to time periods before September
1, 1983.
63. If any provision of this lease shall be held invalid or unenforceable,
such invalidity or unenforceability shall affect only such provision and shall
not in any manner affect or render invalid or unenforceable any other provision
of this lease, and this lease shall be enforced as if any such invalid or
unenforceable provision were not contained herein.
64. If there shall be any conflict between any provision contained in this
Rider and the printed provisions of this lease, the provisions of this Rider
shall prevail.
-23-
<PAGE>
[GRAPHIC OMITTED]
EXHIBIT A
<PAGE>
[GRAPHIC OMITTED]
-2-
<PAGE>
GUARANTY
In consideration of, and as an inducement for the granting, execution and
delivery of that certain lease, dated as of August 31, 1983 ("Lease"), by Holrod
Associates, as Owner ("Owner") to Thursday's Supper Pub, Inc., as Tenant
("Tenant"), affecting portions of the basement, first floor and second floor at
57 West 58th Street, New York, New York, and in further consideration of the sum
of One ($1.00) dollar and other good and valuable consideration paid by Owner to
the undersigned, the receipt and sufficiency of which are hereby acknowledged,
the undersigned, Alan Stillman residing at 322 East 57th Street, New York, New
York ("Guarantor"), hereby absolutely and unconditionally guarantees to Owner,
its successors and assigns the full and prompt payment of all charges for work,
labor, services and materials of whatever nature or kind that are payable by
Tenant or its successors and assigns under the Lease in connection with Tenant's
Work (as the same is defined in the Lease) or otherwise and hereby further
guarantees Tenant's full and timely performance and observance of all the
covenants, terms, conditions and agreements respecting Tenant's Work to be
performed and observed by Tenant and its successors and assigns as set forth in
the Lease or otherwise as well as full and timely completion of Tenant's Work.
Guarantor hereby covenants, agrees and warrants to, with and for the
benefit of Owner that it shall remove and discharge, by bonding, payment or
otherwise, any lien, encumbrance or charge upon the premises demised in the
Lease or the building or real property of which the same forms a part caused by
any act or alleged act of commission or omission on the part of Tenant, or any
of its agents or contractors, or in any manner related to Tenant's Work within
ten (10) days of the creation or imposition of the same. Further, should any
such lien, encumbrance or charge be bonded and should Owner or its agents be
thereafter named as a party in any action or proceeding in respect of such bond
or claim, Guarantor hereby agrees to forever indemnify and save harmless Owner,
its partners and their agents in respect thereof and to pay all costs and
expenses (including legal fees) of Owner related thereto.
Guarantor hereby further covenants, agrees and warrants to, with and for
the benefit of Owner that if default shall at any time be made by Tenant or its
permitted successors or assigns, in the payment by Tenant, its agents,
employees, independent contractors or subcontractors or its successors or
assigns of any charges payable by Tenant, Tenant's agents, employees or
independent contractors for work, labor, services or materials in connection
with Tenant's Work or otherwise, or if Tenant or its successors or assigns
should in any wise or manner default in the performance and observance of any of
the covenants, terms, conditions and agreements respecting Tenant's Work
contained in the Lease or otherwise, or if Tenant, its agents, employees,
independent contractors or subcontractors do not complete Tenant's Work in a
prompt, diligent, expeditious and workmanlike manner pursuant to the terms and
provisions of the Lease or otherwise, Guarantor, in each and every instance,
shall and will forthwith pay such charges together with any penalty or interest
due thereon to the party or parties to whom the same are owed or due and
payable, and shall and will forthwith faithfully perform and fulfill all of such
covenants, terms, conditions and agreements and shall and will take any and all
actions necessary to complete promptly Tenant's Work in accordance with the
terms and provisions of the Lease.
Guarantor represents and warrants to and for the benefit of Owner that it:
(i) is the exclusive stockholder of Tenant; and (ii) that the execution,
delivery and performance of this Guaranty does not and will not violate any term
or provision of any indenture, agreement or other instrument to which Guarantor
is a party, or by which Guarantor or any of its assets or property may be bound,
or be in conflict with, result in a breach of or con-
EXHIBIT B
<PAGE>
stitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of or to any extent or any nature
whatsoever upon any of the assets or property of Guarantor.
Guarantor hereby confirms its understanding that any default by Tenant
under the terms and provisions of Articles 3 or 42 of the Lease shall be and be
deemed to be a default by Guarantor hereunder and that a default by Guarantor
hereunder shall be and be deemed to be a default under the terms and provisions
of the Lease.
This Guaranty is an irrevocable, absolute and unconditional guaranty of
payment and of performance. It shall be enforceable against Guarantor by Owner
and Owner's general partners, assignees and nominees without the necessity of
any suit or proceedings on Owner or a third party's part of any kind or nature
whatsoever against Guarantor, Tenant or the latter's successors or assigns, and
without the necessity of any notice of non-payment, non-performance or
non-observance being given by any party to Guarantor or Tenant or the latter's
successors or assigns or of any notice of acceptance of this Guaranty or of any
other notice or demand to which Guarantor might otherwise be entitled, all of
which Guarantor hereby expressly waives; and Guarantor hereby expressly agrees
that the validity of this Guaranty and the obligations of Guarantor hereunder
shall in no wise be terminated, affected, diminished or impaired by reason of
the assertion or the failure to assert by Owner against Tenant, or against
Tenant's successors or assigns, any of the rights or remedies reserved to Owner
pursuant to the provisions of the Lease or otherwise available to Owner.
In addition to and not in limitation of any provision hereof, Guarantor
confirms its intent, agreement and understanding to be primarily obligated under
those portions of the Lease respecting Tenant's Work, as if it had agreed to and
executed the same as tenant and as if it had contracted with Tenant and Owner to
complete Tenant's Work and to assume all of Tenant's and Tenant's agents,
employees and independent contractor's obligations with respect to the same.
This Guaranty shall be a continuing guaranty, and the liability of
Guarantor hereunder shall in no way be affected, modified, impaired or
diminished by reason of any assignment, renewal, modification or extension of
the Lease or by reason of any modification or waiver of or change in any of the
terms, covenants, conditions or provisions of the Lease by Owner and Tenant or
Tenant's successors or assigns, or by reason of any extension of time that may
be granted by Owner to Tenant or its successors or assigns, or by reason of any
dealings or transactions or matter or thing of any kind or nature occurring
between Owner and Tenant or Tenant's successors or assigns, or by reason of any
bankruptcy, insolvency, reorganization, arrangement, assignment for the benefit
of creditors, receivership or trusteeship affecting Tenant or Tenant's
successors or assigns, whether or not notice thereof is given to Guarantor. The
terms and provisions of this Guaranty shall remain in full force and effect and
be binding on Guarantor and its heirs, distributees, executors, administrators,
and legal representatives unless and until Tenant complies with each and every
one of its obligations under subdivision 2 of Paragraph (e) of Article 42 of the
Lease.
All of Owner's rights and remedies under the Lease and/or under this
Guaranty are intended to be distinct, separate and cumulative and no such right
or remedy therein or herein mentioned is intended to be in exclusion of or a
waiver of any of the others. This Guaranty and/or any of the provisions hereof
cannot be modified, waived or terminated unless such modification, waiver or
termination is in writing, signed by Owner.
-2-
<PAGE>
[ILLEGIBLE] Guarantor shall make any payment to Owner or any third party or
parties or perform or fulfill any covenant, term, condition or agreement
hereunder on account of the liability of Guarantor hereunder, Guarantor will
notify Owner in the manner set forth for notices to Owner in the Lease that such
payment or performance, as the case may be, was made for such purpose. No such
payment or performance by Guarantor pursuant to any provision hereof shall
entitle Guarantor by subrogation or otherwise to any of the rights of Owner
under the Lease.
Guarantor agrees that it will, at any time and from time to time, within
five (5) days following written request by Owner and without charge therefor,
execute, acknowledge and deliver to Owner a statement certifying that this
Guaranty is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
such modification). Guarantor agrees that such certificate may be relied on by
anyone holding or proposing to acquire any interest in the building of which the
premises demised in the Lease form a part from or through Owner or by any
mortgagee or prospective mortgagee of said building or of any interest therein.
As a further inducement to Owner to make and enter into the Lease and in
consideration thereof, Guarantor covenants and agrees that in any action or
proceeding brought on, under or by virtue of this Guaranty, Guarantor shall and
does hereby waive trial by jury. This Guaranty shall be enforced and construed
in accordance with the internal laws of the State of New York and shall be
binding upon and inure to the benefit of Owner and Guarantor and their
respective heirs, distributees, executors, administrators, legal
representatives, successors and assigns.
Dated: New York, New York
As of August __, 1983
--------------------------------------
Alan Stillman
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On this day of October, 1983, before me personally came Alan Stillman,
to me known and known to me to be the individual described in and who executed
the foregoing Guaranty, and he duly acknowledged to me that he executed the
same.
--------------------------------------
Notary Public
-3-
<PAGE>
MEMORANDUM OF LEASE
Name and Address Holrod Associates, a New York
of Landlord: limited partnership
645 Madison Avenue
New York, New York 10022
Name and Address Thursday's Supper Pub, Inc.
of Tenant: 57 West 58th Street
New York, New York 10019
Date of Lease: As of August 31, 1983
Description of Premises: Portions of the basement, first floor and
second floor of the building (all as are
more particularly described in the Lease
(hereinafter defined)), in the building
commonly known as 57 West 58th Street New
York, New York as more particularly
described on Exhibit A annexed hereto and
forming part hereof.
Memorandum Only: This Memorandum of Lease is intended
solely to summarize certain provisions of
that certain lease (the "Lease"), dated
as of August 31, 1983, between the
parties hereto covering premises therein
demised, for filing purposes only in
compliance with the terms and provisions
of Section 291-C of Article 9 of the Real
Property Law of the State of New York.
This Memorandum of Lease is not intended
to and shall not be construed to change,
vary, modify, amend, supplement,
interpret or otherwise alter the Lease or
any of the terms, covenants, conditions
or provisions thereof. In the event of
any inconsistencies between the
provisions of the Lease and this
Memorandum of Lease, the provisions of
the Lease shall be prevail.
Other Provisions: Notice is hereby given that the Lease
contains additional terms, covenants,
conditions and provisions not set forth
in this Memorandum of Lease.
IN WITNESS WHEREOF, the parties have duly executed this Memorandum of
Lease this ___ day of October, 1983.
HOLROD ASSOCIATES
By:______________________________________
THURSDAY'S SUPPER PUB, INC.
By:______________________________________
<PAGE>
EXHIBIT A
Section 5 Block 1274 on the Tax Map of New York County.
ALL that certain lot, piece or parcel of land, situate, lying and, being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the northely side of
58th Street with the easterly side of Avenue of the Americas; running
Thence easterly along the northerly side of 58th Street, 100 feet;
Thence northerly parallel with Avenue of the Americas, 100 feet 5 inches
to the center line of the block;
Thence westerly along said center line of the block and parallel with 58th
Street, 100 feet to the easterly side of Avenue of Americas; and
Thence southerly along the easterly side of Avenue of the Americas 100
feet 5 inches to the point or place of BEGINNING.
Excepting and reserving to Seller all Excess Zoning Rights (as defined in
the Agreement to which this Exhibit A is annexed).
Said premises being known and by the street numbers 57-59 West 58th Street
and 1420-1428 Avenue of the Americas, New York, New York.
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the __ day of October, 1983, before me personally came Alan Stillman,
to me known, who, being by me duly sworn, did depose and say that he resides at
322 East 57th Street, New York, New York; that he is the President of Thursday's
Supper Pub, Inc., the corporation described in and which executed the foregoing
instrument as Tenant; and that he acknowledged that he executed the same by
order of the board of directors of said corporation.
--------------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of October, 1983, before me personally came Ronald A.
Nicholson, to me known, who, being by me duly sworn, did depose and say that he
is a general partner of Holrod Associates, the New York limited partnership
described in and which executed the foregoing instrument as Landlord; and that
he had authority to sign the same and acknowledged that he executed the same as
the act and deed of said limited partnership.
--------------------------------------
Notary Public
<PAGE>
October ___, 1983
Kramer, Levin, Nessen,
Kamin & Frankel
919 Third Avenue
New York, New York 10022
Gentlemen:
Reference is made to that certain lease (the "lease") dated May 19, 1976,
between Holrod Associates, as Landlord, and Thursday's Supper Pub, Inc., as
Tenant, respecting space on the first and second floor and in the basement, as
more particularly described in the lease, (the "premises") of the building
commonly known as 57 West 58th Street, New York, New York, as amended, modified,
supplemented and restated by instrument dated as of August 31, 1983 (the
"Restatement") (the lease and the Restatement are hereinafter collectively
referred to as the "Lease") and specifically to paragraph (f) of Article 49 of
the Restatement.
In connection with paragraph (f) of Article 49 of the Restatement
delivered herewith are the following documents (collectively, the "Escrowed
Documents"):
1. A Memorandum of Lease in form sufficient for recording (the
"Memorandum");
2. A New York City Real Property Transfer Tax Return with respect to
the Restatement ("Transfer Tax Return"); and
EXHIBIT D
<PAGE>
Kramer, Levin, Nessen
Kamin & Frankel
Page Two
October __, 1983
3. An affidavit with respect to the exemption of the Lease from the
New York State Real Property Transfer Gains Tax ("Gains Tax Return").
The Escrowed Documents are being deposited in escrow with you to be held
on the following terms and conditions:
(i) you shall continue to hold the Escrowed Documents in escrow until you
receive written notice from the undersigned that an initial assignment of the
Lease has become or is becoming effective in accordance with the terms and
provisions of Article 49 of the Restatement in connection with the bona fide
sale by Tenant of the restaurant business operated in the premises. Upon receipt
of the aforesaid notice, you are to deliver the Escrowed Documents to Tenant;
(ii) if not previously released from escrow, you shall destroy the
Escrowed Documents: (a) if you receive written notice from the undersigned that
the Lease has been terminated in accordance with its terms or cancelled by the
mutual agreement of the undersigned; (b) on September 1, 2003 when the term of
this escrow shall expire and come to an end (if not previously terminated) and
your obligations to the undersigned hereunder or otherwise shall be and be
deemed to be fully discharged;
(iii) in the event of any dispute as to the disposition of the Escrowed
Documents, you may deposit the same in a court of competent jurisdiction;
(iv) your sole duties hereunder are as indicated herein and upon the
disposition of the Escrowed Documents as herein provided, you shall be deemed to
have performed your duties and shall be automatically discharged from any
further obligation in connection therewith. In no event shall you be entitled to
receive a fee for acting as escrow agent hereunder;
<PAGE>
Kramer, Levin, Nessen
Kamin & Frankel
Page Three
October __, 1983
(v) in the performance of your duties hereunder, you shall not incur any
liability except for willful malfeasance and shall not be liable or responsible
for anything done or omitted to be done hereunder in good faith as herein
provided, except for willful malfeasance. You shall be fully protected in
relying upon any notice, certificate or oral communication believed by you to be
genuine and purported to be signed or given by any person or persons purporting
to have authority to act on behalf of any party hereto;
(vi) you or any successor escrow agent, as the case may be, may resign
your duties and be discharged from all further duties or obligations hereunder
at any time upon giving three days' prior notice to the undersigned. The
undersigned will thereupon jointly designate a successor escrow agent hereunder
within said three-day period to whom the Escrowed Documents shall be delivered.
In default of such a joint designation of a successor escrow agent, you shall
retain the Escrowed Documents as custodian thereof until otherwise directed by
the undersigned, without further liability or responsibility;
(vii) you shall have the continuing right to represent the Landlord in
connection with the transaction(s) contemplated by this letter and the Lease and
shall also have the right to represent the Landlord in any dispute between the
undersigned with respect to the Escrowed Documents or otherwise;
(viii) the undersigned jointly and severally agree to forever indemnify
and hold you harmless of, from and against any and all costs, claims, losses,
suits and demands incurred, resulting from or arising in connection with this
letter or the matters or things contemplated hereby or resulting herefrom; and
(ix) you have executed this letter in your capacity as escrow agent solely
to evidence your agreement to act as escrow agent.
<PAGE>
Kramer, Levin, Nessen
Kamin & Frankel
Page Three
October __, 1983
The undersigned acknowledge that at the time the Escrowed Documents are
released from escrow the Transfer Tax Return and/or gains Tax Return may have to
be modified in order to effect recordation of the Memorandum and/or that
additional documentation may be required in order to effect such recordation.
Accordingly, the undersigned hereby agree to execute such affidavits,
governmental forms or other documents as may then be required by the appropriate
governmental authorities to effect recordation of the Memorandum. All costs and
expenses (including, without limitation, attorneys' fees and any and all taxes,
recording fees or imposts of any kind) incurred in connection with the
recordation of the Memorandum shall be borne by Tenant.
Tenant hereby agrees to forever indemnify and hold Landlord fully harmless
from and against any and all costs, claims, losses, suits, taxes, imposts and
demands incurred, resulting from or arising in connection with this letter, the
Memorandum, the recordation of the Memorandum or the matters or things
contemplated hereby or resulting herefrom.
All references herein to Landlord or Tenant shall refer to the parties
hereto and their respective successors.
This Agreement, which shall be construed in accordance with the internal
laws of the State of New York, may not be modified or terminated orally but only
in writing executed by the parties to be bound.
HOLROD ASSOCIATES
By:
-----------------------------------
THURSDAY'S SUPPER CLUB, INC.
By:
-----------------------------------
ACCEPTED AND AGREE TO:
KRAMER, LEVIN, NESSEN, KAMIN
& FRANKEL.
By:
-----------------------------------
<PAGE>
ACKNOWLEDGEMENTS
Corporate Owner
State of New York, ss.:
County of
On this day of , 19 , before me personally came
to be known, who being by me duly sworn,
did depose and say that he resides in
that he is the of
the corporation described in and which executed the foregoing instrument, as
OWNER; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
------------------------------------------------
Individual Owner
State of New York, ss.:
County of
On this day of , 19 , before me personally came
to be known and known to me to be the
individual described in and who, as OWNER, executed the foregoing instrument and
acknowledged to me that he executed the same.
------------------------------------------------
Corporate Tenant
State of New York, ss.:
County of
On this day of , 19 , before me personally came
to me known, who being by me duly sworn,
did depose and say that he resides in
that he is the of
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
------------------------------------------------
Individual Tenant
State of New York, ss.:
County of
On this day of , 19 , before me personally came
to be known and known to me to be the
individual described in and who, as TENANT, executed the foregoing instrument
and acknowledged to me that he executed the same.
------------------------------------------------
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS
LEASE IN ACCORDANCE WITH ARTICLE 35.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the demised premises and for delivery of merchandise and equipment in a prompt
and efficient manner using elevators and passageways designated for such
delivery by Owner. There shall not be used in any space, or in the public hall
of the building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards.
2. If the premises are situated on the ground floor of the building,
Tenant thereof shall further, at Tenant's expense, keep the sidewalks and curb
in front of said premises clean and free from ice, snow, etc.
3. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed.
4. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the demised premises, or permit or suffer the
demised premises to be occupied or used in a manner offensive or objectionable
to Owner or other occupants of building by reason of noise, odors and or
vibrations or interfere in any with other Tenants or those having business
therein.
5. No sign, advertisement, notice or other letting shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Signs on interior
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
8. Owner reserves the right to exclude from the building between the hours
of 6 P.M. and 8 A.M. and at all hours on Sundays, and holidays all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such person.
9. Owner shall have the right to prohibit any advertising by any Tenant
which, in Owner's opinion, tends to impair the reputation of Owner or its
desirability as a building for stores or offices, and upon written notice from
Owner, Tenant shall refrain from or discontinue such advertising.
10. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive fluid, material,
chemical or substance, or cause or permit any odors or cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.
11. Tenant shall not place a load on any floor of the demised premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Owner reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant at Tenant's expense in
setting sufficient in Owner's judgement to absorb and prevent vibration, noise
and annoyance.
GUARANTY
The undersigned Guarantor guarantees to Owner, Owner's successors and
assigns, the full performance and observance of all the agreements to be
performed and observed by Tenant in the attached Lease, including the "Rules and
Regulations" as therein provided, without requiring any notice to Guarantor of
nonpayment or, nonperformance, or proof, or notice of demand, to hold the
undersigned responsible under this guaranty, all of which the undersigned hereby
expressly waives and expressly agrees that the legality of this agreement and
the agreements of the Guarantor under this agreement shall not be ended, or
changed by reason of the claims to Owner against Tenant of any of the rights or
remedies given to Owner as agreed in the attached Lease. The Guarantor further
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, change or extension of the Lease. As a further inducement to
Owner to make the Lease Owner and Guarantor agree that in any action or
proceeding brought by either Owner or the Guarantor against the other on any
matters concerning the Lease or of this guaranty that Owner and the undersigned
shall and do waive trial by jury.
Address
Premises
================================================================================
HOLROD ASSOCIATES
TO
THURSDAY'S SUPPER PUB, INC.
================================================================================
STANDARD FORM OF
[SEAL] STORE [SEAL]
LEASE
The Real Estate Board of New York, Inc.
(c) Copyright 1979. All rights Reserved.
Reproduction in whole or in part prohibited.
================================================================================
Dated 19
Rent Per Year
Rent Per Month
Term
From
To
Drawn by Checked by
-------------------------------- -----------------------------
Entered by Approved by
-------------------------------- -----------------------------
================================================================================
<PAGE>
SUPPLEMENTAL AGREEMENT
AND
FIRST AMENDMENT TO LEASE
AGREEMENT dated as of May 3, 1993 between HOLROD ASSOCIATES, as
Owner ("Owner"), and MANHATTAN OCEAN CLUB ASSOCIATES, as Tenant ("Tenant").
WITNESS:
WHEREAS:
(i) Owner and Tenant are parties to that certain lease (the "Lease")
dated as of August 31, 1983 covering space more particularly described therein,
located in the building at 57 West 58th Street, New York, New York;
(ii) Pursuant to Article 43 of the Lease, the Fixed Minimum Rent (as
that tern is defined in the Lease) in the Lease reserved is to increase on
January 1, 1994 to the Fair Market Rent (as that term is defined in the Lease);
and
(iii) Owner and Tenant wish to set forth herein their agreement as
to what the Fair Market Rent and, accordingly, the Fixed Minimum Rent is to be
on January 1, 1994;
NOW, THEREFORE, in consideration of Ten ($10) Dollars and other good
and valuable consideration, the receipt whereof is hereby acknowledged, Owner
and Tenant hereby agree that:
<PAGE>
1. The Fixed Minimum Rent of January 1, 1994 shall, notwithstanding
anything set forth in the Lease to the contrary, be $302,800 per annum.
2. The number "seventy-five (75%) percent" appearing in Article
43(a) (1) (iii) of the Lease is hereby deleted therefrom and the number "one
hundred (100%) percent" shall hereby be deemed inserted in its place and stead.
3. Tenant and Owner hereby represent and agree that except as
expressly herein modified all of the terms of the Lease remain in full force and
effect.
4. Tenant and Owner acknowledge that the within lease has been
assigned to Manhattan Ocean Club Associates as of the 1st day of January, 1984.
Owner hereby specifically consents to such assignment.
IN WITNESS WHEREOF, Owner and Tenant have executed this Supplemental
Agreement and First Amendment to Lease as of the date first set forth above.
OWNER
HOLROD ASSOCIATES
By: /s/ [ILLEGIBLE]
---------------------------------------
CONSENTED TO:
THURSDAYS' SUPPER PUB, INC. TENANT: MANHATTAN OCEAN CLUB ASSOCIATES
By: THURSDAYS' SUPPER PUB, INC., General
Partner
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------- ---------------------------------------
<PAGE>
SECOND AMENDMENT TO LEASE
AGREEMENT dated as of April 1, 1995 between HOLROD ASSOCIATES, as
Owner ("Owner"), and MANHATTAN OCEAN CLUB ASSOCIATES, successor in interest to
Thursday's Supper Pub, Inc., as Tenant ("Tenant").
WITNESSETH:
WHEREAS:
(i) Owner and Tenant are parties to that certain lease (the
"Original Lease") dated as of August 31, 1983 covering space more particularly
described therein, located in the building at 57 West 58th Street, New York, New
York, as amended by a Supplemental Agreement and First Amendment to Lease (the
"First Amendment") dated as of May 3, 1993 (the Original Lease and the First
Amendment are hereinafter sometimes collectively referred to as the "Lease");
(ii) Tenant has requested that the Lease be amended to extend the
term thereof for an additional ten (10) year period;
(iii) Owner is willing to grant Tenant the extension it requested
only on the condition, among others, that the Fixed Minimum Rent (as that term
is defined in the Original lease) reserved under the Lease shall, from and after
January 1, 1996 increase by $25,000.00 per annum, it being understood that such
increase shall be in addition to, but not factored into, the calculation of
future increases in Fixed Minimum Rent pursuant to Article 43. (a) (i) of the
Original Lease.
NOW, THEREFORE, in consideration of Ten ($10) Dollars and other good
and valuable consideration, the receipt whereof is hereby acknowledged, Owner
and Tenant hereby agree that;
1. The term of the Lease is hereby extended for ten (10) years so
that the expiration date of the term thereof is August 31, 2013. The portion of
the term occurring after August 31, 2003 is hereinafter sometimes referred to as
the "Extension Period". Tenant hereby acknowledges and agrees that
notwithstanding anything to the contrary set forth in the Lease or otherwise,
Tenant has no right to renew the Lease or further extend the term thereof beyond
August 31, 2013.
2. Notwithstanding anything to the contrary set forth in the Lease
or otherwise, in addition to the Fixed Minimum Rent reserved under the Lease (as
the same may be increased from time to time pursuant to the provisions of
Article 43. (a) (1) of the Original Lease), from and after January 1, 1996 and
continuing
<PAGE>
through and including August 31, 2003 Tenant shall pay to Owner, as a component
of Fixed Minimum Rent that is hereinafter referred to as "Fixed Supplemental
Rent", $25,000.00 per annum, such amount being paid to Owner by Tenant in equal
monthly installments at such times as Fixed Minimum Rent is due and payable
under the Lease. Fixed Supplemental Rent shall not be subject to increase,
pursuant to Article 43. (a) (i) of the Original Lease.
3. The Lease is hereby amended by adding after Article 64, a new
Article 65 that reads as follows:
"A. The Fixed Minimum Rent during the Extension Period shall
initially equal the fair market rental value (the "FMR") of the demised
premises (as that term is defined in the Original Lease) but shall be
increased annually pursuant to Paragraph C of this Article. If, prior to
June 1, 2003 Owner and Tenant cannot agree on the FMR for the Extension
Period and execute an agreement in form and content satisfactory to Owner
confirming the FMR, same shall be determined in accordance with the terms
and provisions of Paragraph B of this Article.
B. In the event that the FMR is to be determined in accordance
with the provisions of this Paragraph, the following procedure shall be
Utilized: Tenant shall appoint a disinterested person with at least ten
(10) years professional service as a licensed real estate broker in the
State of New York who has been involved in the appraisal and rental of
retail restaurant space in the Borough of Manhattan for not less than five
(5) years to serve as an appraiser on its behalf and shall give notice
thereof to Owner on or before June 1, 2003. Owner shall, within fifteen
(15) days after receiving said notice appoint a second disinterested
person having qualifications similar to those required of the appraiser
appointed by Tenant to serve as appraiser on its behalf and shall give
written notice thereof to Tenant. If either Owner or Tenant fails or
neglects to timely appoint an appraiser pursuant to the foregoing, then in
such event the other party shall select a person to serve as the appraiser
not so selected by the first party, and upon such selection, such
appraiser shall be deemed to have been selected by the first party. The
appraisers thus appointed shall appoint a third disinterested person, who
shall be a real estate broker licensed as such in the State of New York
actively engaged in the rental, sale and appraisal of restaurant space in
the Borough of Manhattan for not less than ten (10) years. If the
appraisers thus appointed by Owner and Tenant shall fail to appoint such
third disinterested appraiser (who is amenable to serving as such) within
fifteen (15) days after
-2-
<PAGE>
the appointment of two appraisers, then either Owner or Tenant may, by
application to the president of The Real Estate Board of New York, Inc.
seek the appointment of such third disinterested person. Upon such
appointment, such person shall be the third appraiser as if appointed by
the original two appraisers. Each appraiser shall, after the appointment
of the third appraiser, render in writing to Owner and Tenant its own
independent appraisal of what the annual fair market rental value of the
demised premises would be were the same then ready to be leased and
dedicated as a first class restaurant free of all liens and encumbrances
of any kind for the Extension Period together with an affidavit that his
appraisal is an independently determined bona fide estimate. The sum of
the amounts specified in each of the three appraisals shall be divided by
three and the quotient of such division shall be the annual FMR except
that in no event and under no circumstances shall the FMR be less than the
Fixed Minimum Rent payable under the Lease for the month of August, 2003
(considered on an annualized basis). Said quotient shall be binding on
Owner and Tenant. The cost and expense of each of the appraisers appointed
(or which should have been appointed) by Owner and Tenant shall be borne
by Owner and Tenant respectively and the cost and expense of the third
appraiser shall be shared equally by Owner and Tenant. Owner and Tenant
agree to sign all documents and to do all other things necessary to submit
the question of the amount of the FMR to the appraisers and further agree
to, and hereby do, waive any and all rights they or either of them may at
any time have to revoke their agreement under this Article. If, for any
reason whatsoever, the FMR has not been determined by September 1, 2003,
Tenant shall pay on that day and on the first day of each month thereafter
until the Fixed Minimum Rent has been determined, on account of the Fixed
Minimum Rent then due, 105% of the Fixed Minimum Rent payable on August 1,
2003. Once the Fixed Minimum Rent has been finally determined, Tenant
shall immediately pay any deficiency to Owner or Owner shall credit any
overpayment to Tenant.
C. In addition to and not in limitation of any other provision
of this lease, it is expressly understood, acknowledged and agreed that on
each Adjustment Date (as such term is defined in Article 43(a) (1) of the
Original Lease) during the Extension Period, the Fixed Minimum Rent
reserved hereunder shall automatically be increased by an amount equal to
the product derived by multiplying the Fixed Minimum Rent reserved
hereunder on the day immediately preceding the Adjustment Date by the
percentage increase, if any, in the Consumer Price Index (as such term is
defined in Article 13(a)(2) of the Original Lease) for the month
-3-
<PAGE>
preceding each such Adjustment Date over the Consumer Price Index for the
month immediately preceding the preceding Adjustment Date.
D. In no event shall the Fixed Minimum Rent, as originally
provided to be paid under this lease or as thereafter increased pursuant
to adjustments under this Paragraph or otherwise, be reduced for any
reason whatsoever. Any delay or failure of Owner in computing or billing
for the adjustments of Fixed Minimum Rent hereinabove set forth shall not
constitute a waiver of or in any way impair the continuing obligation of
Tenant to pay such adjustments hereunder from and after the date the same
become effective in accordance with the terms of this lease and for the
period in this lease set forth."
4. Except as expressly amended hereby, the Lease, as written, shall
remain in full force through and including August 31, 2013. Tenant hereby
represents and warrants to and for the benefit of Owner that the Lease as
amended hereby is in full force and effect without any default by Owner and that
Tenant is in possession of the demised premises and has no claims against Owner
under or in connection with the Lease nor any offsets against the rents payable
thereunder.
IN WITNESS WHEREOF, Owner and Tenant have executed this Second
Amendment to Lease as of the date first set forth above.
OWNER:
HOLROD ASSOCIATES
By:_______________________________________
TENANT:
MANHATTAN OCEAN CLUB
ASSOCIATES, successor to
Thursday' a Supper Pub., Inc.
By:_______________________________________
CONSENTED TO;
THURSDAY'S SUPPER PUB, INC.
By:________________________________
-4-
<PAGE>
Exhibit 10.2
Agreement of Lease, made as of this 1st day of November 1991, between BEEKMAN
TENANTS CORPORATION, party of the first part, hereinafter referred to as OWNER,
and WHITE & WITKOWSKY, INC., a New York Corporation, party of the second part,
hereinafter referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
approximately 4465 sq. feet on the ground floor; 5047 sq. feet in the basement
(Kitchen); now used as a restaurant premises (per the annexed drawing) in the
building known as 575 Park Avenue in the Borough of Manhattan, City of New York,
for the term of 10 years (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 1st day of November nineteen hundred
and Ninety-One, and to end on the 31st day of October two thousand six, both
dates inclusive, at an annual rental rate of ______ set forth in Article 41 of
the Rider annexed hereto.
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first full monthly installment(s) on the execution hereof.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby convenant
as follows:
Rent 1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy 2. Tenant shall use and occupy demised premises for a high-class
dining room and business, as more fully set forth in Article 40
of the Rider annexed hereto.
and for no other purpose. Tenant shall at all times conduct its business in a
high grade and reputable manner, shall not violate Article 37 hereof, and shall
keep show windows and signs in a neat and clean condition.
Alterations:
3. Subject to Article 50 of the Rider, Tenant shall make no changes in or to the
demised premises of any nature without Owner's prior written consent, which
shall not unreasonably be withheld or delayed. Subject to the prior written
consent of Owner, and to the provisions of this article, Tenant at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises. Tenant shall,
before making any alterations, additions, installations or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have done for,
or materials furnished to, Tenant, whether or not done pursuant to this article,
the same shall be discharged by Tenant within ten days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises. Nothing in this article shall be construed to give Owner title
to or to prevent Tenant's removal of trade fixtures, moveable office furniture
and equipment, but upon removal of any such from the premises or upon removal of
other installations as may be required by Owner, Tenant shall immediately and at
its expense, repair and restore the premises to the condition existing prior to
installation and repair any damage to the demised premises or the building due
to such removal. All property permitted or required to be removed by Tenant at
the end of the term remaining in the premises after Tenant's removal shall be
deemed abandoned and may, at the election of Owner, either be retained as
Owner's property or may be removed from the premises by Owner at Tenant's
expense. Tenant may make non-structural decorative changes without Landlord's
consent.
Repairs.
4. Owner shall maintain and repair the public portions of the building, both
exterior and interior, except that if Owner allows Tenant to erect on the
outside of the building a sign or signs, or a hoist, lift or sidewalk elevator
for the exclusive use of Tenant, Tenant shall maintain such exterior
installations in good appearance and shall cause the same to be operated in a
good and workmanlike manner and shall make all repairs thereto necessary to keep
same in good order and condition, at Tenant's own cost and expense, and shall
cause the same to be covered by the insurance provided for hereafter in Article
8. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein, and the sidewalks
adjacent thereto, and at its sole cost and expense, make all non-structural
repairs thereto as and when needed to preserve them in good working order and
condition, reasonable wear and tear, obsolescence and damage from the elements,
fire or other casualty, excepted. If the demised premises be or become infested
with vermin, Tenant shall at Tenant's expense, cause the same to be exterminated
from time to time to the satisfaction of Owner. Except as specifically provided
in Article 9 or elsewhere in this lease, there shall be no allowance to the
Tenant for the diminuation of rental value and no liability on the part of Owner
by reason of inconvenience, annoyance or injury to business arising from Owner,
Tenant or others making or failing to make any repairs, alterations, additions
or improvements in or to any portion of the building including the erection or
operation of any crane, derrick or sidewalk shed, or in or to the demised
premises or the fixtures, appurtenances or equipment thereof. The provisions of
this article 4 with respect to the making of repairs shall not apply in the case
of fire or other casualty which are dealt with in article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the New York State Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
Requirements of Law, Fire Insurance:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and
<PAGE>
any violation, order or duty upon Owner or Tenant with respect to
the demised premises, and with respect to the portion of the sidewalk adjacent
to the premises, if the premises are on the street level, arising out of
Tenant's use or manner of use thereof, or with respect to the building if
arising out of Tenant's use or manner of use of the premises or the building
(including the use permitted under the lease). Except as provided in Article 29
hereof, nothing herein shall require Tenant to make structural repairs or
alterations unless Tenant has by its manner of use of the demised premises or
method of operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or permit
any act or thing to be done in or to the demised premises which is contrary to
law, or which will invalidate or be in conflict with public liability, fire or
other policies of insurance at any time carried by or for the benefit of Owner.
Tenant shall pay all costs, expenses, fines, penalties or damages, which may be
imposed upon Owner by reason of Tenant's failure to comply with the provisions
of this article. If the fire insurance rate shall, at the beginning of the lease
or at any time thereafter, be higher than it otherwise would be, then Tenant
shall reimburse Owner, as additional rent hereunder, for that portion of all
fire insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant, to comply with the terms of this article. In
any action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" of rate for the building or demised premises issued by a body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rate then applicable to said premises.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be selfoperative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Owner may request. Landlord
represents that the ground lease is in full force and effect AND LANDLORD
WILL KEEP SAID GROUND LEASE IN FULL FORCE AND EFFECT for the full term
(and renewal term) of this lease.
Tenant's Liability Insurance Property Loss, Damage, Indemnity:
8. Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees. Owner
or its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
of any private, public or quasi public work. Tenant agrees, at Tenant's sole
cost and expense, to maintain general public liability insurance in standard
form in favor of Owner and Tenant against claims for bodily injury or death or
property damage occurring in or upon the demised premises, effective from the
date Tenant enters into possession and during the term of this lease. Such
insurance shall be in an amount and with carriers acceptable to the Owner. Such
policy or policies shall be delivered to the Owner. On Tenant's default in
obtaining or delivering any such policy or policies or failure to pay the
charges therefor, Owner may secure or pay the charges for any such policy or
policies and charge the Tenant as additional rent therefor. Tenant shall
indemnify and save harmless Owner against and from all liabilities, obligations,
damages, penalties, claims, costs and expenses for which Owner shall not be
reimbursed by insurance, including reasonable attorneys fees, paid, suffered or
incurred as a result of any breach by Tenant, Tenant's agent, contractors,
employees, invitees, or licensees, of any covenant on condition of this lease,
or the carelessness, negligence or improper conduct of the Tenant, Tenant's
agents, contractors, employees, invitees or licensees. Tenant's liability under
this lease extends to the acts and omissions of any subtenant, and any agent,
contractor, employee, invitee or licensee of any subtenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding by Counsel approved by Owner in writing, such approval not
to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by
and at the expense of Owner and the rent, until such repair shall be
substantially completed, shall be apportioned from the day following the
casualty according to the part of the premises which is usable. (c) If the
demised premises are totally damaged or rendered wholly unusable by fire or
other casualty, then the rent shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner, subject to Owner's right to elect not
to restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised premises are damaged in
whole or in part) if the building shall be so damaged that Owner shall decide to
demolish it or to rebuild it, then, in any of such events, Owner may elect to
terminate this lease by written notice to set forth above for the
termination of this lease and Tenant shall forthwith quit, surrender and vacate
the premises without prejudice however, to Owner's rights and remedies against
Tenant under the lease provisions in effect prior to such termination, and any
rent owing shall be paid up to such date and any payments of rent made by Tenant
which were on account of any period subsequent to such date shall be returned to
Tenant. Unless Owner shall serve a termination notice as provided for herein,
Owner shall make the repairs and restorations under the conditions of (b) and
(c) hereof, with all reasonable expedition subject to delays due to adjustment
of insurance claims, labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's restoration by removing from
the premises as promptly as reasonably possible, all of Tenant's salvageable
inventory and movable equipment, furniture, and other property. Tenant's
liability for rent shall resume five (5) days after written notice from owner
that the premises are substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability that may exist as a
result of damage from fire or other casualty. Notwithstanding the foregoing,
each party shall look first to any insurance in its favor before making any
claim against the other party for recovery for loss or damage resulting from
fire or other casualty, and to the extent that such insurance is in force and
collectible and to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right of recovery against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance and also, provided that such a Policy can be obtained without
additional premiums. Tenant acknowledges that Owner will not carry insurance on
Tenant's furniture and/or furnishings or any fixtures or equipment,
improvements, or appurtenances removable by Tenant and agrees that Owner will
not be obligated to repair any damage thereto or replace the same. (f) Tenant
hereby waives the provisions of Section 227 of the Real Property Law and agrees
that the provisions of this article shall govern and control in lieu thereof.
The foregoing notwithstanding, in the event the demised premises can not be
reasonably restored within nine (9) months from the date of the fire or other
casualty, Tenant may elect to terminate this lease by written notice to Landlord
given within 90 days after such fire or casualty specifying a date for
expiration of the lease which shall not be less than the giving of such notice,
and upon the date specified in such notice the term of this lease shall expire
as fully and completely as if such date were the date set forth above for the
termination of this lease and Tenant shall forthwith quit, surrender and vacate
the premises without prejudice however, to Owner's rights and remedies against
Tenant under the lease provisions in effect prior to such termination, and any
rent owing shall be paid up to such date and any payments of rent made by Tenant
which were on account of any period subsequent to such date shall be returned to
Tenant.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease. Tenant shall be entitled to
condemnation proceeds with respect to the undepreciated portion of fixtures and
improvements installed by Tenant.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance. If this lease be assigned,
or if the demised premises or any part thereof be underlet or occupied by
anybody other than Tenant, Owner may, after default by Tenant, collect rent from
the assignee, under-tenant or occupant, and apply the net amount collected to
the rent herein reserved, but no such assignment, under-letting, occupancy or
collection shall be deemed a waiver of the covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
Electric Current:
[GRAPHIC OMITTED]
12. Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant convenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages or expenses which Tenant may sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and, at other
reasonable times, on reasonable notice, to examine the same and to make such
repairs, replacements and improvements as Owner may deem necessary and
reasonably desirable to any portion of the building or which Owner may elect to
perform, in the premises, following Tenant's failure to make repairs or perform
any work which Tenant is obligated to perform under this lease, or for the
purpose of complying with laws, regulations and other directions of governmental
authorities. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein, provided they are within the walls, Owner may, during the progress of
any work in the demised premises, take all necessary materials and equipment
into said premises without the same constituting an eviction nor shall the
Tenant be entitled to any abatement of rent while such work is in progress nor
to any damages by reason of loss or interruption of business or otherwise.
Throughout the term hereof Owner shall have the
- ----------
Rider to be added if necessary.
[GRAPHIC OMITTED]
<PAGE>
If Tenant is not present to open and permit an entry into the
premises, Owner or Owner's agents may enter the same whenever such entry may be
necessary or permissible by master key or forcibly and provided reasonable care
is exercised to safeguard Tenant's property and such entry shall not render
Owner or its agents liable therefor, nor in any event shall the obligations of
Tenant hereunder be affected. If during the last month of term Tenant shall have
removed all or substantially all of Tenant's property therefrom, Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to Tenant for any
compensation and such act shall have no effect on this lease or Tenant's
obligations hereunder. Owner shall have the right at any time, without the same
constituting an eviction and without incurring liability to Tenant therefor to
change the arrangement and/or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets, or other public parts of the
building and to change the name, number or designation by which the building may
be known.
Vault,
Vault Space,
Area:
14. No vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of, Articles 2 or 37 hereof, or of, the certificate of occupancy issued for the
building of which the demised premises are a part. Tenant has inspected the
premises and accepts them as is, subject to the riders annexed hereto with
respect to Owner's work, if any. In any event, Owner makes no representation as
to the condition of the premises and Tenant agrees to accept the same subject to
violations, whether or not of record. Nothing herein shall be construed to
prohibit use of demised premises as provided in Article 2.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Landlord by sending of a written notice to Tenant
within a reasonable time after the happening of any one or more of the following
events: (1) the commencement of a case in bankruptcy or under the laws of any
state naming Tenant as the debtor; or (2) the making by Tenant of an assignment
or any other arrangement for the benefit of creditors under any state statute.
Neither Tenant nor any person claiming through or under Tenant, or by reason of
any statute or order of court, shall thereafter be entitled to possession of the
premises demised but shall forthwith quit and surrender the premises. If this
lease shall be assigned in accordance with its terms, the provisions of this
Article 16 shall be applicable only to the party then owning Tenant's interest
in this lease.
(b) It is stipulated and agreed that in the event of the termination of this
lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other
provisions of this lease to the contrary, be entitled to recover from Tenant as
and for liquidated damages an amount equal to the difference between the rent
reserved hereunder for the unexpired portion of the term demised and the fair
and reasonable rental value of the demise premises for the same period. In the
computation of such damages the difference between any installment of rent
becoming due hereunder after the date of termination and the fair and reasonable
rental value of the demised premises for the period for which such installment
was payable shall be discounted to the date of termination at the rate of four
per cent (4%) per annum. If such premises or any part thereof be re-let by the
Owner for the unexpired term of said lease, or any part thereof, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of rent reserved upon such reletting shall be deemed to be
the fair and reasonable rental value for the part or the whole of the premises
so re-let during the term of the re-letting. Nothing herein contained shall
limit or prejudice the right of the Owner to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed by
any statute or rule of law in effect at the time when, and governing the
proceedings in which, such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; or if this lease be rejected under Section 365 of Title II of
the U.S. Code (Bankruptcy Code); [ILLEGIBLE] of said default and upon the
expiration of said 30 days, if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said 30 day
period, and if Tenant shall not have diligently commenced curing such default
within such 30 day period, and shall not thereafter with reasonable diligence
and in good faith proceed to remedy or cure such default, then Owner may serve a
written 5 days notice of cancellation of this lease upon Tenant, and upon the
expiration of said 5 days, this lease and the term thereunder shall end and
expire as fully and completely as if the expiration of such 5 day period were
the day herein definitely fixed for the end and expiration of this lease and the
term thereof and Tenant shall then quit and surrender the demised premises to
Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the term
shall expire as aforesaid; or if Tenant shall make default in the payment of the
rent reserved herein or any item of additional rent herein mentioned or any part
of either or in making any other payment herein required which remains uncured
for 10 days, then and in any of such events Owner may without notice, re-enter
the demised premises either by force or otherwise, and dispossess Tenant by
summary proceedings or otherwise, and the legal representative of Tenant or
other occupant of demised premises and remove their effects and hold the
premises as if this lease had not been made, and Tenant hereby waives the
service of notice of intention to re-enter or to institute legal proceedings to
that end.
Remedies of
Owner and
Waiver of
Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent, and additional rent, shall
become due thereupon and be paid up to the time of such reentry, dispossess
and/or expiration, (b) Owner may re-let the premises or any part or parts
thereof, either in the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this lease and may grant concessions
or free rent or charge a higher rental than that in this lease, and/or (c)
Tenant or the legal representatives of Tenant shall also pay Owner as liquidated
damages for the failure of Tenant to observe and perform said Tenant's covenants
herein contained, any deficiency between the rent hereby reserved and/or
convenanted to be paid and the net amount, if any, of the rents collected on
account of the subsequent lease or leases of the demised premises for each month
of the period which would otherwise have constituted the balance of the term of
this lease. The failure of Owner to re-let the premises or any part or parts
thereof shall not release or affect Tenant's liability for damages. In computing
such liquidated damages there shall be added to the said deficiency such
expenses as Owner may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the demised
premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this lease. Owner, in putting the demised premises in good
order or preparing the same for re-rental may, at Owner's option, make such
alterations, repairs, replacements, and/or decorations in the demised premises
as Owner, in Owner's sole judgment, considers advisable and necessary for the
purpose of re-letting the demised premises, and the making of such alterations,
repairs, replacements, and/or decorations shall not operate or be construed to
release Tenant from liability. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rent collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
Fees and
Expenses:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, Owner may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder, and
if Owner, in connection therewith or in connection with any default by Tenant in
the covenant to pay rent hereunder, makes any expenditures or incurs any
obligations for the payment of money, including but not limited to attorney's
fees, in instituting, prosecuting or defending any actions or proceeding, such
sums so paid or obligations incurred with interest and costs shall be deemed to
be additional rent hereunder and shall be paid by Tenant to Owner within five
(5) days of rendition of any bill or statement to Tenant therefor, and if
Tenant's lease term shall have expired at the time of making of such
expenditures or incurring of such obligations, such sums shall be recoverable by
Owner as damages.
No Repre-
sentations by
Owner:
20. Neither Owner nor Owner's agents have made any representations or promises
with respect to the physical condition of the building, the land upon which it
is erected or the demised premises, the rents, leases, expenses of operation, or
any other matter or thing affecting or related to the premises except as herein
expressly set forth and no rights, easements or licenses are
<PAGE>
said premises and the building of which the same form a part were in good and
satisfactory condition at the time such possession was so taken except to
latent defects. All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and completely
expresses the agreement between Owner and Tenant and any agreement hereafter
made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such agreement is in writing
and signed by the party against whom enforcement of the change, modification,
discharge or abandonment is sought.
End of
Term:
21. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear excepted, and Tenant shall remove all its
property. Tenant's obligation to observe or perform this covenant shall survive
the expiration or other termination of this lease. If the last day of the term
of this lease or any renewal thereof, falls on Sunday, this lease shall expire
at noon on the preceding Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.
Quiet
Enjoyment:
22. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 33
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure
to Give
Possession:
23. If Owner is unable to give possession of the demised premises on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, undertenant or occupants, or if the premises are
located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or for any other
reason, Owner shall not be subject to any liability or failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for the inability to obtain possession) until after
Owner shall have given Tenant written notice that the premises are substantially
ready for Tenant's occupancy. If permission is given to Tenant to enter into the
possession of the demised premises or to occupy premises other than the demised
premises prior to the date specified as the commencement of the term of this
lease. Tenant covenants and agrees that such occupancy shall be deemed to be
under all the terms, covenants, conditions and provisions of this lease, except
as to the covenant to pay rent. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
No Waiver:
24. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by owner of rent
with knowledge of the breach of any covenant of this lease shall not be deemed a
waiver of such breach and no provision of this lease shall be deemed to have
been waived by Owner unless such waiver be in writing signed by Owner. No
payment by Tenant or receipt by Owner of a lesser amount than the monthly rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Owner may accept such check or payment without prejudice to
Owner's right to recover the balance of such rent or pursue any other remedy in
this lease provided. No act or thing done by Owner or Owner's agents during the
term hereby demised shall be deemed in acceptance of a surrender of said
premises and no agreement to accept such surrender shall be valid unless in
writing signed by Owner. No employee of Owner or Owner's agent shall have any
power to accept the keys of said premises prior to the termination of the lease
and the delivery of keys to any such agent or employee shall not operate as a
termination of the lease or a surrender of the premises.
Waiver of
Trial by Jury:
25. It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, relationship
of Owner and Tenant, Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually agreed
that in the event Owner commences any summary proceeding for possession of the
premises, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding.
fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment or
fixtures if Owner is prevented or delayed from doing so by reason of strike or
labor troubles, government preemption in connection with a National Emergency or
by reason of any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions of supply and
demand which have been or are affected by war or other emergency, or when, in
the judgement of Owner, temporary interruption of such services is necessary by
reason of accident, mechanical breakdown, or to make repairs, alterations or
improvements.
Bills and
Notices:
27. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Water
Charges:
28. (see paragraph 53)
Sprinklers:
29. Anything elsewhere in this lease to the contrary notwithstanding, if the New
York Board of Fire Underwriters or the Insurance Services Office or any bureau,
department or official of the federal, state or city government require or
recommend the installation of a sprinkler system or that any changes,
modifications, alterations, or additional sprinkler heads or other equipment be
made or supplied in an existing sprinkler system by reason of Tenant's business,
or the location of partitions, trade fixtures, or other contents of the demised
premises, or for any other reason, or if any such sprinkler system
installations, changes, modifications, alterations, additional sprinkler heads
or other such equipment, become necessary to prevent the imposition of a penalty
or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company. Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent on the
first day of each month during the term of this lease, of the contract price for
sprinkler supervisory service.
[GRAPHIC OMITTED]
Heat,
Cleaning:
30. As long as Tenant is not in default under any of the covenants of this lease
Owner shall, if and insofar as existing facilities permit furnish heat to the
demised premises. Tenant shall, at Tenant's expense, keep demised premises clean
and in order, to the satisfaction to Owner, and if demised premises are situated
on the street floor, Tenant shall, at Tenant's own expense, make all repairs and
replacements to the sidewalks and curbs adjacent thereto, and keep said
sidewalks and curbs free from snow, ice, dirt and rubbish. Tenant shall pay the
cost of removal of any of Tenant's refuse and rubbish from the building.
- ---------------------------------------------------
[GRAPHIC OMITTED] Space to be filled in or deleted.
<PAGE>
[ILLEGIBLE] in the judgement of Owner, are necessary for the proper operation of
the building.
Security:
[GRAPHIC OMITTED]
31. Tenant has deposited with Owner the sum of $50,000 to be held in an interest
bearing account. as security for the faithful performance and observance by
Tenant of the terms, provisions and conditions of this lease; it is agreed that
in the event Tenant defaults in respect of any of the terms, provisions and
conditions of this lease, including, but not limited to, the payment of rent and
additional rent. Owner may use, apply or retain the whole or any part of the
security so deposited to the extent required for the payment of any rent and
additional rent or any other sum as to which Tenant is in default or for any sum
which Owner may expend or may be required to expend by reason of Tenant's
default in respect of any of the terms, covenants and conditions of this lease,
including but not limited to, any damages or deficiency in the re-letting of the
premises, whether such damages or deficiency accrued before or after summary
proceedings or other re-entry by Owner. In the event that Tenant shall fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this lease, the security shall be returned to Tenant after the date fixed as the
end of the Lease and after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or leasing of the
building, of which the demised premises form a part, Owner shall have the right
to transfer the security to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of such security, and
Tenant agrees to look to the new Owner solely for the return of said security;
and it is agreed that the provisions hereof shall apply to every transfer or
assignment made of the security to a new Owner. Tenant further covenants that it
will not assign or encumber or attempt to assign or encumber the monies
deposited herein as security and that neither Owner nor its successors or
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
Captions:
32. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
of any provision thereof.
Definitions:
33. The term "Owner" as used in this lease means only the Owner, or the
mortgagee in possession, for the time being of the land and building (or the
Owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of said
land and building or of said lease, or in the event of a lease of said building,
or of the land and building, the said Owner shall be and hereby is entirely
freed and relieved of all covenants and obligations of Owner hereunder, and it
shall be deemed and construed without further agreement between the parties of
their successors in interest, or between the parties and the purchaser, at any
such sale, or the said lessee of the building, or of the land and building, that
the purchaser or the lessee of the building has assumed and agreed to carry out
any and all covenants and obligations of Owner hereunder. The words "re-enter"
and "re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business days" as used in this lease shall exclude Saturdays
(except such portion thereof as is covered by specific hours in Article 30
hereof), Sundays and all days designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to H V A C service.
Adjacent
Excavation-
Shoring:
34. If an excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the
strictly with the Rules and Regulations and such other and further reasonable
Rules and Regulations as Owner or Owner's agents may from time to adopt.
Notice of any additional rules or regulations shall be given in such manner
as Owner may elect. In case Tenant disputes the reasonableness of any
additional Rule or Regulation hereafter made or adopted by Owner or Owner's
agents, the parties hereto agree to submit the question of the reasonableness
of such Rule or Regulation for decision to the New York office of the
American Arbitration Association, whose determination shall be final and
conclusive upon the parties hereto. The right to dispute the reasonableness
of any additional Rule or Regulation upon Tenant's part shall be deemed
waived unless the same shall be asserted by service of a notice, in writing
upon Owner within ten (10) days after the giving of notice thereof. Nothing
in this lease contained shall be construed to impose upon Owner any duty or
obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall
not be liable to Tenant for violation of the same by any other tenant, its
servants, employees, agents, visitors or licensees.
Glass:
36. Tenant shall replace, at the expense of Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the
demised premises other than breakage resulting from Owner's negligence. Owner
may insure, and keep insured, at Tenant's expense, all plate and other glass
in the demised premises for and in the name of Owner. Bills for the premiums
therefor shall be rendered by Owner to Tenant at such times as Owner may
elect, and shall be due from, and payable by, Tenant when rendered, and the
amount thereof shall be deemed to be, and be paid as, additional rent.
Pornographic
Uses
Prohibited:
37. Tenant agrees that the value of the demised premises and the reputation of
the Owner will be seriously injured if the premises are used for any obscene or
pornographic purposes or any sort of commercial sex establishment. Tenant agrees
that Tenant will not bring or permit any obscene or pornographic material on the
premises, and shall not permit or conduct any obscene, nude, or semi-nude live
performances on the premises, nor permit use of the premises for nude modeling,
rap sessions, or as a so-called rubber goods shops, or as a sex club of any
sort, or as a "massage parlor." Tenant agrees further that Tenant will not
permit any of these uses by any sublessee or assignee of the premises. This
Article shall directly bind any successors in interest to the Tenant. Tenant
agrees that if at any time Tenant violates any of the provisions of this
Article, such violation shall be deemed a breach of a substantial obligation of
the terms of this lease and objectionable conduct. Pornographic material is
defined for purposes of this Article as any written or pictorial matter with
prurient appeal or any objects of instrument that are primarily concerned with
lewd or prurient sexual activity. Obscene material is defined here as it is in
Penal law ss.235.00.
Estoppel
Certificate:
38. Tenant, at any time, and from time to time, upon at least 10 days prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates which the rent and additional rent
have been paid, and stating whether or not there exists any defaults by Owner
under this Lease, and, if so, specifying each such default.
Successors
and Assigns:
39. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
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[GRAPHIC OMITTED] Space to be filled in or deleted.
THE RIDER ANNEXED HERETO WITH ARTICLES 40 ET. SEQ. IS AN INTEGRAL PART OF THIS
LEASE.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
[CORP.
Witness for Owner: BEEKMAN TENANTS CORP. SEAL]
---------------------------------
/s/ [ILLEGIBLE] [L.S.]
- ---------------------------------- ---------------------------------
[CORP.
Witness for Tenant: White & Witkowsky, Inc. SEAL]
---------------------------------
/s/ [ILLEGIBLE] [L.S.]
- ---------------------------------- ---------------------------------
<PAGE>
[Illegible] _____________________, to me known, who being by me duly sworn,
did depose and say that he resides in New York, N.Y.; that he is the President
of Beekman Tenants Corp. the corporation described in and which executed the
foregoing instrument, as OWNER; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
INDIVIDUAL OWNER _____________________________
STATE OF NEW YORK, ss.
County of
On this____day of__________, 19__, before me personally came
____________________________, to me known and known to me to be the individual
____________________________described in and who, as OWNER, executed the
foregoing instrument and acknowledged to me that ____________________________ he
executed the same.
[Illegible] _____________________, to me known, who being by me duly sworn,
did depose and say that he resides in _____________________; that he is the
_____________________ of White & Witkowsky, Inc., the corporation * described in
and which executed the foregoing instrument, as TENANT; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
*New York Limited Partnership _____________________________
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.
County of
On this____day of__________, 19__, before me personally came
____________________________, to me known and known to me to be the individual
____________________________ described in and who, as TENANT, executed the
foregoing instrument and acknowledged to me that ____________________________ he
executed the same.
____________________________
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 35.
1. The sidewalks, entrances, driveways, passages, courts, elevators
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the demised premises and for delivery of merchandise and equipment in a prompt
and efficient manner using elevators and passageways designated for such
delivery by Owner. There shall not be used in any space, or in the public hall
of the building, either by any tenant or by jobbers, or others in the delivery
or receipt of merchandise, any hand trucks except those equipped with rubber
tires and safeguards.
2. If the premises are situated on the ground floor of the building,
Tenant thereof shall further, at Tenant's expense, keep the sidewalks and curb
in front of said premises clean and free from ice, snow, etc.
3. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed.
4. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the demised premises, or permit or suffer the
demised premises to be occupied or used in a manner offensive or objectionable
to Owner in its reasonable judgement or other occupants of the building by
reason of noise, odors and/or vibrations or interfere in any way with other
Tenants or those having business therein.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, not unreasonably withheld, except that the name of Tenant may
appear on the entrance door of the premises. In the event of the violation of
the foregoing by any Tenant, Owner may remove same without any liability and may
charge the expense incurred by such removal to Tenant or Tenants violating this
rule. Signs on interior doors and directory tablet shall be inscribed, painted
or affixed for each Tenant by Owner at the expense of such Tenant, and shall be
of a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations or the
lease of which these Rules and Regulations are a part.
9. Owner shall have the right to prohibit any advertising by any Tenant
which, in Owner's reasonable opinion, tends to impair the reputation of Owner or
its desirability as a building for stores or offices, and upon written notice
from Owner, Tenant shall refrain from or discontinue such advertising.
10. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other excessive objectionable odors to permeate in
or emanate from the demised premises.
11. Tenant shall not place a load on any floor of the demised premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Owner reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant at Tenant's expense in
setting sufficient in Owner's judgment to absorb and prevent vibration, noise
and annoyance.
GUARANTY
The undersigned Guarantor guarantees to Owner, Owners successors and
assigns, the full performance and observance of all the agreements to be
performed and observed by Tenant in the attached Lease, including the "Rules and
Regulations" as therein provided, without requiring any notice to Guarantor of
nonpayment or, nonperformance, or proof, or notice of demand, to hold the
undersigned responsible under this guaranty, all of which the undersigned hereby
expressly waives and expressly agrees that the legality of this agreement and
the agreements of the Guarantor under this agreement shall not be ended, or
changed by reason of the claims to Owner against Tenant of any of the rights or
remedies given to Owner as agreed in the attached Lease. The Guarantor further
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, change or extension of the Lease. As a further inducement to
Owner to make the Lease Owner and Guarantor agree that in any action or
proceeding brought by either Owner or the Guarantor against the other on any
matters concerning the Lease or of this guaranty that Owner and the undersigned
shall and do waive trial by jury.
______________________________________________________________________ Guarantor
Address
Premises
================================================================================
TO
================================================================================
STANDARD FORM OF
[SEAL] Store [SEAL]
Lease
The Real Estate Board of New York, Inc.
(c) Copyright 1979. All Rights Reserved.
Reproduction in whole or in part prohibited.
================================================================================
Dated 19__.
Rent per Year
Rent per Month
Term
From
To
Drawn by.................................Checked by............................
Entered by...............................Approved by...........................
================================================================================
<PAGE>
RIDER CONSISTING OF ARTICLES 40 THROUGH 90
FORMING PART OF LEASE DATED AS OF OCTOBER 15, 1991
BETWEEN BEEKMAN TENANTS CORPORATION, LANDLORD
AND WHITE & WITKOWSKY, INC., TENANT.
TABLE OF CONTENTS
40. Use .............................................................. 1
41. Fixed Rental ..................................................... 2
42. Restrictions on Music ............................................ 5
43. Rent and Occupancy Taxes ......................................... 6
44. Tenant Restrictions .............................................. 6
45. Insurance ........................................................ 9
46. Odors; Extermination, Etc ........................................ 11
47. Representations .................................................. 12
48. Assignment of Lease .............................................. 13
49. Ground Leases .................................................... 18
50. Additional Alteration Provisions ................................. 19
51. Additional Default Provisions .................................... 26
52. Tenant's Employees ............................................... 28
53. Utilities ........................................................ 29
54. Steam ............................................................ 32
55. Remedies ......................................................... 33
56. Additional Bankruptcy Provisions ................................. 33
57. Condition of Demised Premises .................................... 37
58. Deliveries and Garbage Removal ................................... 38
59. Signage .......................................................... 38
60. Tenant's Obligations ............................................. 39
61. Licenses and Permits ............................................. 40
62. Contractors ...................................................... 40
63. Real Estate Taxes ................................................ 41
64. Vacations ........................................................ 42
65. No Other Restaurant .............................................. 42
66. Conflict ......................................................... 42
67. Structural Repairs ............................................... 42
68. Fire ............................................................. 44
69. Certificate of Occupancy ......................................... 44
70. Abatement ........................................................ 44
71. Waste Removal .................................................... 45
72. Condition on Termination ......................................... 45
73. Existing Equipment ............................................... 46
74. Laundry Facilities ............................................... 46
75. Sprinkler System ................................................. 46
76. Plans ............................................................ 46
77. Improvements ..................................................... 46
78. Health Code Violations ........................................... 47
79. Alarm System ..................................................... 47
<PAGE>
(ii)
80. Limitation of Liability .......................................... 48
81. Definitions ...................................................... 48
82. Broker ........................................................... 49
83. Rent Regulations ................................................. 49
84. Authorization .................................................... 50
85. Arbitration ...................................................... 50
86. Landlord's Security Interest ..................................... 51
87. Renewal Option ................................................... 52
88 Miscellaneous .................................................... 55
90. Entire Agreement ................................................. 59
<PAGE>
40. Use. (a) Tenant shall use and occupy the demised premises only as and
for the conduct of a high-class dining-room and restaurant business for the sale
to the public of food, liquors, alcoholic and nonalcoholic beverages of all
kinds, to be consumed on the premises and for the sale of cigars and cigarettes,
as well as such incidentals as are usually and customarily sold in restaurants
of similar character and for no other purposes. Tenant shall use the East 63rd
Street entrance only as its address in all advertising and for all other
purposes; Tenant shall not use the 575 Park Avenue address.
Said restaurant shall be operated as a first class restaurant as to
quality, decor and patronage. Examples of first class restaurants for purposes
of this lease are Post House, La Cite and Smith & Wollensky. The Tenant not yet
having selected the name for the restaurant to be operated on the demised
premises further agrees to operate said restaurant on the demised premises under
such name as may be consented to in writing by the Landlord, which consent shall
not unreasonably be withheld or delayed, during the term of this lease or during
any extended or renewal term hereof. The foregoing notwithstanding, Landlord
hereby consents to such name as the original Tenant may select so long as same
shall not be patently offensive or objectionable.
(b) The Tenant shall conduct and operate, or cause to be conducted
and operated, in the first-class manner above set forth, in the demised
premises, a dining room and restaurant business, with due diligence, daily, and
during all hours which is commercially reasonable
<PAGE>
for first class restaurants operating in the vicinity of the demised premises to
be open, provided such times will not be violative of any law, rule or
regulation of the Federal Government, the State of New York or the City of New
York or any division, agency of bureau thereof or any provision of this lease.
41. Fixed Rental. (a) The fixed rent ("Fixed Rent") which the Tenant
herewith agrees to pay to the Landlord shall be as follows:
(i) At the annual rate of Two Hundred Sixteen Thousand and 00/100
($216,000.00) Dollars (payable in equal monthly installments of Eighteen
Thousand and 00/100 ($18,000.00) Dollars) during the period commencing on the
date hereof and continuing through October 31, l994,
(ii) At the annual rate of Two Hundred Forty-one Thousand Nine
Hundred Twenty and 00/100 ($241,920.00) Dollars (payable in equal monthly
installments of Twenty Thousand One Hundred Sixty and 00/100 ($20,160.00)
Dollars) during the period commencing on November 1, 1994 and continuing through
October 31, 1997,
(iii) At the annual rate of Two Hundred Seventy Thousand Nine
Hundred Fifty and 00/100 ($270,950.00) Dollars (payable in equal monthly
installments of Twenty-two Thousand Five Hundred Seventy-nine and 17/100
($22,579.17) Dollars) during the period commencing on November 1, 1997 and
continuing through October 31, 2000,
- 2 -
<PAGE>
(iv) At the annual rate of Three Hundred Three Thousand Four Hundred
Sixty-four and 00/100 ($303,464.00) Dollars (payable in equal monthly
installments of Twenty-five Thousand Two Hundred Eighty-eight and 67/100
($25,288.67) Dollars) during the period commencing on November 1, 2000 and
continuing through October 31, 2003, and
(v) At the annual rate of Three Hundred Thirty-nine Thousand Eight
Hundred Eighty and 00/100 ($339,880.00) Dollars (payable in equal monthly
installments of Twenty-eight Thousand Three Hundred Twenty-three and 33/100
($28,323.33) Dollars) during the period commencing on November 1, 2003 and
continuing through October 31, 2006.
The foregoing notwithstanding, the Tenant shall not be obligated to
pay Fixed Rent during the initial four months (i.e. November 1 through February
28, 1992) of this lease and shall be entitled to pay only 50% of the monthly
Fixed Rent during the fifth month and sixth months (i.e. March 1 through April
30, 1992) of this lease.
Except as otherwise herein provided, the Fixed Rent (and other rent
due hereunder) shall be payable in equal monthly installments, in advance, on
the first day of each month, without further notice, at the office of the
Landlord, 575 Park Avenue, New York, New York or at such other place as may be
designated by Landlord. Such rent shall be due without set-off or deduction; in
the event other provisions of this lease require payment of specified amounts
upon receipt of a bill
- 3 -
<PAGE>
therefor, such other provisions shall take precedence over this provision.
Rent which is not received on or before the tenth day of each month
shall be "late" and shall be subject to a bookkeeping charge of two percent and
after thirty days from the due date shall bear interest at the maximum legal
rate until paid.
(b) Commencing on November 1, 1994 and each third anniversary
thereafter during the term of this lease, the Fixed Rent set forth in Paragraph
(a) of this Article 41 shall be increased (but not decreased) by a percentage
equal to one-half the percentage determined by subtracting 12% from the
aggregate percentage increase in the U.S. Bureau of Labor Statistics Price Index
(Metropolitan New York - All Urban Consumers 1982 equalling 100) for the prior
three year period then ended.
For example, should the CPI on November 1, 1994 exceed the CPI on
the date of this lease by 15%, the Fixed Rent payable commencing November 1,
1994 shall be increased by an aggregate 13 1/2% above the Fixed Rent for the
three year period then ended. In other words, the Fixed Rent commencing October
15, 1994 would equal $245,160.00 (payable in equal monthly installments of
$20,430.00).
Upon execution of this lease Tenant shall deliver the first full
month's rent (i.e., the rent to be applied toward May 1992) and the
- 4 -
<PAGE>
security payable pursuant to Article 31 of this lease (i.e., an aggregate
Sixty-eight Thousand ($68,000) Dollars) by bank or certified check. The
foregoing notwithstanding, Tenant may substitute an irrevocable letter of credit
drawn upon Morgan Guaranty Trust Company of New York in the amount of $50,000,
in form reasonably satisfactory to Landlord for the check delivered in payment
of the security payable pursuant to Article 31 of this lease.
42. Restrictions on Music. Tenant shall be permitted to provide musical
entertainment and other music for its patrons in the demised premises provided
the same is "soft music" (such as piano or string quartet music) and is not
unreasonably loud or offensive in any of the residential apartments of the
building in which the demised premises are located. Tenant may not operate a
cabaret or dance establishment and Tenant shall be responsible for payments to
any and all applicable performing rights organizations. Tenant may have live
band music on Friday and Saturday evenings, Valentine's Day and New Year's Eve,
which shall be the only nights when live music shall be permitted after
midnight. Tenant may, on occasion, in connection with the catering of a party,
have live band music, provided it shall not be permitted after midnight and
further provided it is not unreasonably loud or offensive in any of the
residential apartments of the building in which the demised premises are
located. In the event of noise complaints from residential tenants, the Board of
Directors of Landlord may upon resolution and written notice to Tenant,
establish a set of rules which further restrict the use of music in the demised
premises, which rules
- 5 -
<PAGE>
are reasonably designed to address the complaints of the residents while
recognizing the need of Tenant to conduct its business as contemplated by this
lease.
Notwithstanding any of the provisions of this Article 42, Tenant
shall not permit any entertainment or music to reach such noise level that the
same may be heard outside the demised premises; accordingly Tenant at Tenant's
sole cost and expense, shall install prior to commencement of operations all
necessary soundproofing required for its operations to meet the foregoing
standards.
43. Rent and Occupancy Taxes. All rent and additional rent paid by Tenant
shall be deemed paid for use of the demised premises. Tenant shall be
responsible for payment of all commercial rent and occupancy taxes which may be
due as a result of the existence of this lease; upon request of Landlord or its
attorneys or accountants, Tenant shall supply copies of commercial rent and
occupancy tax reports and returns and proof of payment of such taxes to Landlord
within 10 days after the due date thereof.
44. Tenant Restrictions. (a) The Tenant agrees not to suffer or permit any
nuisance upon the said premises or any part thereof or the occupancy or use
thereof for any purpose which shall be unlawful, disreputable or immoral, and
will not suffer or permit any thing or substance to be brought in, or any act to
be done on, said premises which would make void any policy of fire or other
insurance, or give any
- 6 -
<PAGE>
insurer an option to cancel any policy. Under no circumstances shall Tenant
permit the premises to be used for illegal gambling, conventions, or for fund
raising or other activities involving political candidates or ballot issues, or
the promulgation of controversial principles. Fund raising for museums or
charities which are registered with the New York Attorney General and enjoy tax
exempt status shall be permissible within the other restrictions imposed by this
lease. In no event shall the premises be used for purposes other than as a first
class restaurant as defined in this lease.
(b) The Tenant shall not use the demised premises or any portion
thereof or permit the demised premises or any part thereof to be used in any
manner which (i) constitutes a public or private nuisance, (ii) would cause
physical damage to the building or any part thereof, (iii) the Landlord
reasonably deems to impair the appearance, character or reputation of the
building, (iv) Landlord reasonably deems offensive by reason of the discharge of
excess objectionable fumes, vapors or odors into the building systems or
facilities or into the building flues or vents not designed for or capable of
receiving them, (v) the Landlord reasonably deems to impair or interfere with
any building services or the proper economic heating, air conditioning, cleaning
or other servicing of the building, or (vi) the Landlord reasonably deems to
impair or interfere with the use or occupancy of any of the other areas of the
building by, or occasion discomfort or annoyance to, the Landlord or any other
tenants or occupants of the building.
- 7 -
<PAGE>
(c) The Tenant shall not (i) engage in any unethical methods of
business operation, (ii) use or permit to be used the sidewalks or other space
outside the premises for any displays, sales or similar undertaking or storage,
(iii) use or permit to be used any loudspeaker, phonograph or other sound system
or advertising device which may be heard outside the premises, or (iv)
distribute or permit to be distributed handbills or other matter to customers
outside the premises. Tenant further shall cause the appearance of the premises
and the deportment of all personnel employed therein at all times to be in
keeping with the dignity and stature of a first class restaurant in a first
class building.
(d) Landlord operates the Beekman Hotel as a first class residential
cooperative apartment building under the ground leases herein described.
Landlord and Tenant acknowledge that Landlord has certain industry-wide
contractual obligations to the New York Hotel and Motel Trades Council,
AFL-CIO. Landlord and Tenant further acknowledge that this is a space lease
only and Tenant agrees that it shall operate the demised premises in accordance
with the terms of this lease separate and distinct from the portion of the
Building comprising the hotel, except as otherwise required by law.
45. Insurance. (a) Tenant agrees to keep in force for the benefit of
Landlord and Tenant the following listed kinds of insurance policies. All such
policies shall be written by solvent insurance companies licensed to do business
in the State of New York and in the amounts set
- 8 -
<PAGE>
forth or where not set forth, in amounts reasonably satisfactory to Landlord.
Any casualty insurance proceeds shall be applied first towards the cost of
repair or replacement unless specific provision is otherwise made herein. All
policies shall name both Landlord and Tenant as insureds.
(i) General Liability policies in standard form protecting the
Landlord from and against any and all liability occasioned by claims and suits
for personal injury or property loss and damage in the amount of One Million
Dollars ($1,000,000) per person, per occurrence. Said policies shall have an
occurrence endorsement.
(ii) Fire legal liability policies to cover property damage to the
building or premises in which the demised premises are located in an amount of
One Million Dollars ($1,000,000) per occurrence.
(iii) Alcohol and liquor liability policies protecting Landlord from
claims and suits for injuries to persons or damage to property resulting from or
related to the consumption, sale, use, gift or distribution of alcoholic
beverages by Tenant in the amount Five Hundred Thousand Dollars ($500,000) per
person, per occurrence.
(iv) Products liability insurance protecting Landlord from claims
and suits for injuries to persons or property resulting from or related to the
consumption, use, sale, gift or distribution of food or
- 9 -
<PAGE>
beverages by Tenant in the amount of One Million Dollars ($1,000,000) per
person, per occurrence.
(v) Plate glass insurance for the benefit of Landlord in an amount
reasonably set by Landlord.
(vi) Umbrella or excess liability policy for Landlord's benefit in
the amount of $2,000,000 per person per occurrence for suits, claims or damages
in excess of the stated amounts in subarticles (i), (iii) and (iv).
Tenant shall deliver all aforedescribed policies to Landlord prior to
taking possession of the premises, or in the case of alcohol liability, prior to
selling any alcoholic beverages. Tenant shall deliver to Landlord Certificates
of insurance of renewal and renewal policies fifteen days prior to expiration of
the aforedescribed policies. Each policy shall contain a provision requiring the
insurance company to notify Landlord of the cancellation of such policy not less
than thirty (30) days prior to the date of such cancellation.
(b) Wherever in this lease policies of insurance or bonds, are to be
provided for the benefit of the Landlord, the same shall, at the option of the
Landlord, be made payable to and shall secure the Landlord and/or the Landlord's
lessors and/or the owners of any mortgage, or mortgages, covering the said
demised premises, as their interest may appear.
- 10 -
<PAGE>
46. Odors; Extermination, Etc. The Tenant covenants and agrees to maintain
at all times in good working order and condition an adequate system of
ventilation, and air cooling, and shall conduct its business in such manner that
noxious gases, fumes or odors or anything reasonably objectionable to tenants or
persons in or about the Beekman Hotel shall be emitted outside the building so
as to reasonably avoid any nuisance, disturbance or interference whatsoever with
the use and enjoyment of the said Beekman Hotel by the tenants and occupants
thereof in conformance with the practice of first class restaurants. Tenant
shall be responsible for all additions, repairs, maintenance and replacements to
said system(s). The Tenant shall install, maintain, repair and replace as
necessary an approved ansul system or other fire prevention system as required
by law or as may reasonably be required by Landlord's insurance company.
Anything herein contained to the contrary notwithstanding, the Tenant
shall not suffer or permit and further agrees to prevent, by means of
contracting for or employing the services of a licensed exterminating company,
and by other reasonably satisfactory means, to be employed at regular and
reasonable intervals, the accumulation, in or about all areas of the demised
premises, including but not limited to the basement, of any vermin, rodents,
bugs, insects or anything of like objectionable nature. The Tenant further
covenants and agrees that no waste matter or refuse will be permitted to
accumulate in or about the demised premises and that the interior and immediate
exterior of the demised premises (including any passageways used by Tenant) will
at all
- 11 -
<PAGE>
times be kept in a clean and orderly condition. The Tenant shall, at the
Tenant's own cost and expense, make non-structural repairs to the interior and
fixtures, awnings and appurtenances located on the exterior of the demised
premises whenever such repairs are necessary, upon written, reasonable request
from the Landlord; but Tenant shall not be obligated to make structural repairs
to the building or its appurtenances (other than awning or marquee).
Tenant covenants and agrees that it will install, repair, maintain and
replace grease traps in the sewer and waste lines running from the demised
premises and Tenant will take all precautions to avoid stoppage of such lines.
Tenant shall be responsible for repairing, maintaining and replacing those parts
of the waste plumbing system which run between the demised premises and the main
waste lines of the building. These parts of the waste system shall be deemed to
include the floor drains.
47. Representations. (a) Tenant warrants and represents that (i) it is a
corporation duly organized and validly existing in the State of New York; (ii)
it is authorized to enter into this lease; and, (iii) upon execution, this lease
shall be an agreement binding on the Tenant.
(b) Landlord warrants and represents that (i) it is a cooperative
housing corporation duly organized and validly existing in the State of New
York; (ii) it is authorized to enter into this lease; and, (iii) upon execution,
this lease shall be an agreement binding on the Landlord.
- 12 -
<PAGE>
48. Assignment of Lease. (a) In the event that Tenant wishes at any time
to assign this lease it may do the same subject to strict compliance with the
following:
(i) Tenant shall provide to Landlord complete financial statements
for the proposed assignee prepared by a certified public accountant.
(ii) Tenant shall provide resumes of the principals of the proposed
assignee identifying their relationships to first class restaurants and their
experience in the operation and/or ownership of the same.
(iii) Tenant shall provide full copies of all documents to be
executed between the Tenant and proposed assignee including all financial
details of consideration, rent, key money, license transfer fees or other
monetary or other consideration which changes hands.
(b) Provided Tenant has supplied all of the items required in
subarticle (a), and provided the same are reasonably satisfactory to Landlord
and its professional consultants, Landlord will not unreasonably withhold its
consent provided that a percentage of any "key money," additional rent or other
consideration in excess of rent and other sums payable to Landlord pursuant to
the terms hereof, is paid and delivered to Landlord simultaneously with the
delivery of Landlord's consent to such assignment computed as follows:
- 13 -
<PAGE>
(i) If such assignment occurs during the first year of the lease,
50% of all amounts in excess of $600,000;
(ii) If such assignment occurs during the second year of the lease,
50% of all amounts in excess of $520,000;
(iii) If such assignment occurs during the third year of the lease,
50% of all amounts in excess of $440,000;
(iv) If such assignment occurs during the fourth year of the lease,
50% of all amounts in excess of $360,000;
(v) If such assignment occurs during the fifth year of the lease,
50% of all amounts in excess of $280,000;
(vi) If such assignment occurs during the sixth year of the lease,
50% of all amounts in excess of $200,000;
(vii) If such assignment occurs during the seventh year of the
lease, 50% of all amounts in excess of $120,000;
(viii) Thereafter, 50% of all sums received.
The foregoing notwithstanding, the amount payable to Landlord hereunder shall
not exceed $500,000 (the "Cap"), which Cap shall be increased (but
- 14 -
<PAGE>
not decreased) by a percentage equal to the increase in the U.S. Bureau of Labor
Statistics Price Index (Metropolitan New York - All Urban Consumers 1982
equalling 100) for the period from November 1, 1991 to the date of such payment.
(c) In no event shall Landlord be deemed to be acting unreasonably
if it rejects proposed assignees for any one or more of the following reasons:
(i) A principal is ineligible to hold a liquor license;
(ii) A principal has less than five years experience in the
ownership and operation of a first class restaurant;
(iii) The net worth of the proposed assignee is less than $250,000,
unless such assignee agrees to make and secure an investment in the demised
premises of at least $250,000:
(iv) The Proposed entity is a franchise or branch of another
restaurant;
(v) Tenant is in default of any material provision of this lease at
the time a request is made to assign this lease;
(vi) Tenant seeks to assign its lease to less than all of the
demised premises;
- 15 -
<PAGE>
(vii) Tenant shall have refused or otherwise failed to reimburse
Owner on demand for any reasonable costs that may be incurred by Owner in
connection with said assignment, including, without limitation, the reasonable
cost of making investigations as to the acceptability of the proposed assignee
and reasonable legal costs incurred in review or preparation of any
documentation in connection therewith.
(d) Tenant shall not license use of the premises or attempt by
artifice or device to accomplish an assignment by other means. Tenant shall not
be permitted to sublet all or any part of the demised premises.
(e) In any event, upon receipt by Landlord of a request to assign
the lease, the Landlord shall have the option, in its sole discretion, to
declare this lease to be terminated as of the proposed date of assignment or on
a date set by Landlord not less than thirty nor more than sixty days from
receipt of the request to assign. Landlord shall respond to the request to
assign within ten business days of actual receipt of the request.
In the event Landlord elects to terminate the lease pursuant to the
option hereby granted, the Tenant shall be liable for rent and other payments
accrued through the date of termination and for any damages caused by moving.
- 16 -
<PAGE>
In the event Landlord exercises its option to terminate the lease
upon Tenant's request to assign the same, Landlord agrees to pay to Tenant an
amount equal to the net amount Tenant would have received from the proposed
assignee pursuant to subsection (b) of this Article. Payment of such amount by
Landlord shall be made on the same terms and at the same times as would have
been made by such assignee. Nothing contained herein shall prevent Landlord from
leasing the demised premises to Tenant's proposed assignee.
(f) If any material representation made by the Tenant in this
Article is false, or in the event the Tenant fails to perform any of the terms
and conditions of this Article on its part to be performed, or in the event any
shareholder of Tenant, without first obtaining the aforementioned written
consent of the Landlord, sells, assigns, transfers, or in any other way disposes
of any shares of the capital stock of Tenant that may now or hereafter be held
or owned by (them) him, other than to an immediate family member or an entity
controlled by (them) him or among the shareholders of Tenant, or if any shares
of capital stock Tenant that may now or hereafter be held or owned are sold by
virtue of any execution under a judgment, or by virtue of any collateral
security agreement or by operation of law or otherwise (other than as permitted
in this Article 48), or if Alan Stillman lose majority voting control of Tenant,
then such false representation, or failure by Tenant to perform, or such action
by a shareholder of the general partner or a partner of Tenant, or such sale, or
such occurrence shall be considered a material default by the Tenant in the
fulfillment of the
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covenants of this lease, and unless Tenant shall cure such default within five
(5) days of written notice thereof the Landlord shall have the right to
terminate this lease immediately, and, in addition thereto, Landlord shall have
the right to exercise any and all rights and privileges and remedies given to
the Landlord by and pursuant to the other provisions of this lease. The
foregoing notwithstanding, Tenant may, without restriction or payment of any
amount to Landlord, assign this lease to another entity in which Alan Stillman
maintains a controlling ownership interest of at least 51%.
49. Ground Leases. It is understood and agreed that the Landlord is not
the owner in fee of the premises herein demised and that it is the lessee of the
entire cooperative apartment building known and designated as the Beekman Hotel
and located at 63rd Street and Park Avenue, of which the demised premises form a
part. The Landlord is lessee under the following leases (hereinafter sometimes
called the "major leases");
(a) Lease dated March 3l, 1926 between Abraham B. Cox and Julia E.
Cannon, Lessors, and 571 Park Avenue Corporation, Lessee, as amended May 24,
1927 and December 30, 1941, and as renewed by agreements dated April 1, 1952,
April 1, 1957 and March 30, 1962 and renewed and modified by agreement dated
April 1, 1968 and by lease modification dated May 5, 1967; and
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(b) Lease dated September 30, 1925, between Clarinda S. Boardman,
Lessor, and 571 Park Avenue Corporation, Lessee, as amended by agreements dated
June 1, 1927 and December 30, 1941, and as renewed by agreements dated April 1,
1952, October 15, 1956 and March 30, 1962, and renewed and modified by agreement
dated April 1, 1968 and by lease modification dated May 5, 1967.
The within lease, it is agreed, is subject and subordinate to all of
the terms, covenants and conditions of the said major leases, as amended and
renewed and modified.
50. Additional Alteration Provisions. Supplementing, but not limiting the
provisions of Article 3 of this Lease, the Tenant shall have the right to make
alterations, additions and improvements in the said demised premises, subject to
the following terms and conditions;
(a) Tenant shall, before the commencement of any such work, submit
to the Landlord for the Landlord's approval in writing, which approval shall not
be unreasonably withheld or delayed, plans and specifications for such work, and
shall not commence such work without such approval in writing. All plans
submitted to Landlord shall be signed by a licensed architect or engineer.
(b) Tenant shall be responsible for the timely filing of said plans
and specifications with, and obtaining the necessary approval by, the municipal,
state or other governmental authority having jurisdiction
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thereof, including, but not limited to the New York City Landmarks Preservation
Commission.
(c) In consideration for, and as an inducement to the Landlord
consenting to Tenant's alterations, Tenant before commencing the work of any
structural alterations, additions and improvements shall, at Tenant's own cost
and expense, deliver to Landlord a bond in a form satisfactory to Landlord and
executed by a surety company authorized to do business in the State of New York,
in a sum equal to the estimated cost of such structural alterations, additions
and improvements which shall guaranty to the Landlord:
(i) That the said structural alterations, additions and improvements
will commence within thirty (30) days of the date of the bond, and
will be completed within a reasonable time thereafter (the time to
be fixed in said bond) and in accordance with the plans and
specifications of Tenant.
(ii) That the Landlord shall be indemnified, saved and held harmless
of and from any and all claims, counsel fees, loss, damages and
expenses whatsoever by reason of any liens, orders, claims, charges
or payments of any kind whatsoever that may be made by or accrue or
become chargeable against the Landlord, the Tenant or the said
demised premises, by reason of any work done or materials
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furnished in connection with the said structural alterations,
additions and improvements.
(iii) That if any mechanic's lien is filed against the Landlord, the
Tenant, or the demised premises, or any part thereof, or any
interest therein, the same shall be discharged by the Tenant, at the
Tenant's expense, within ten (10) days thereafter by the filing of
the bond required by law.
(iv) That Tenant will otherwise fully comply with all the terms and
conditions of this Article 50.
(d) That if any alterations, additions and improvements in said
demised premises be structural and shall cost in excess of Ten Thousand Dollars
($10,000.00), the Tenant, before commencing such work, shall deliver, at the
Tenant's own cost and expense, the following bonds:
1. The bond required to be delivered to Lessor, pursuant to
condition numbered 2 on Page 4 of lease dated September 30, 1925
between Clarinda S. Boardman, Lessor, and 571 Park Avenue
Corporation, Lessee.
2. The bond required to be delivered to Lessors pursuant to
condition numbered 2 on Page 5 of lease
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between Abraham B. Cox and Julia T.E. Cannon, Lessors and 571 Park
Avenue Corporation, Lessee, dated March 31, 1926.
Further, if said Lessors require the services of an architect to
determine the estimated cost of such alterations, additions and improvements,
the reasonable fees of the said architect shall be paid by the Tenant in the
within lease.
It is agreed that the Tenant may, if it desires furnish one bond
(instead of two) to comply with the provisions of subdivisions (c) and (d) of
this Article 50, but only if such one bond is acceptable to the said Lessors of
the major leases.
(e) That, before commencing the said alterations, additions and
improvements, the Tenant and all its contractors and subcontractors shall, at
the Tenant's own expense, as required in Article 3 hereof, carry such Workmen's
Compensation and General Liability Insurance as the Landlord may reasonably
require, and as may be required under the major leases, and shall deliver to the
Landlord certificates of such insurance.
(f) That at least ten (10) days before the commencement of such
alterations, additions and improvements, the Tenant shall notify the Landlord in
writing of the Tenant's intention to commence the same and the Tenant shall pay
the amount of any increase in the premiums on
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insurance policies covering the building, on account of endorsement to be made
upon said policies, covering the risk during the course of such alterations,
additions and improvements. Landlord acknowledges that Tenant has notified
Landlord of Tenant's intention to commence such alterations, additions and
improvements.
(g) That if the Tenant fails to bond or discharge a mechanics's
lien, within ten (10) days after it is filed, by the filing of the bond required
by law, the Landlord shall have the right, upon five (5) days' prior written
notice to Tenant, to pay said lien, and the amount so paid by the Landlord, with
interest at the maximum legal rate chargeable to a corporation (not to exceed
twenty-four [24%] per annum) from the date of payment shall be additional rent
and the same shall be due and payable on written demand.
(h) That Article 3 of this lease shall apply to, and govern, such
alterations, additions and improvements, and after the making thereof, all
provisions and articles of this lease shall apply to, said alterations,
additions and improvements and to the rights and obligations of Tenants and the
Landlord with reference thereto.
If the Tenant fails to perform any of the terms or conditions of
this Article on the Tenant's part to be performed, then such failure by the
Tenant shall be considered a default by the Tenant in the fulfillment of the
covenants of this lease and Landlord shall have the
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right to exercise any and all rights and privileges and remedies given to the
Landlord by and pursuant to the other provisions of this lease.
Anything to the contrary in this Article 50 notwithstanding, it is
agreed that the Tenant may, without the Landlord's consent, make reasonable
decorative changes in the demised premises.
(i) Tenant shall obtain the necessary consents, authorizations and
licenses from all federal, state and/or municipal authorities having
jurisdiction over any of the work, and all the work shall be done in accordance
with the plans and specifications and the consents, authorizations and licenses
obtained. All work shall be performed in compliance with the provisions of law
and regulations applicable thereto and Tenant shall obtain and deliver to
Landlord all "sign offs" of the New York City Building Department and any other
governmental agencies involved.
(j) All electrical work performed by Tenant or its contractors must
be approved by the New York Board of Fire Underwriters.
(k) All plumbing and electrical work performed by Tenant or its
contractors must be done by licensed individuals.
(l) Tenant will indemnify and save Landlord harmless from and
against any and all bills for labor performed and equipment, fixtures and
materials furnished to Tenant and against any and all liens, bills
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or claims therefor or against the demised premises or the building containing
the same and from and against all losses, damages, costs, expenses, suits and
claims whatsoever in connection with any such work, including, without
limitation, any liability or charge for sales or other taxes imposed or demanded
for labor or materials in connection therewith.
(m) All alterations will be done in a good and workmanlike manner
and with first quality materials.
(n) Landlord and its agents shall have the right to inspect the
demised premises while the alterations are being done.
(o) No alteration shall cause or result in the occurrence of such
unreasonable odors, noise and/or vibration as would violate any provision of
this lease.
(p) Tenant shall proceed with all alterations promptly and shall
prosecute the same to completion with reasonable diligence and continuity under
all the facts and circumstances then prevailing.
(q) The term "alteration" as used in this lease shall mean any
decoration, improvement, addition, change or installation of, in, or to the
demised premises, including, without limitation, any of such involving
electrical, air conditioning, ventilation, heating, plumbing, ceilings,
stairways, partitions, demising walls within the demised
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premises, doors, gates, vaults, paneling, molding, shelving, radiators,
enclosures, floors and floor coverings, whether or not the same are made in
connection with the repair, replacement or addition to trade fixtures, machinery
or equipment.
(r) All new equipment or personal property installed and used by
Tenant in operation of its business pursuant to the terms hereof, other than its
telephone system, computer and ice machine, shall be owned by Tenant free and
clear of any liens, liabilities or other encumbrances and, with the exception of
original artwork, shall upon termination of this lease become the property of
Landlord, free and clear of all liens, liabilities or encumbrances.
51. Additional Default Provisions. Anything in this lease contained to the
contrary notwithstanding, except in connection with any of the following (each
of which, in the event of default, Tenant shall have five (5) days' prior
written notice to cure):
(a) The payment of rent, whether such rent be the monthly payments
or rent, additional rent, escalations or otherwise;
(b) The obligation of the Tenant to provide and keep in force
insurance;
(c) Any default under Article 48 hereof;
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(d) The terms and conditions set forth in Article 50 hereof;
the Tenant shall not be deemed in default unless the Landlord shall have given
to the Tenant notice by personal delivery of the same at the demised premises or
by registered mail specifying the nature of such default, and the same shall not
have been cured within the grace period provided therefor in this lease, and
where a grace period has not been otherwise provided for then within thirty (30)
days after the giving of such notice. If any default shall consist of a failure
to make repairs or to comply with the rules or regulations of public or
quasi-public authorities, and the same cannot with reasonable diligence be
remedied within the said thirty (30) day period, the Tenant shall not be deemed
in default if the Tenant shall have commenced the work of making such repairs or
complying with such rule, regulation or requirement within such period and shall
be proceeding with the same in a reasonable and diligent manner. Anything
contained in this lease to the contrary notwithstanding, and provided Tenant is
not otherwise in default hereunder, Tenant shall not be deemed in default under
the provisions of this lease, solely as a result of the fact that its use of the
demised premises as contemplated in Article 40 hereof is determined by
appropriate governmental authorities to constitute a violation of the existing
certificate of occupancy.
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<PAGE>
52. Tenant's Employees.
(a) Tenant shall at all times enforce good order among its
employees.
(b) The Tenant will indemnify and hold harmless the Landlord from
and against any and all liability to, claim or demand of, the Tenant, its
agents, servants, licensees, invitees, guests or undertenants or any other
person or corporation, which liability, claim or demand shall arise in or out of
Tenant's operation of the demised premises or the sidewalk in front of or
adjoining the demised premises. For the purposes of this lease such sidewalk
shall be defined as the sidewalk running the entire length of the building on
63rd Street.
(c) The Tenant will well and faithfully observe and cause to be
observed by the Tenant's servants, employees and agents and by all other
occupants of the demised premises, all of the rules and regulations hereafter
established that, in the judgment of the Landlord, shall be necessary for the
safety, care and cleanliness of the demised premises, or the building in which
said premises are situated and for the preservation of good order therein.
(d) The Tenant agrees that the best endeavors of the Tenant will be
used to prevent Tenant's employees from loitering in, or around, the hallways,
basement, stairways or elevators of the building in which
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the demised premises are located, or from, at any time, loitering in front of,
or along the sidewalk of, the said building.
(e) Tenant does hereby agree that its patrons, guests, invitees,
agents, servants and employees shall not have the right to use the washroom
facilities of the hotel located off the main corridor in the Hotel and Tenant
agrees to reasonably cooperate with Landlord to prevent such use. Tenant further
agrees that its patrons, guests, invitees, agents, servants and employees will
only use the 63rd Street entrance for ingress and egress to the demised
premises, and that the door from the demised premises into the lobby of the
Hotel will be not used for ingress and egress to the demised premises except as
may otherwise be required by law. Subject to the applicable fire and safety
codes, Landlord shall have the right to lock and/or secure access ways between
the demised premises and the other portions of the building in which the demised
premises are located. Tenant shall take reasonable steps to prevent patrons
from using the entrance to the lobby. Such steps shall include posting of
appropriate signs. Nothing contained herein shall be deemed to restrict the use
of such entrance as a fire or emergency exit and any restriction shall in all
cases be subject and subordinate to applicable fire and safety codes.
53. Utilities. Tenant shall, at its own cost and expense, pay any and all
charges for
(a) electricity and electric power furnished to any part of the
demised premises, whether used for lighting, heat or power purposes;
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(b) water consumed by, or in, any part of the demised premises as
reflected on water meters bearing numbers 9405 and 2886 (and any replacements or
substitutions) which are currently billed to Landlord by New York City. Tenant
shall promptly pay to Landlord the amounts of said charges when demanded by
Landlord (such amounts to be deemed additional rent due hereunder). During the
final year of the term of this lease Landlord shall be entitled to bill Tenant
for estimated water charges commencing January 1, 2006. Said estimate shall be
based upon the usage charged in the last statement received from the City of New
York plus five percent, adjusted on a monthly basis. Except as modified in this
Article 53, the conditions set forth in Article 28 of this lease (regarding
water charges) shall remain in full force and effect;
(c) telephone service in, to and from the demised premises, it being
agreed that no telephone service will be provided to Tenant through the hotel
switchboard; and
(d) gas furnished to the demised premises.
Moreover, Tenant shall, at its own cost and expense, properly maintain the
present meters and equipment to measure the said electricity, electric power and
gas furnished to, and the water consumed by or in, the demised premises. Tenant
shall, at its own cost and expense, install its own telephone system and
numbers.
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Landlord shall not in any way be liable or responsible to Tenant for any
loss or damage or expense which Tenant may sustain or incur if either the
quantity or character of electric service is changed or is no longer available
or suitable for Tenant's requirements.
Any riser or risers to supply Tenant's electrical requirements, upon
written request of Tenant, will be installed by Landlord at the sole cost and
expense of Tenant, if, in Landlord's reasonable judgment, the same are necessary
and will not cause permanent damage or injury to the building or demised
premises or cause or create a dangerous or hazardous condition or entail
excessive or unreasonable alterations, repair or expense or interfere with or
disturb other tenants or occupants. In addition to the installation of such
riser or risers, Landlord will also, at the sole cost and expense of Tenant,
install all other equipment proper and necessary in connection therewith subject
to the aforesaid terms and conditions.
Tenant covenants and agrees that at all times its use of electric current
shall never exceed the capacity of existing feeders to the building or the
risers or wiring installation.
Tenant shall make no alteration or additions to the electric equipment
and/or appliances without the prior written consent of Landlord in each
instance.
Rigid conduit only will be allowed.
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54. Steam. Tenant shall pay any and all charges for steam furnished to the
demised premises. The parties agree, however, in connection therewith, that:
(a) The Tenant shall install at its own cost and expense meters and
equipment to measure the said steam so furnished, and pay Con Edison directly,
or pay to the Landlord seven (7%) per cent of Landlord's steam bill for the
building at 575 Park Avenue if Tenant does not make meter payments directly to
Con Edison. Tenant shall pay such bill as and when presented with a copy of
Landlord's bill. Such payment shall be deemed additional rent due hereunder.
(b) It is further covenanted and agreed by Tenant that the aforesaid
costs and expenses in connection with the aforesaid steam are chargeable and
collectible as additional rent and shall be paid to Landlord by Tenant upon
presentation of bills therefor.
(c) In the event that Landlord converts its heating system to
another form of energy, such as oil or gas, it is agreed that Tenant shall pay
to Landlord seven percent of Landlord's energy bill in the same manner as Tenant
is required to pay seven percent of Landlord's steam bill.
55. Remedies. If the Tenant fails to indemnify the Landlord or fails to
pay any sums payable hereunder in addition to the fixed reserved rent or other
additional rent beyond the applicable grace
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period provided for in this lease, then such failure by Tenant shall be
considered a default by the Tenant in fulfillment of the covenants of this lease
and the Landlord shall have the right to terminate this lease upon the
occurrence of such default and in addition thereto shall have the right, without
further notice or time to cure, to exercise any and all rights and privileges
and remedies given to the Landlord by and pursuant to Articles 17 and 18 hereof.
56. Additional Bankruptcy Provisions. Anything herein contained in Article
16 hereof to the contrary notwithstanding, if any of the events described in
Article 16(a) and 16(b) hereof shall be involuntary on the part of the Tenant,
the event in question shall not be deemed a default within the meaning of this
lease if removed or discharged by Tenant within sixty (60) days after the date
of occurrence thereof.
Further supplementing the provisions of Article 16 hereof:
(a) Without limitation Tenant shall remain obligated under this
lease in accordance with its terms, shall remain in possession of the demised
premises within the meaning of Title 11 U.S.C. ss.365 (as the same may be
amended) and shall not take any action to terminate, surrender, rescind or avoid
this lease, or abate or defer any rental, or claim a construction eviction, by
reason of any bankruptcy, insolvency, reorganization, liquidation, dissolution
or other proceeding affecting Landlord or any of its assigns or any action with
respect to this lease
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which may be taken by any trustee, receiver or liquidator or by any court.
B. If an order for relief is entered or if a stay of proceeding or
other acts becomes effective in favor of Tenant or Tenant's interest in this
lease, in any proceeding which is commenced by or against Tenant, under the
present or any future federal bankruptcy code or any other present or future
applicable federal, state or other statute of law, Landlord shall be entitled to
invoke any and all rights and remedies available to it under such bankruptcy
code, statute, law or this lease, including, without limitation, such rights and
remedies as may be necessary to adequately protect Landlord's right, title and
interest in and to the demised premises or any part thereof and/or adequately
assure the complete and continuous future performance of Tenant's obligations
under this lease. Adequate protection of Landlord's right, title and interest in
and to the demised premises, and adequate assurance of the complete and
continuous future performance of Tenant's obligations under this lease, shall
include, without limitation, the following requirements:
(i) that Tenant shall comply with all of its obligations under
this lease;
(ii) that Tenant shall pay to Landlord, on the first day of
each month occurring subsequent to the entry of such order or the effective date
of such stay, a sum equal to the amount by which the
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demised premises diminished in value during the immediately preceding monthly
period, but, in no event, an amount which is less than the aggregate rental
payable for such monthly period;
(iii) that Tenant shall continue to use the demised premises
in the manner required by this lease;
(iv) that Landlord shall be permitted to supervise the
performance of Tenant's obligations under this lease;
(v) that Tenant shall hire, at Tenant's sole cost and expense,
such security personnel as may be necessary to insure the adequate protection
and security of the demised premises;
(vi) that Tenant pay to Landlord within thirty (30) days after
entry of such order or the effective date of such stay, as partial adequate
protection against future diminution in value of the demised premises and
adequate assurance of the complete and continuous future performance of Tenant's
obligations under this lease, a security deposit in an amount acceptable to
Landlord, but in no event less than the aggregate rental payable hereunder for
the previous lease year plus five (5%) per cent of such rental;
(vii) that Tenant has and will continue to have unencumbered
assets after the payment of all secured obligations and
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administrative expenses to assure Landlord that sufficient funds will be
available to fulfill the obligations of Tenant under this lease;
(viii) that Landlord be granted a security interest acceptable
to Landlord in property of Tenant to secure the performance of Tenant's
obligations under this lease; and
(ix) that if Tenant's trustee, Tenant or Tenant as
debtor-in-possession assumes this Lease and propose to assign the same (pursuant
to Title 11 U.S.C. ss.365, as the same may be amended) to any Person who shall
have made a bona fide offer to accept an assignment of this lease on terms
acceptable to the trustee, Tenant or Tenant as debtor-in-possession, then
notice of such proposed assignment, setting forth (x) the name and address of
such Person, (y) all of the terms and conditions of such offer and (z) the
adequate assurance to be provided Landlord to assure such Person's future
performance under the lease, including, without limitation, the assurances
referred to in Title 11 U.S.C. ss.365(b)(30) (as the same may be amended), shall
be given to Landlord by the trustee, Tenant or Tenant as debtor-in-possession no
later than twenty (20) days after receipt by the trustee, Tenant or Tenant
debtor-in-possession of such offer, but in any event no later than ten (10)
days prior to the date that the trustee, Tenant or Tenant debtor-in-possession
shall make application to a court of competent jurisdiction for authority and
approval to enter into such assignment and assumption, and Landlord shall
thereupon have the prior right and option, to be exercised by notice to the
trustee, Tenant or Tenant
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debtor-in-possession, given at any time prior to the effective date of such
proposed assignment, to accept an assignment of this lease upon the same terms
and conditions and for the same consideration, if any, as the bona fide offer
made by such person, less any brokerage commissions which may be payable out of
the consideration to be paid by such person for the assignment of this lease.
(c) Anything contained in this lease to the contrary
notwithstanding, all amounts payable by Tenant to or on behalf of Landlord under
this lease, whether or not expressly denominated Fixed Rent, additional rent or
rental, shall constitute rent for the purposes of Section 502(b) (7) of the
Bankruptcy Code.
57. Condition of Demised Premises. Tenant has examined all of the demised
premises, including the kitchen equipment, installations and all of the
appurtenant personal property belonging to the Landlord, and the parties agree
that Tenant leases and rents the same in the condition in which they presently
are or will be at the commencement date of this lease, without warranty or
representation on the part of the Landlord, its agents and representatives,
except that all such equipment, installations and personal property are owned by
Landlord free and clear of liens, claims or encumbrances. Landlord agrees that
there will be no substantial or material change in said items between the date
hereof and the commencement date of the term of this lease.
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58. Deliveries and Garbage Removal. Tenant further agrees that all
deliveries of foodstuffs, liquors and any and other deliveries required to be
made, as well as the removal of all waste, rubbish and garbage from the demised
premises, shall be made solely through the basement of the demised premises and
not otherwise, nor shall any such deliveries to or removals from the demised
premises be allowed to be stored in any areaway, courtyard or in front of any
portion of the Beekman Hotel. Landlord shall permit access to Tenant for ingress
and egress only through said basement during normal business hours. Landlord
acknowledges that garbage pickup will be six (6) days per week and that the
removal thereof shall occur after the close of Tenant's daily business, and
Tenant will use his best efforts to make sure that all such removals will be not
later than 12:00 midnight nor earlier than 6:00 a.m. All garbage shall be stored
prior to removal in the garbage room which is part of Tenant's demised premises.
59. Signage. In addition to, and not in limitation of, any other
provisions in this lease contained, Tenant covenants that it will not place or
affix any signs, lettering or advertisement of Tenant's restaurant in or upon
the demised premises, either inside or outside, or in or upon the windows or
show windows or any doors or glass appurtenant to the demised premises, without
the written consent of the Landlord in each instance first had and obtained, and
should the Landlord grant any such consent, Landlord shall be the sole judge of
the location, size, color and content and other characterization of all such
signs, lettering or advertisement; Landlord agrees not to unreasonably withhold
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its consent or exercise its judgment. Tenant shall keep all such signs,
lettering and advertisement in good order and working condition. Tenant shall
obtain all sign permits or licenses and shall pay all fees and costs therefor.
Tenant agrees that the Landlord may, at Tenant's expense, at any time and from
time to time, but after twenty (20) days prior written notice to Tenant, remove
any particular sign or signs or advertisement installed by the Tenant, which are
not in accordance with the provisions hereof, unless within said period of
twenty (20) days Tenant shall commence the removal of such sign or advertisement
and continue such removal with diligence.
60. Tenant's Obligations. Tenant further covenants and agrees that all
purchases made by or for Tenant in connection with Tenant's business or
otherwise are to be made in the Tenant's name or the restaurant's name and not
in the name of or for the account of the Landlord, or under the name "Beekman
Hotel", or under any other name but Tenant's own name or the restaurant's name,
and Tenant further covenants and agrees to pay promptly all bills for operating
charges, supplies, foodstuffs, expenses and purchases made by Tenant, whether
for food, fixtures or equipment, including the prompt payment of wages and
salary for all persons employed by Tenant, it being expressly understood and
agreed that Landlord shall at no time or in any way be responsible or obligated
for any purchases made by Tenant, or for any expenses or obligations of any kind
whatsoever incurred or that may be incurred by Tenant in connection with the
conduct, maintenance and operation of said restaurant and/or Tenant's business.
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61. Licenses and Permits. Tenant agrees to secure at its own expense, all
licenses or permits required for the operation of its business, and the parties
agree that Landlord does not warrant or represent, nor is this lease conditional
on whether or not Tenant procures such licenses or permits or, having obtained
the same, that such licenses or permits shall or will thereafter be renewed. The
foregoing notwithstanding, Tenant shall have no obligation to amend the
certificate of occupancy as presently existing.
62. Contractors. Notice is hereby given to all contractors,
subcontractors, laborers and materialmen that under no circumstances shall the
Landlord be liable or required to pay for any work, labor or services rendered
or materials furnished to the Tenant or to the demised premises, and that no
mechanic's lien for work, labor or services rendered or materials furnished to
the Tenant, or to any one occupying the demised premises, shall under any
circumstances attach to or affect the Landlord's interest therein or the
reversionary or other interest of the overlandlord in the premises, or in and to
the improvement which may be made therein or to the real estate in which the
demised premises are situated.
63. Real Estate Taxes. The Tenant hereby agrees that if the amount of real
estate taxes assessed or imposed by the City of New York, or any County or other
governmental authority against both the land and building of which the demised
premises form a part, exceed the amount of such real estate taxes for the fiscal
year commencing July 1, 1991 and
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ending June 30, 1992, the annual rental of the Tenant hereunder shall be
increased by an amount equal to seven (7%) per cent of the total of all such
increases. The excess real estate taxes payable by the Tenant shall be
apportioned to charge the Tenant from the commencement of the term and shall
likewise be apportioned to charge the Tenant to the end of the term.
Any increase in real estate taxes shall be due and payable by the Tenant
to the Landlord on the first day of the month next succeeding the month in which
any such increase in such taxes are payable by the Landlord. The foregoing
notwithstanding Tenant shall not be required to pay any increase in real estate
taxes more frequently than Landlord pays the same to the taxing authority.
Any such increases due after the termination of the within lease shall
survive such termination or expiration, and be due and payable as herein
provided.
The Landlord agrees to submit to the Tenant a comparative statement
showing such increases.
It is further understood and agreed that in the event the Tenant has paid
to the Landlord the Tenant's share of any increase in taxes as hereinabove
provided, and the Landlord obtains a reduction of such real estate taxes, the
Landlord will refund to the Tenant the Tenant's proportionate share of any
increases in taxes which the Tenant has
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paid, less seven (7%) percent of any expenses incurred by the Landlord in
obtaining such tax reduction.
64. Vacations. At the option of the Tenant, Tenant may close for vacation
each year during the month of July or August; Tenant shall provide sixty day's
notice of such election.
65. No Other Restaurant. Landlord agrees that it will not lease or license
any other area of the building, known as The Beekman Hotel, for the purpose of
the sale to the public of any food or beverages.
66. Conflict. The printed portion of the within lease (Articles 1-39) is
hereby modified and supplemented to the extent set forth in this paragraph.
Wherever there is any conflict between what is set forth in this rider (Articles
40-90) and the printed portion of the lease (Articles 1-39), the provisions set
forth in the rider shall prevail and the lease shall be construed accordingly.
67. Structural Repairs. Landlord shall be responsible to make all
structural repairs to the demised premises except as follows:
(a) All drain and waste lines running between the demised premises
and main waste lines within the Building will be maintained, repaired and
replaced (as necessary) by Tenant.
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(b) Maintenance, repair and replacement of trunk plumbing lines
(non-waste) shall be the responsibility of Landlord inside the walls.
(c) Maintenance, repair and replacement of all electrical lines
which provide service to or within the demised premises will be the
responsibility of Tenant.
(d) All maintenance, repair and replacement of existing plumbing
fixtures, air conditioning equipment, meters, kitchen equipment (including
stoves, ovens, refrigerators, freezers, dishwashers, etc.) shall be the
responsibility of Tenant.
(e) All maintenance, repair and replacement of floors and flooring
in all parts of the demised premises shall be the responsibility of Tenant. In
particular, Tenant shall regularly seal and keep water tight the kitchen floor.
Tenant shall be responsible for all non-structural repairs and
replacements within the demised premises; such non-structural items, without
limiting the definition of the same, shall be deemed to include windows, doors
and all parts thereof for the purposes of this lease. In the event such repairs
are required as a result of a casualty for which Landlord has received insurance
proceeds, Landlord shall pay to Tenant such portion of such proceeds, not to
exceed the actual cost of such repairs, which relate thereto.
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<PAGE>
68. Fire. If the demised premises are substantially destroyed by fire
during the last two years of the term of this lease, either party may terminate
and cancel this lease at any time within 45 days after the damage or destruction
by written notice to the other party in accordance with Article 27, and upon
giving such notice this lease shall end; however, accrued sums due and unpaid
for periods of time prior to cancellation shall remain an obligation of Tenant.
69. Certificate of Occupancy. Landlord represents that notwithstanding the
certificate of occupancy presently in effect at the building the demised
premises have been used for the purposes stated in Article 2 on a continuous
basis for not less than 31 years.
70. Abatement. If the Landlord's inability to perform creates a condition
which interferes substantially with the normal use of the premises for the
operation of an establishment such as allowed by Article 2, and as a consequence
Tenant is compelled to discontinue business in the premises with the public
during the period of time that such interference persists, then the rental shall
be, and is hereby, abated during the time of such discontinuance of business,
but no such abatement shall continue beyond the time that the interference no
longer persists regardless of any delay by Tenant in resuming operation of
business after that time.
71. Waste Removal. Tenant will not dispose of waste by improper means and
will contract for regular daily pickup of solid waste by a
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licensed carting company. Tenant shall not store food garbage in the basement or
in any other area without such precautions as will prevent odors and insure that
the garbage is sealed in air tight containers. In the event of a strike by
carting and/or waste disposal companies Tenant shall remain responsible for
proper removal of garbage from the demised premises. At no time will Tenant
store or dispose of garbage or trash in such manner or in such place as will
violate any laws, rules or regulations of any bureau or department of the City,
State or Federal government. Provided the same does not violate Landlord's union
contract, Tenant may use the Landlord's compactor at such times as the same is
available provided Tenant obtains written consent of the Landlord, and complies
with such conditions and pays such fees as may be imposed by the Landlord.
Tenant will exercise due care in using the same and agrees to hold Landlord
harmless from any and all claims for personal injury or property damage by
reason of Tenant's use of the compactor by Tenant, its agents, licensees,
contractors and employees.
72. Condition on Termination. Upon termination of the lease the Tenant
shall be responsible for providing that all equipment, plumbing, heating and
electrical conduit for which Tenant is responsible is in working order.
73. Existing Equipment. Tenant may use existing air conditioning and
kitchen equipment. Repair, maintenance and replacement of the same will be done
by Tenant as and when required.
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74. Laundry Facilities. Tenant may not use Landlord's laundry facilities
without express written consent, which may be arbitrarily withheld.
75. Sprinkler System. In the event any state or municipal authority, or
the insurance company of Landlord requires installation of a sprinkler system
during the term hereof Tenant shall pay for and install the same. Should such
requirement be imposed during the final two years of the term hereof, Tenant may
provide Landlord with ninety day notice of its intention to terminate the lease,
and, provided Tenant is not in default of any provisions hereof, Tenant may
terminate this lease at the end of the ninety day period.
76. Plans. Annexed hereto are plans for the demised premises showing the
area reserved for Tenant.
77. Improvements. As material consideration and inducement to Landlord to
enter into this lease Tenant agrees to spend at least Two Hundred Fifty Thousand
($250,000) Dollars on renovations and improvement in the demised premises
subject to the terms and restrictions of this lease regarding alterations.
Tenant shall produce paid bills and other proof of payment for Landlord's
examination to establish such expenditures, which may include reasonable and
actual "soft costs" of such renovations. To the extent such expenditures are not
made by April 30, 1992, the portion of said funds not spent or contractually
committed to items on which delivery is delayed, shall be payable to Landlord as
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additional rent hereunder in 12 equal monthly installments payable the fifteenth
day of May, 1992 and on the first day of the next eleven months. Such payments
shall be deemed additional rent. The $250,000 shall be spent on items which are
not readily removable and which are fixtures or on items of personal property,
other than artwork, which shall become the property of Landlord on termination
of this lease. All of such renovations will be deemed fixtures and shall become
the property of Landlord on termination of this lease.
78. Health Code Violations. In the event that Tenant is cited for any
violation of any health code, regulation or law and fails to remedy the same
situation within five business days of issuance of a violation, citation, notice
of violation or warning, said failure to remedy the same or to undertake
substantial action to remedy the same shall be deemed a material breach of this
lease without further notice.
79. Alarm System. Tenant shall be fully responsible for the security of
its premises and may install and use whatever alarm systems it wishes to install
and maintain provided that said security provisions do not compromise security
installations, systems or precautions which are or may be installed or
maintained by Landlord. Landlord shall be entitled to have its security
consultant evaluate Tenant's system to insure that it does not interfere in any
way with Landlord's security or protection services and upon a finding that the
same does interfere in any manner, Landlord may prohibit installation of such
system or equipment or require the removal of the same.
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<PAGE>
80. Limitation of Liability. Any claims for personal injury, property
damage or otherwise against Landlord which Tenant may have or acquire for by
reason of the torts (whether by reason of negligence or otherwise), breach of
contract (except for breach of the terms of this lease), breach of warranty or
criminal acts of Landlord, Landlord's employees, invitees, licensees,
contractors, guests or tenants shall be limited to Landlord's interest in the
Building. Tenant waives any such claims it might have against the officers,
directors or shareholders of Landlord. Tenant shall maintain whatever insurance
policies it deems advisable to protect itself against such occurrences and shall
look first to such policies for recompense.
81. Definitions. The following definitions shall be applicable herein:
(a) The terms "Owner" and "Landlord" shall be deemed equivalent and
shall both refer to Beekman Tenants Corporation except where explicit provision
is otherwise made.
(b) The terms "article", "paragraph" and "provision" shall be deemed
to refer to the numbered sections of this lease and shall be synonymous.
(c) The "term" of this lease shall also refer to any extensions or
renewal periods to which the parties may subsequently agree in writing.
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82. Broker. Landlord and Tenant each represent and warrant one to another
that, neither of them has employed any broker, agent or finder in carrying on
the negotiations relating to this lease. Each party shall indemnify and hold the
other harmless, from and against any claim or claims for brokerage or other
commissions arising from or out of any breach of the foregoing representations
and warranties.
83. Rent Regulations. In the event that a law or regulation establishing
any form of rent control, regulation or stabilization is subsequently adopted
and is deemed to apply to the demised premises and to limit the rent payable
hereunder, or to require the renewal hereof pursuant to statutory decree without
the consent of Landlord, the parties agree that the following provisions shall
become applicable during such time as said laws or regulations may be in effect
and prevent the Landlord from collecting the full amount of rent for which
provision is made in this lease or during such time as this lease is statutorily
renewed.
(a) Landlord shall become entitled each year to the maximum increase
in rent which is allowable under the law provided that the same does not exceed
the rent for which provision is herein made for that period of time.
(b) Subsequent to December 31, 2006 Landlord shall become entitled
to the maximum allowable rent increases for periods of time that this lease is
renewed by statutory authority or requirement.
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<PAGE>
84. Authorization. Landlord shall provide a certified resolution of its
Board of Directors consenting to the execution of this lease. Tenant shall
provide a certified resolution of its Board of Directors consenting to the
execution of this lease.
85. Arbitration. The parties agree that any dispute between them with
respect to the terms hereof shall be settled by resort to arbitration before the
American Arbitration Association in New York City before three arbitrators and
pursuant to the rules of the Association then obtaining. Any decision of the
arbitrators may be confirmed as a judgment and entered in any court of competent
jurisdiction. The arbitrators may award costs of arbitration as part of their
award, the parties agree that a claim by Landlord that Tenant has failed to pay
rent may be brought directly in a court of competent jurisdiction without resort
to arbitration. In addition, the parties shall each be entitled to obtain
injunctive relief from a court of competent jurisdiction prior to arbitration if
the same is otherwise appropriate and the party seeking such relief posts such
bond as may be required by the court wherein such relief is sought.
86. Landlord's Security Interest.
(a) As additional security for the faithful performance and
observance by Tenant of all of the terms, provisions and conditions of this
lease, Tenant by its execution of this lease, hereby grants Landlord a security
interest in, to and covering all of Tenant's
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personal property, which security interest shall constitute a valid and
continuing first lien on said property under the New York Uniform Commercial
code. Concurrent with the execution of this lease, Tenant shall execute and
deliver to Landlord a UCC-1 Financing Statement evidencing the aforesaid
security interest of Landlord. Throughout the term of this lease or any renewal
thereof Tenant, at its sole cost and expense, shall promptly execute all
confirmatory or continuation statements required to perfect such security
interest of Landlord under all applicable law.
(b) In addition to any and all of Landlord's other remedies provided
hereunder, or otherwise available at law, if Tenant shall default under any of
the terms or provisions of this lease Landlord may, immediately after expiration
of all applicable grace periods, foreclose upon its security interest granted
hereunder in accordance with the applicable provisions of the New York Uniform
Commercial Code or any other then applicable law and apply the proceeds of such
foreclosure to and on account of any and all of Tenant's obligations hereunder,
as Landlord in its sole discretion may see fit.
(c) Nothing in this Article 89 shall be construed as preventing
Tenant from substituting from time to time any property of at least equal
quality and value for items of Tenant's personal property.
(d) In the event that Tenant shall assign this lease with Landlord's
consent, Landlord agrees that Tenant shall be entitled to
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<PAGE>
take back from any assignee a purchase money security interest encumbering its
personal property; provided, however, that any such security interest shall be,
and expressly state that it is, subject and subordinate in all respects to the
lien granted Landlord pursuant to this Article 89.
87. Renewal Option. (a) Tenant shall have the option (the "Renewal
Option") to extend the term of this lease for an additional period of ten (10)
years (the "Renewal Term"), which Renewal Term shall commence on the date
immediately succeeding the termination date of this lease (the "Expiration
Date"). This option shall be valid provided that this lease shall not have been
previously terminated and that Tenant shall not be in default in the observance
or performance of any of the terms, covenants or conditions of this lease,
beyond any applicable grace periods on the date Tenant gives Landlord written
notice (the "Renewal Notice") of Tenant's election to exercise the Renewal
Option. The Renewal Option shall be exercised with respect to the entire
demised premises only and shall be exercisable by Tenant delivering the Renewal
Notice to Landlord at least twelve (12) months prior to the Expiration Date.
Time is of the essence with respect to the giving of the Renewal Notice.
(b) If Tenant exercises the Renewal Option in accordance with the
terms of subsection (a) above, the terms, covenants and conditions for the
Renewal Term shall be the same as are contained in this lease, except that (i)
the Fixed Rent shall be deemed to mean the Fixed Rent as
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determined pursuant to subsection (c) of this Article; (ii) any provisions of
this lease with respect to any free period of Fixed Rent shall not be applicable
during the Renewal Term; and (iii) the provisions of subsection (a) of this
Article relative to Tenant's right to renew the term of this lease shall not be
applicable during the Renewal Term.
(c) The Fixed Rent for the Renewal Term shall be an amount equal to
the Fair Market Rent. The term "Fair Market Rent" shall mean the fixed annual
rent that a willing lessee would pay and a willing lessor would accept for the
premises during a ten (10) year term, assuming (i) that the premises were vacant
of tenancy and in their "as is" condition on the commencement date of the
Renewal Notice; (ii) that the premises were being demised upon the same terms
and conditions as are provided for in this lease for the Renewal Term; (iii)
that landlord would be paying no brokerage commission in connection with such
leasing; (iv) the provisions of subsection (a) of this Article relative to
Tenant's right to renew the term of this lease shall not be applicable during
the Renewal Term; and (v) that Tenant would not be receiving any work allowance
or free rental period in connection with such leasing.
(d) In the event that Tenant shall have exercised the Renewal Option
in accordance with the terms of subsection (a) of this Article, Landlord shall
give Tenant written notice (the "Rent Notice") at least one hundred eighty (180)
days prior to the Expiration Date setting forth Landlord's determination of the
Fair Market Rent ("Landlord's
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Determination"). If Tenant disputes Landlord's Determination, then Tenant shall
give Landlord written notice ("Tenant's Notice"), within thirty (30) days after
Tenant's receipt of the Rent Notice, stating such dispute and setting forth, in
Tenant's Notice, Tenant's determination of the Fair Market Rent. If Tenant fails
or refuses for any reason to give Tenant's Notice within the thirty (30) day
period set forth above, Tenant shall be deemed to have accepted Landlord's
Determination for the Renewal Term. If Tenant in Tenant's Notice disputes
Landlord's Determination in the manner set forth above, any such dispute, if not
resolved between the parties within twenty (20) days thereafter, shall be
settled in accordance with the provisions of subsection (e) hereof.
(e) If the final determination of the Rental Value shall not be made
on or before the first day of the Renewal Term in accordance with the provisions
of this Article, then, pending such final determination, Tenant shall pay, as
the Fixed Rent for the Renewal Term, an amount equal to Landlord's
Determination. If, based upon the final determination hereunder of the Rental
Value, the payments made by Tenant on account of the Fixed Rent for such portion
of the Renewal Term were less than the Rental Value payable for the Renewal
Term, Tenant shall pay to Landlord the amount of such deficiency, within ten
(10) days after demand therefor, or if greater than such Rental Value, Landlord
shall pay to Tenant the amount of such excess within ten (10) days after demand
therefor or, at Landlord's option, credit the amount of such excess against
future installments of Fixed Rent and/or Additional Rent payable by Tenant.
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(f) (i) If Tenant notifies Landlord that Tenant dispute Landlord's
Determination of the Fair Market Rent within the thirty (30) day period set
forth in subsection (d) above and Landlord and Tenant fail to agree as to the
Fair Market Rent within the thirty (30) day period set forth in subsection (d),
then the Fair Market Rent shall be determined by arbitration in accordance with
Article 85 of this lease.
(ii) After a determination has been made of the Fair Market
Rent, the parties shall execute and deliver to each other an instrument setting
forth the Rental Value, as hereinabove determined.
88. Miscellaneous
(a) Tenant agrees that its sole remedy in cases where Landlord's
reasonableness in exercising its judgment or withholding its consent or approval
is applicable and at issue shall be those in the nature of an injunction,
declaratory judgment or specific performance, the rights to any monetary damages
or other remedies being hereby specifically waived.
(b) Tenant shall, in operating its business adequately, staff the
operation both as to products and personnel.
(c) Tenant shall, at Tenant's sole cost and expense, keep the
demised premises in good order and condition and clean or cause the demised
premises to be cleaned daily (on all business days during which
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the demised premises are open for conducting the Tenant's business) in a manner
reasonably satisfactory to Landlord. At Tenant's sole cost and expense, the
demised premises shall be exterminated against infestation of vermin, roaches or
rodents regularly, and in addition, whenever there shall be evidence of any
infestation. Tenant shall, at its sole cost and expense, keep and maintain all
glass, exterior and interior, of the demised premises in a clean condition and
further agrees to wash or cause the same to be washed at sufficient frequent
intervals so as to maintain the appearance thereof in keeping with a first class
restaurant. Tenant shall, at its sole cost and expense, replace any and all
plate and other glass damaged or broken from any cause whatsoever in and about
the demised premises.
(d) Tenant shall supply a set of keys to the demised premises to
Landlord's hotel manager or his designee for emergency access to the demised
premises.
(e) Without limiting anything otherwise set forth in the Building
Rules, no awning, canopy, marquee or other projections, whether they contain or
do not contain advertising material, may be attached to any part of the building
without the prior written consent of Landlord, which consent as to dignified
canopies and marquees, in Landlord's discretion, and in the shape of the
existing canopies and marquees shall not be unreasonably withheld. Further,
Tenant shall not post, erect or maintain outside or inside the windows or show
windows, nor on any exterior construction, any signs, placards or other
advertisements,
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except with the prior written approval of Landlord, which consent, as to
dignified and tasteful window and vitrine signs and decorations, shall not be
unreasonably withheld. No hanging outside signs will be approved nor will any
papered signs posted on the windows on the premises be approved unless the same
are required to be so posted at such location by law (e.g., alcoholic beverage
license). If Tenant violates the provisions of this Article, then in addition to
and without limiting Landlord's remedies under this lease, the Landlord may upon
five (5) days' notice itself remove any such sign, placard, advertisement or
display without liability or obligation to Tenant and, if necessary to carry out
the foregoing, then Landlord may enter into the premises to effect such removal.
The parties acknowledge that a breach of the provisions of this paragraph would
constitute a material breach of this lease.
(f) If any term, covenant, condition or provision of this lease, or
the application thereof, to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this lease, or the application of
such term, covenant or provision to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby, and
each term, covenant or condition of this lease shall be valid and enforceable to
the fullest extent permitted by law.
(g) At Tenant's sole cost and expense, Tenant shall fireproof all
draperies and curtains in the demised premises and submit to
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Landlord, upon Landlord's request, current certificates evidencing such
fireproofing.
(h) Tenant shall install and maintain in all cooking areas, at
Tenant's sole cost and expense, chemical fire extinguishing devices (such as
ansul) approved by the fire insurance rating organization having jurisdiction
over the demised premises and, if gas is used in the demised premises for
cooking or other purposes, suitable gas cutoff devices (manual and automatic).
(i) Submission by Landlord of the within lease for execution by
Tenant, shall confer no rights nor impose any obligations on either party unless
and until both Landlord and Tenant shall have executed this lease and duplicate
originals thereof shall have been delivered to the respective parties.
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90. Entire Agreement. This lease contains the entire agreement of the
parties and cannot be altered, amended or terminated except by an instrument in
writing signed by the party against whom the alteration, amendment or
termination is charged.
BEEKMAN TENANTS CORPORATION
By: /s/ Irwin Guttag
-------------------------
Irwin Guttag, President
WHITE & WITKOWSKY, INC.
By: /s/ Alan Stillman
-------------------------
Alan Stillman
<PAGE>
Rider 'A' attached to and forming a part of Lease dated June 21, 1988 between
ROCKEFELLER CENTER NORTH, INC., as the Landlord and WHITE & WITKOWSKY, INC., as
the Tenant.
In the event the term commencement date does not occur on or prior to November
1, 1988, then in such event the term of this Lease shall end on the day
preceding the twenty-first anniversary of the term commencement date and the
rates of fixed rent payable hereunder shall be adjusted so that the rate of
$405,900.00 per annum shall run from the term commencement date to and including
the day preceding the fifth anniversary of the term commencement date, the rate
of $510,515.00 per annum shall run from the fifth anniversary of the term
commencement date to and including the day preceding the tenth anniversary of
the term commencement date, the rate of $601,400.00 per annum shall run from the
tenth anniversary of the term commencement date to and including the day
preceding the fifteenth anniversary of the term commencement date, and the rate
of $711,110.00 per annum shall run thereafter. If for any reason the term
commencement date shall not occur on or prior to January 1, 1989, then in such
event the Tenant may elect to terminate this Lease and the term and estate
hereby granted by giving to the Landlord notice thereof specifying the date for
such termination, which specified date shall not be less than 30 days after the
giving of such notice and the term and estate hereby granted shall terminate on
the date specified therefor in such notice, except that, if the term
commencement date shall occur prior to the date so specified in such notice,
then such notice of termination shall be deemed ineffective and this Lease and
the term and estate hereby granted shall remain in full force and effect as if
such notice had never been given.
<PAGE>
RT-L-1(4/81)
EJR:LK
Lease, dated June 21, 1988 between ROCKEFELLER CENTER NORTH, INC., a New York
corporation, having an office at No. 1230 Avenue of the Americas, New York,
N.Y. 10020 (herein called "the Landlord"), and WHITE & WITKOWSKY, INC., a New
York corporation, c/o The New York Restaurant Group, Inc., No. 1114 First
Avenue, New York, N.Y. 10021
(herein called "the Tenant"),
Witnesseth:
FIRST. Demise of Premises, Term and Rent. The Landlord does hereby lease
and demise to the Tenant, and the Tenant does hereby hire and take from the
Landlord, subject and subordinate to the underlying mortgages (as defined in
Article Thirteenth hereof), and upon and subject to the covenants, agreements,
terms, provisions and conditions of this Lease, for the term hereinafter stated,
the space(s) substantially as shown hatched on the diagram(s) attached hereto as
Exhibit A and designated as shop 'S' and shop 'G-1' on the Street Floor; and
shop 'B' and shop 'G-2' on the Mezzanine Floor of the building known as 111 West
50th Street and 1271 Avenue of the Americas (herein called "the Building"),
situated upon a plot of land (herein called "the Land"), in the Borough of
Manhattan, New York, N.Y., together with all fixtures, equipment, improvements,
installations and appurtenances which at the commencement of or during the term
of this Lease are thereto attached (except items not deemed to be included
therein and removable by the Tenant as provided in Article Fourth hereof); which
space(s), fixtures, equipment, improvements, installations and appurtenances are
herein sometimes called "the premises".
The term of this Lease shall commence on October 1, 1988 (subject to
Article Second hereof) or on such earlier date as the Tenant shall occupy the
space(s) above designated with the consent of the Landlord (such date for the
commencement of the term hereof being herein called "the term commencement
date") and shall end on September 30, 2009 or on such earlier date upon which
said term may expire or be terminated pursuant to any of the conditions of
limitation or other provisions of this Lease or pursuant to law.
The premises shall be used for the following, but no other, purpose,
namely: the operation of a first class restaurant of the class and style of
Smith & Wollensky, The Manhattan Ocean Club and The Post House, serving food,
liquor, wine and beer for on-premises consumption, such restaurant to be in 2
separate sections under a common theme and decor (similar to Smith & Wollensky
and Wollensky's Grill) and with clearly related names.
The rent reserved under this Lease for the term hereof shall be and
consist of (a) fixed rent, at the following rate(s), namely: $405,900.00 per
annum during the period from the term commencement date to and including
September 30, 1993; $510,515.00 per annum during the period from October 1, 1993
to and including September 30, 1998; $601,400.00 per annum during the period
from October 1, 1998 to and including September 30, 2003; and $711,110.00 per
annum thereafter,
payable in equal monthly installments in advance on the first day of each and
every calendar month of the term hereof for which fixed rent is reserved as
aforesaid (except that, if the term commencement date shall be other than the
first day of a calendar month, the first monthly installment of fixed rent,
apportioned for the part month in question, shall be payable on the term
commencement date and except that the Tenant shall pay, upon the execution of
this Lease by the Tenant, $ None to be applied against the first installment or
installments of fixed rent coming due hereunder), plus (b) the additional rent
and the percentage rent (if any) hereunder payable as hereinafter provided; all
to be paid to the Landlord, at its office, or at such other place or places as
the Landlord shall designate to the Tenant, in lawful money of the United States
of America; provided, however, that, notwithstanding the foregoing, the fixed
rent payable hereunder shall be abated in the aggregate amount of $418,909.62,
which abatement shall be applicable to the first installment or installments of
fixed rent becoming due hereunder. (See Rider A attached to this Lease).
<PAGE>
RT-L-1(4/81)
2
If the CPI in effect for the month of December immediately preceding
January 1, 1990 and any January 1 thereafter (herein called an "Adjustment
Date") shall be greater than the CPI in effect for the month of December
immediately preceding the January 1 occurring one year prior to such Adjustment
Date (herein called an "Applicable Standard Date"), then the aggregate fixed
rent payable hereunder shall be increased as of such Adjustment Date by an
amount equal to 25% of the product obtained by multiplying the annual rate of
fixed rent in effect on the day preceding such Adjustment Date (without giving
effect to any abatement of fixed rent other than an abatement under Article
Tenth hereof) by the percentage by which the CPI in effect for the month of
December immediately preceding such Adjustment Date exceeds the CPI in effect
for the month of December immediately preceding such Applicable Standard Date.
Notwithstanding the foregoing, the percentage used in determining the amount of
such increase as of any Adjustment Date shall be the lesser of (i) the
percentage as determined pursuant hereto, or (ii) 8%, it being understood that
in no event shall such increase exceed 2% of the aggregate fixed rent as of any
Adjustment Date. The term "CPI" shall mean as of any particular date the
Consumer Price Index for All Urban Consumers for New York, N.Y.--Northeastern,
N.J. published by the Bureau of Labor Statistics of the U.S. Department of Labor
with a 1967 = 100 base; provided, however, that (a) if such index (or any index
substituted therefor as hereinafter provided) shall cease to be published, then
for the purposes of this paragraph there shall be substituted for such index
such other index of a similar kind published by a governmental or other
nonpartisan organization as may be reasonably selected by the Landlord, (b) if
there is any change in the computation of said index or of any such substituted
index (including a change in the base year or included items), then for the
purposes of this paragraph such index as so changed shall be substituted for the
index in effect prior thereto, and (c) if the base period or date for any such
substituted index is prior to an Adjustment Date but on or subsequent to the
immediately preceding Applicable Standard Date, then such substituted index
shall for all purposes of any computation under this paragraph with respect to
such Adjustment Date be recomputed to arrive at the substituted index for the
December immediately preceding such Applicable Standard Date and such other
adjustments shall be made as shall be required, if any, to carry out the intent
of this paragraph, all in such manner as shall be reasonably determined by the
Landlord.
The Tenant shall pay the fixed rent, additional rent and percentage rent
(if any) as and when the same shall become due and payable as herein provided,
without demand therefor, and without any setoff or deduction whatsoever, and
shall keep, observe and perform, and shall permit no violation of, each and
every of the covenants, agreements, terms, provisions and conditions herein
contained on the part of the Tenant to be kept, observed and performed.
In determining the rentable area of the Building or any portion thereof
pursuant to any provision of this Lease, the rentable area of the Building or
such portion, as the case may be, shall be the rentable area thereof in square
feet determined in accordance with the Standard Method of Floor Measurement for
Office Buildings approved by The Real Estate Board of New York, Inc., which
became effective on April 16, 1968.
SECOND. Completion and Occupancy. The Tenant has examined and shall accept
the premises in their existing condition and state of repair and understands
that no work is to be performed by the Landlord in connection therewith except
such work, if any, as the Landlord may be required to do by the terms hereof in
the layout or finish of the premises. If the Landlord shall be required by the
terms hereof to do any work in the layout or finish of the premises, the
Landlord, either through its own employees or through a contractor or
contractors to be engaged by it for such purpose, will proceed with due
dispatch, subject to delay by causes beyond its reasonable control and to the
vacating and surrendering of the premises by any present occupant thereof, to do
all of such work during regular working hours and will exercise all reasonable
efforts to complete all of such work not later than the specific date
hereinabove designated for the commencement of the term hereof. If the Landlord
is required by the terms hereof to do any such work without expense to the
Tenant and the cost of such work is increased due to any delay resulting from
any act or omission of the Tenant, its agents or employees, the Tenant shall pay
to the Landlord an amount equal to such increase in cost.
Unless otherwise specifically provided herein, if the premises shall not
be available for occupancy by the Tenant on the specific date hereinabove
designated for the commencement of the term hereof for any reason, including
noncompletion by the Landlord of such work as it shall be required by the terms
hereof to do in connection with the layout or finish of the premises, then this
Lease shall not be affected thereby but, in such case, said specific date shall
be deemed to be postponed until the date when the premises shall be available
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3
for occupancy by the Tenant, provided, however, that there shall be no such
postponement of said specific date for any period of delay in the availability
of the premises for occupancy by the Tenant which shall be due to (a) any act or
omission of the Tenant, its agents or employees, including, without limitation,
delays due to changes in or additions to any work to be done by the Landlord as
aforesaid or delays in submission of information, approving working drawings or
estimates or giving authorizations or approvals, (b) any additional time for
completion of such work which may be required because of the inclusion in such
work of any work which may hereinafter be defined as "Special Work", or (c) the
noncompletion by the Landlord of any work, whether in connection with the layout
or finish of the premises or otherwise, which the Landlord is not required to do
by the terms hereof until after the term commencement date, it being understood
that the Tenant shall have no claim against the Landlord, and the Landlord shall
have no liability to the Tenant, by reason of any such postponement of said
specific date. No part of the premises shall be deemed unavailable for
occupancy by the Tenant, nor shall any work which the Landlord is obligated to
perform in such part of the premises be deemed incomplete for the purpose of any
adjustment of fixed rent payable hereunder, solely due to the noncompletion of
details of construction, decoration or mechanical adjustments which are minor in
character and the noncompletion of which does not materially interfere with the
Tenant's use of such part of the premises. Pursuant to Section 223-a of the Real
Property Law of the State of New York and notwithstanding any other law of like
import now or hereafter in force, the parties hereto expressly provide that, if
the premises are not available for occupancy by the Tenant on the term
commencement date due to any cause of the nature referred to in the preceding
clause (a), (b) or (c) of this paragraph, the Tenant, except with the consent of
the Landlord, shall not be entitled to possession of the premises until the same
are available for occupancy by the Tenant and there shall be no abatement of
fixed rent by reason thereof and the Tenant shall not have any claim against the
Landlord nor any right to rescind this Lease, and the Landlord shall have no
liability to the Tenant, by reason thereof.
The Tenant by entering into occupancy of any part of the premises shall
be conclusively deemed to have agreed that the Landlord, up to the time of such
occupancy, had performed all of its obligations hereunder with respect to such
part and that such part, except for latent defects and except for minor details
of construction, decoration and mechanical adjustment referred to above, was in
satisfactory condition as of the date of such occupancy, unless within 10 days
after such date the Tenant shall give notice to the Landlord specifying the
respects in which the same was not in such condition.
THIRD. Use of Premises. The Tenant shall not, except with the prior
consent of the Landlord, use, or suffer or permit the use of, the premises or
any part thereof for any purpose other than the use hereinabove specifically
mentioned, provided, however, anything in this Lease to the contrary
notwithstanding, that the portions, if any, of the premises which are identified
as toilets or utility areas shall be used by the Tenant only for the purposes
for which they are designed and the portions, if any, of the premises which are
identified as storage areas shall be used only for storage purposes.
The Tenant shall not use, or suffer or permit the use of, the premises or
any part thereof in any manner or for any purpose or do, bring or keep anything,
or suffer or permit anything to be done, brought or kept, therein (including,
but not limited to, the installation or operation of any electrical, electronic
or other equipment) (i) which would violate any covenant, agreement, term,
provision or condition of this Lease or is unlawful or in contravention of the
Certificate of Occupancy for the Building, or (ii) which in the reasonable
judgment of the Landlord may in any way materially impair or interfere with any
of the Building services or the proper and economic heating, air conditioning,
cleaning or other servicing of the Building or the premises or materially impair
or interfere with the use of any of the other areas of the Building by, or
occasion material discomfort, inconvenience or annoyance to, any of the other
tenants of the Building or materially impair the appearance of the Building; nor
shall the Tenant use, or suffer or permit the use of, the premises or any part
thereof in any manner, or do, or suffer or permit the doing of, anything therein
or in connection with the Tenant's business or advertising which, in the
reasonable judgment of the Landlord, may be prejudicial to the business of the
Landlord or the reputation of the Landlord or the Building or reflect
unfavorably on the Landlord or the Building or confuse or mislead the public as
to any connection or relationship between the Landlord and the Tenant.
<PAGE>
RT-L-1(4/81)
4
Unless otherwise specifically provided in this Lease, the Tenant, except
in each case with the prior consent of the Landlord, will not use, or suffer or
permit the use of, the premises or any part thereof for any of the following
purposes, whether or not incidental to the Tenant's business, namely: (a)
manufacturing of any kind, (b) the business of a commercial bank, a savings
bank, a savings and loan association, a building and loan association, a trust
company or any other business which, under the banking laws of the United States
of America or the State of New York, may be carried on only by persons, firms or
corporations authorized so to do under the provisions of such laws, (c) the
business of a dealer or broker in, or underwriter of, stocks, bonds or other
securities of any kind whatsoever, (d) or (e) an auction of any kind.
If any governmental license or permit shall be required for the proper and
lawful conduct of any business or other activity carried on in the premises, and
if the failure to secure such license or permit would, in any way, affect the
Landlord, the Tenant shall procure and thereafter maintain such license or
permit, submit the same to inspection by the Landlord, and comply with the terms
and conditions thereof.
The Tenant hereby covenants and agrees that, except to designate the
Tenant's business address (and then only in a conventional manner and without
emphasis or display), the Tenant will not use the name "Time & Life Building" or
any simulation or abbreviation of such name for any purpose whatsoever. The
Tenant will discontinue using such name and any simulation or abbreviation
thereof for the purpose of designating the Tenant's business address, within 30
days after the Landlord or Time, Incorporated, one of the tenants in the
Building, shall notify the Tenant that the Building is no longer known by such
name. The Tenant expressly acknowledges that its covenants made in this
paragraph are made for the benefit of said Time, Incorporated, as well as for
the benefit of the Landlord, and may be enforced by said Time, Incorporated, as
well as by the Landlord.
FOURTH. Fixtures, etc., Not to be Removed. All fixtures, equipment,
improvements and installations attached to, or built into, the premises at the
commencement of or during the term hereof, whether or not installed at the
expense of the Tenant or by the Tenant, shall be and remain part of the premises
and be deemed the property of the Landlord and shall not be removed by the
Tenant, except as otherwise expressly provided in this Lease. All electric,
plumbing, heating, sprinkling, dumbwaiter, elevator, fixtures and outlets,
venetian blinds, partitions, railings, gates, doors, vaults, stairs, paneling
(including display cases and cupboards recessed in paneling), molding,
shelving, radiator enclosures, flooring, and ventilating, silencing, air
conditioning and cooling equipment shall be deemed to be included in such
fixtures, equipment, improvements and installations, whether or not attached to
or built into the premises. Anything hereinbefore in this Article contained to
the contrary notwithstanding, any fixture, equipment, improvement or
installation furnished and installed in any part of the premises (whether or not
attached thereto or built therein) at the sole expense of the Tenant (and with
respect to which no credit or allowance shall have been granted to the Tenant by
the Landlord, other than the abatement of fixed rent provided in the fourth
paragraph of Article First hereof, and which was not furnished and installed in
replacement of an item which the Tenant would not be entitled to remove in
accordance with this Article) may be removed from the Building by the Tenant
prior to the expiration of the term hereof with respect to such part and, if and
to the extent requested by the Landlord (either prior to or not more than 30
days after such expiration), shall be removed from the Building by the Tenant
not later than such expiration unless such request is made after such expiration
(or is made prior to such expiration and the Tenant acting with reasonable
promptness is not able to so remove the same prior to such expiration), in which
event the same shall be so removed by the Tenant with reasonable promptness
after the receipt of such request. The cost of repairing any damage to the
premises or the Building arising from such removal shall be paid by the Tenant
upon demand. If any fixture, equipment, improvement or installation which as
aforesaid may or is required to be removed by the Tenant is not so removed
within the time above specified therefor, then the Landlord may at its election
deem that the same has been abandoned by the Tenant to the Landlord, but no such
election shall relieve the Tenant of its obligation to pay the cost and expense
of removing the same or the cost of repairing damage arising from such removal.
All the perimeter walls of the premises, any balconies, terraces or roofs
adjacent to the premises (including any flagpoles or other installations on said
walls, balconies, terraces or roofs), and any space in
<PAGE>
5 the foregoing provisions of this paragraph, the Tenant agrees that the
exterior facade
Rider 'B' attached to and forming a part of Lease dated June 21, 1988, between
ROCKEFELLER CENTER NORTH, INC., as the Landlord, and WHITE & WITKOWSKY, INC., as
the Tenant.
"FIFTH. Electric Current and Water. The Landlord shall furnish, through
the existing transmission facilities installed by it in the Building,
alternating electric current to the premises in such reasonable quantity as may
be required for the Tenant's ordinary use of the premises for the purposes
herein specified. Such alternating electric current shall be measured by a meter
or meters provided and installed by the Landlord at the expense of the Landlord
at such location or locations as the Landlord shall select and the Tenant shall
pay to the Landlord, as billed by the Landlord, at the end of each billing
period of the public utility company then supplying such alternating electric
current to the Building an amount which shall be the sum of (i) 106% of the
product obtained by multiplying the actual number of kilowatt hours of electric
current consumed by the Tenant in such billing period by a fraction having as
its numerator the amount charged the Building by said public utility for the
total number of kilowatt hours consumed by the Building in such billing period
and as its denominator said total number of kilowatt hours so consumed by the
Building in such billing period, plus (ii) any taxes applicable to the amount
determined pursuant to the foregoing clause (i).
The Landlord may, at its option, upon not less than 60 days' prior notice
to the Tenant, discontinue the furnishing of electric current to the premises or
any part thereof and, in such event, the Tenant shall contract for the supplying
of such electric current thereto with the public service company supplying
electric current to the neighborhood and the Landlord shall permit its risers,
conduits and feeders serving the premises, to the extent available, suitable and
safely capable, to be used for the purpose of supplying such electric current.
If the Tenant shall require electric current for use in the premises in
excess of such reasonable quantity to be furnished as provided in this Lease and
if, in the Landlord's judgment, such excess requirements cannot be furnished
unless additional risers, conduits, feeders, switchboards and/or appurtenances
are installed in the Building, the Landlord, upon request of the Tenant, will
proceed with reasonable diligence to install such additional risers, conduits,
feeders, switchboards and/or appurtenances provided the same and the use thereof
shall be permitted by applicable laws and insurance regulations and shall not
cause permanent damage or injury to the Building or the premises or cause or
create a dangerous or hazardous condition or entail excessive or unreasonable
alterations or repairs or interfere with or disturb other tenants or occupants
of the Building, and the Tenant shall pay all costs and expenses incurred by
the Landlord in connection with such installation and shall maintain on deposit
with the Landlord such security for the payment by the Tenant of all such costs
and expenses as the Landlord shall from time to time request. The Tenant shall
purchase and install all lamps, starters and ballasts (including replacements
thereof) used in the lighting fixtures in the premises.
Water will be furnished by the Landlord for normal use in lavatory and
toilet facilities, if any, in the premises. Where any water is otherwise
furnished or any steam is furnished by the Landlord, the Tenant shall pay (i)
the cost of supplying, installing and maintaining a meter to measure the water
or steam so furnished, (ii) the reasonable charges of the Landlord for the water
or steam so furnished and, in the case of water, for any required pumping and
heating thereof, and (iii) any taxes, sewer rent or other charges which may be
imposed by any government or agency thereof based upon the quantity of water or
steam so furnished or the charge therefor.
The Landlord shall in no way be liable for any failure, inadequacy or
defect in the character or supply of electric current, water or steam furnished
to the premises except for actual damage suffered by the Tenant by reason of any
such failure, inadequacy or defect caused by the wilful misconduct or negligence
of the Landlord.
When requested by the Tenant within 6 months following the receipt
by it of any bill for alternating electric current, the Landlord, in
substantiation of its determination of the amounts set forth in said bill, will
furnish to the Tenant such additional information as reasonably may be required
for such purpose, and, as may be necessary for the verification of such
information, will permit the pertinent records of the Landlord to be examined by
an officer of the Tenant or by such independent certified public accountant as
the Tenant may designate; it being expressly understood that the Landlord shall
be under no duty to preserve any such records, or any data or material related
thereto, beyond such time as shall be its customary practice with respect
thereto."
<PAGE>
RT-L-1(4/81)
6
SIXTH. Various Covenants. The Tenant shall:
(a) take good care of the premises, keep clean the portions of the
premises which the Landlord is not required by this Lease to clean, and pay the
cost of making good any injury, damage or breakage (including, without
limitation, the cost of removing stains from floors and walls) done by the
Tenant or by the employees, licensees or invitees of the Tenant, other than any
damage with respect to which the Tenant is released from liability pursuant to
the third paragraph of Article Ninth hereof;
(b) observe and comply with the rules and regulations annexed hereto and
such other and further reasonable rules and regulations as the Landlord
hereafter at any time may make and communicate to the Tenant, and which, in the
judgment of the Landlord, shall be necessary or desirable for the reputation,
safety, care or appearance of the Building, or the preservation of good order
therein, or the operation or maintenance of the Building, or the equipment
thereof, or the comfort of tenants or others in the Building; provided, however,
that in the case of any conflict between the provisions of this Lease and any
such rule or regulation, the provisions of this Lease shall control;
(c) permit (but, except in the case of an emergency, only upon request,
which may be oral, made to the Tenant or an employee of the Tenant at the
premises) the Landlord and any mortgagee under any of the underlying mortgages,
and their representatives, to enter the premises at such hours as shall not
unreasonably interfere with the Tenant's business, for the purposes of
inspection and permit them or any of their agents or contractors so to enter for
the purpose of complying with any law, order or requirement of any governmental
authority or insurance body, or exercising any right reserved to the Landlord
under Article Eighth hereof or elsewhere by this Lease;
(d) make no claim against the Landlord for any injury or damage to the
Tenant or to any other person or for any damage to, or loss (by theft or
otherwise) of, or loss of use of, any property of the Tenant or of any other
person, irrespective of the cause of such injury, damage or loss, unless caused
by the negligence or wilful misconduct of the Landlord, its agents, servants or
employees, in the operation or maintenance of the premises or the Building, it
being understood that no property other than such as might normally be
<PAGE>
[ILLEGIBLE]
<PAGE>
RT-L-1(4/81)
7
brought upon or kept in the premises as an incident to the reasonable use of the
premises for the purposes herein specified will be brought upon or kept in the
premises; (See Rider 'C' attached to this Lease)
(j) not violate, or permit the violation of, any condition imposed by the
standard fire insurance policy issued for office buildings in the Borough of
Manhattan, New York, N.Y., and not do, suffer or permit anything to be done, or
keep, suffer or permit anything to be kept, in the premises, which would
increase the fire or other casualty insurance rate on the Building or property
therein, or which would result in insurance companies of good standing refusing
to insure the Building or any such property in amounts and against risks as
reasonably determined by the Landlord. The Landlord acknowledges that the normal
intended use and operation of the premises for the purposes set forth in Article
First hereof shall not be deemed to violate this covenant;
(k) permit (but only upon request, which may be oral, made to the Tenant
or an employee of the Tenant at the premises) the Landlord to show the premises
at reasonable times during Business Hours (as hereinafter defined) to any
lessee, or any prospective purchaser, lessee, mortgagee or assignee of any
(Continued)
[ILLEGIBLE]
<PAGE>
RT-L-1(4/81)
8
(n) indemnify, and save harmless, the Landlord and its officers,
directors, agents and employees (herein collectively called "the Indemnitees")
from and against all liability (statutory or otherwise) claims, suits, demands,
damages, judgments, costs, interest and expenses (including reasonable counsel
fees and disbursements incurred in the defense thereof) to which any Indemnitee
may (except insofar as it arises out of the negligence or wilful misconduct of
such Indemnitee) be subject or suffer whether by reason of, or by reason of any
claim for, any injury to, or death of, any person or persons or damage to
property (including any loss of use thereof) or otherwise arising from or in
connection with the use of, or from any work or thing whatsoever done in, any
part of the premises (other than by the Landlord or its contractors) during the
term of this Lease with respect to such part or during the period of time, if
any, prior to the commencement of such term that the Tenant may have been given
access thereto for the purpose of doing work or otherwise, or arising from any
condition of the premises due to or resulting from any default by the Tenant in
the keeping, observance or performance of any covenant, agreement, term,
provision or condition contained in this Lease or from any act or negligence of
the Tenant or any of its officers, directors, agents, contractors, servants,
employees, licensees or invitees; and (See Rider 'D' attached to this Lease)
Rider 'D' attached to and forming a part of Lease dated June 21, 1988 between
ROCKEFELLER CENTER NORTH, INC., as the Landlord and WHITE & WITKOWSKY, INC., as
the Tenant.
(o) procure and maintain comprehensive general liability insurance
with respect to the premises protecting the interests of both the Landlord and
the Tenant against any liability on account of any claim, loss, damage, injury
or death suffered or sustained by any person or persons and on account of any
claim, loss, damage or injury to property arising out of the use of the
premises, which insurance shall be maintained in such amounts as may be
reasonably specified by the Landlord to the Tenant, but in no event less than
$5,000,000. in respect of bodily injury or death to any one person, not less
than $5,000,000. with respect to bodily injury or death to any number of persons
in respect of any one occurrence and not less than $5,000,000. in respect of any
claim, loss, damage or injury to property such insurance to be carried in such
company or companies and on such forms as may be reasonably approved by the
Landlord and the original policies of such insurance or certificates therefor
shall be delivered by the Tenant to the Landlord; it being understood that the
Tenant, if it so elects, may carry such insurance under its blanket policy, in
which case the Tenant shall deliver to the Landlord a certificate evidencing
such insurance coverage and a duplicate receipt evidencing payment therefor.
or interest in this Lease or in the premises or be deemed to be the consent of
the Landlord mentioned in this Article, it being expressly understood that any
such listing (other than a listing conforming with the next preceding sentence
hereof) is a privilege extended by the Landlord revocable at will by notice to
the Tenant.
EIGHTH. Changes or Alterations by Landlord. The Landlord reserves the
right to make such changes, alterations, additions, improvements, repairs or
replacements in or to the Building (including the premises) and the fixtures and
equipment thereof, as well as in or to the street entrances, halls, passages,
elevators, escalators and stairways and other parts of the Building, and to
erect, maintain and use pipes, ducts and conduits in and through the premises,
all as it may reasonably deem necessary or desirable; provided, however, (a)
that there be no unreasonable obstruction of the means of access to the premises
or unreasonable
<PAGE>
RT-L-1(4/81)
9
interference with the use of the premises, (See Rider 'E' attached to this
Lease) Nothing contained in this paragraph or in Article Sixth hereof shall be
deemed to relieve the Tenant of any duty, obligation or liability of the Tenant
with respect to making any repair, replacement or improvement or complying with
any law, order or requirement of any governmental or other authority.
The Landlord reserves the right to change the name or address of the
Building at any time. Neither this Lease nor any use by the Tenant shall give
the Tenant any right or easement to the use of any door or any passage
connecting the Building with any subway or any other building or to the use of
any public conveniences, and the use of such doors, passages and conveniences
may be regulated or discontinued at any time by the Landlord.
NINTH. Damage by Fire, etc. If any part of the premises shall be damaged
by fire or other casualty, the Tenant shall give prompt notice thereof to the
Landlord and the Landlord shall proceed with reasonable diligence, to repair
such damage, and if any part of the premises shall be rendered untenantable by
reason of such damage, the annual fixed rent payable hereunder, to the extent
that such fixed rent relates to such part of the premises and such abatement is
in excess of the annual rate of any other existing abatement of fixed rent
relating thereto under any other covenant, agreement, term, provision or
condition of this Lease, shall be abated for the period from the date of such
damage to the date when such part of the premises shall have been made
tenantable or to such earlier date upon which the full term of this Lease with
respect to such part of the premises shall expire or terminate, unless (a) such
fire or other casualty shall have resulted from the negligence of the Tenant or
the employees, licensees or invitees of the Tenant (except to the extent that
the Tenant is released from liability pursuant to the third paragraph of this
Article). The Landlord shall not be liable for any inconvenience or annoyance to
the Tenant or injury to the business of the Tenant resulting in any way from
such damage or the repair thereof. The Tenant understands that the Landlord will
not carry insurance of any kind on the Tenant's goods, furniture or furnishings
or on any fixtures, equipment, improvements, installations or appurtenances
removable by the Tenant as provided in this Lease, and that the Landlord shall
not be obligated to repair any damage thereto or replace the same.
If substantial alteration or reconstruction of the Building shall, in the
opinion of the Landlord, be reasonably required as a result of damage by fire or
other casualty (whether or not the premises shall have been damaged by such fire
or other casualty), then this Lease and the term and estate hereby granted may
be terminated by the Landlord by its giving to the Tenant within 60 days after
the date of such damage a notice specifying a date, not less than 30 days after
the giving of such notice, for such termination. (See Rider 'F' attached to this
Lease.) In the event of the giving of such notice of termination, this Lease and
the term and estate hereby granted shall expire as of the date specified
therefor in such notice with the same effect as if such date were the date
hereinbefore specified for the expiration of the full term of this Lease, and
the fixed rent payable hereunder shall be apportioned as of such date of
termination, subject to abatement, if any, as and to the extent above provided.
Nothing herein contained shall relieve the Tenant from any liability to
the Landlord or to its insurers in connection with any damage to the premises or
the Building by fire or other casualty if the Tenant shall be legally liable in
such respect, except, however, that the Landlord hereby releases the Tenant with
respect to any liability which the Tenant might otherwise have to the Landlord
for any damage to the Building or the premises by fire or other casualty
occurring during the term of this Lease to the extent of the proceeds received
under a policy or policies of insurance permitting such release by the Landlord
of such liability on the part of the Tenant. Whenever the Landlord elects to
insure the Building against fire or other casualty in an amount determined by,
and under terms and conditions acceptable to, the Landlord and with an insurer
selected by the Landlord, the Landlord will cause the policy evidencing such
insurance to include a provision permitting such a release of liability if such
a provision is obtainable from such insurer at no additional expense to the
Landlord. (See Rider 'G' attached to this Lease)
This Lease shall be considered an express agreement governing any case of
damage to or destruction of, or any part of, the Building or the premises by
fire or other casualty, and Section 227 of the Real Property
<PAGE>
RT-L-1(4/81)
10
Law of the State of New York providing for such a contingency in the absence of
express agreement, and any other law of like import, now or hereafter in force,
shall have no application in such case.
TENTH. Condemnation. In the event that the whole of the premises shall be
lawfully condemned or taken in any manner for any public or quasi-public use,
this Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title in such condemnation or taking. In
the event that only a part of the premises shall be so condemned or taken, then
the term and estate hereby granted with respect to such part of the premises
shall forthwith cease and terminate as of the date of vesting of title in such
condemnation or taking and the annual fixed rent payable hereunder, to the
extent that such fixed rent relates to such part of the premises and such
abatement is in excess of the annual rate of any other existing abatement of
fixed rent relating thereto under any other covenant, agreement, term, provision
or condition of this Lease, shall be abated for the period from the date of such
vesting of title to the date specified in this Lease for the expiration of the
full term of this Lease with respect to such part of the premises. In the event
that only a part of the Building shall be so condemned or taken, then (a) if
substantial alteration or reconstruction of the Building shall, in the opinion
of the Landlord, be necessary or desirable as a result of such condemnation or
taking (whether or not the premises be affected), this Lease and the term and
estate hereby granted may be terminated by the Landlord by its giving to the
Tenant, within 60 days following the date on which the Landlord shall have
received notice of such vesting of title, notice specifying a date, not less
than 30 days after the giving by the Landlord of such notice, for such
termination, and (b) if such condemnation or taking shall be of a substantial
part of the premises or of a substantial part of the means of access thereto, or
shall result in the premises being unsuitable for the conduct of the Tenant's
business, this Lease and the term and estate hereby granted may be terminated by
the Tenant by its giving to the Landlord, within 60 days following the date upon
which the Tenant shall have received notice of such vesting of title, notice
specifying a date, not less than 30 days after the giving by the Tenant of such
notice, for such termination, or (c) if neither the Landlord nor the Tenant
elects to terminate this Lease, as aforesaid, this Lease shall be and remain
unaffected by such condemnation or taking, except that this Lease and the term
and estate hereby granted with respect to the part of the premises so condemned
or taken shall expire on the date of such vesting of title to such part and
except that the fixed rent payable hereunder shall be abated to the extent, if
any, hereinabove provided in this Article. In the event that only a part of the
premises shall be so condemned or taken and this Lease and the term and estate
hereby granted with respect to the remaining portion of the premises are not
terminated as hereinbefore provided, the Landlord will proceed with reasonable
diligence to restore the remaining portion of the premises as nearly as
practicable to the same condition as it was in prior to such condemnation or
taking.
The termination of this Lease and the term and estate hereby granted in
any of the cases hereinabove provided shall be with the same effect as if the
date of such termination were the date hereinbefore specified for the expiration
of the full term of this Lease, and the fixed rent payable hereunder shall be
apportioned as of such date of termination.
In the event of any condemnation or taking hereinabove mentioned of all or
a part of the Building, the Landlord shall be entitled to receive the entire
award in the condemnation proceeding, including any award made for the value of
the estate vested by this Lease in the Tenant, and the Tenant hereby expressly
assigns to the Landlord any and all right, title and interest of the Tenant now
or hereafter arising in or to any such award or any part thereof, and the Tenant
shall be entitled to receive no part of such award; provided, however, that
nothing herein contained shall be deemed to preclude the Tenant from intervening
for the Tenant's own interest in any such condemnation proceeding to claim or
receive from the condemning authority any compensation to which the Tenant may
otherwise lawfully be entitled in such case in respect of property owned by the
Tenant and removable by it under Article Fourth hereof.
The provisions of this Article shall not be applicable to any condemnation
or taking for governmental occupancy for a limited period.
ELEVENTH. Compliance with Laws. The Tenant shall comply with all laws and
ordinances, and all rules, orders and regulations of all governmental
authorities and of all insurance bodies, at any time duly issued and in force,
applicable to the premises or any part thereof, to the Tenant's use thereof or
to the Tenant's keeping, performance or observance of any covenant, agreement,
term, provision or condition of
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to the extent that such costs and expenses are in excess of 50% of the annual
rate of the fixed rent then payable under this Lease
this Lease, except that the Tenant shall not be under any obligation to comply
with any law, ordinance, rule, order or regulation requiring any structural
alteration of or in connection with the premises solely by reason of the use
thereof for any of the purposes specified in Article First hereof and not by
reason of either (i) a condition which has been created by, or at the instance
of, the Tenant, or (ii) a breach of any covenant, agreement, term, provision or
condition hereof on the part of the Tenant to be kept, observed or performed.
Where any structural alteration of or in connection with the premises is
required by any such law, ordinance, rule, order or regulation, and, by reason
of the express exception hereinabove contained, the Tenant is not under any
obligation to make such alteration, then the Landlord shall make such alteration
if the expense of making the same is not in excess of 50% of the annual rate of
fixed rent then payable under this Lease or, if the expense of making such
alteration is in excess thereof, the Landlord shall have the option of making
such alteration, or of terminating this Lease and the term and estate hereby
granted by giving to the Tenant not less than 30 days' prior notice of such
termination; provided, however, that, if within 15 days after the giving by the
Landlord of its notice of termination as aforesaid, the Tenant shall request the
Landlord to make such alteration at the cost and expense of the Tenant, then
such notice of termination shall be ineffective and, in
Rider 'H' attached to and forming a part of Lease dated June 21, 1988, between
ROCKEFELLER CENTER NORTH, INC., as the Landlord, and WHITE & WITKOWSKY, INC., as
the Tenant.
provided, however, that such subordination of this Lease and the term and estate
hereby granted to any underlying mortgage hereafter entered into by the Landlord
shall be upon the condition that the mortgagee thereunder shall deliver to the
Tenant an instrument in writing providing in substance that, so long as no
default exists, nor any event has occurred, which has continued to exist for
such period of time (after notice, if any, required by this Lease) as would
entitle the Landlord to terminate this Lease or would cause, without any further
action of the Landlord, the termination of this Lease or would entitle the
Landlord to disposess the Tenant, this Lease shall not be terminated, nor shall
the Tenant's use, possession or enjoyment of the premises be interfered with,
nor shall the leasehold estate granted by this Lease be affected in any other
manner, in any foreclosure or any action or proceeding instituted under or in
connection with such underlying mortgage or in case such mortgagee takes
possession of the Building pursuant to any provision of such underlying
mortgage, unless the Landlord would have had such right if such underlying
mortgage had not been made or if the Landlord had not defaulted under such
underlying mortgage. The Landlord will use all reasonable efforts to obtain a
similar instrument in writing from the mortgagee under the presently existing
underlying mortgage.
THIRTEENTH. Mortgage Subordination. This Lease and the term and estate
hereby granted are and shall be subject and subordinate to the lien of each
mortgage which may now or at any time hereafter affect the Building and/or the
Land, or the Landlord's interest therein (all such mortgages being collectively
called "the underlying mortgages"), (See Rider 'H' attached to this Lease) The
foregoing provisions for the subordination of this Lease and the term and estate
hereby granted shall be self-operative and no further instrument shall be
required to effect any such subordination; but the Tenant shall, however, upon
request by the Landlord, at any time or times execute and deliver any and all
instruments that may be necessary or proper to effect such subordination or to
confirm or evidence the same, and in the event that the Tenant shall fail to
execute and deliver any such instrument the Landlord, in addition to any other
remedies, may, as the agent or attorney-in-fact of the Tenant, execute and
deliver the same, and the Tenant hereby irrevocably constitutes and appoints the
Landlord the Tenant's agent and attorney-in-fact for such purpose.
(and all work done by the Landlord in connection therewith shall be performed in
a good and workmanlike manner and in such a way so as to minimize the
interference to the Tenant's use and occupancy of, and ability to conduct its
business in the premises)
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FOURTEENTH. Notices. Any notice, consent, approval, request,
communication, bill, demand or statement provided for hereunder by either party
to the other party shall be in writing and shall be deemed to have been duly
given if delivered personally to such other party or mailed in a postpaid
envelope (registered, certified or otherwise, with or without return receipt)
addressed to such other party, which address for the Landlord shall be as above
set forth and for the Tenant shall be the Tenant's address as above set forth,
or if the address of such other party for notices shall have been duly changed
as hereinafter provided, if so mailed to such other party at such changed
address. Either party may at any time change the address for such notices,
consents, approvals, requests, communications, bills, demands or statements by
delivering or mailing, as aforesaid, to the other party a notice stating the
change and setting forth the changed address. If the term "Tenant" as used in
this Lease refers to more than one person, any notice, consent, approval,
request, communication, bill, demand or statement given as aforesaid to any one
of such persons shall be deemed to have been duly given to the Tenant.
FIFTEENTH. Conditions of Limitation. This Lease and the term and estate
hereby granted are subject to the limitation that:
(a) in case the Tenant shall default in the payment of any fixed
rent or additional rent on any date upon which the same becomes due, and
any such default shall continue for 10 days after the Landlord shall have
given to the Tenant a notice specifying such default,
(b) in case the Tenant shall default in the due keeping, observance
or performance of any covenant, agreement, term, provision or condition of
Article Third or of subparagraph (e) or (f) of Article Sixth hereof on the
part of the Tenant to be kept, observed or performed and if such default
shall continue and shall not be remedied by the Tenant within 3 business
days (except that, with respect to any such default under subparagraph (g)
of Article Sixth hereof, said period shall be 24 hours) after the Landlord
shall have given to the Tenant a notice specifying the same,
(c) in case the Tenant shall default in the due keeping, observance
or performance of any covenant, agreement, term, provision or condition of
this Lease (other than a default of the character referred to in
subparagraph (a) or (b) of this Article), and if such default shall
continue and shall not be remedied by the Tenant within 30 days after the
Landlord shall have given to the Tenant a notice specifying the same, or,
in the case of such a default which for causes beyond the Tenant's control
cannot with due diligence be cured within said period of 30 days, if the
Tenant (i) shall not, promptly upon the giving of such notice, give the
Landlord notice of the Tenant's intention to duly institute all steps
necessary to remedy such default, (ii) shall not duly institute and
thereafter diligently prosecute to completion all steps necessary to
remedy the same, or (iii) shall not remedy the same within a reasonable
time after the date of the giving of said notice by the Landlord, or
(d) in case any event shall occur or any contingency shall arise
whereby this Lease or the estate hereby granted or the unexpired balance
of the full term hereof would, by operation of law or otherwise, devolve
upon or pass to any person, firm or corporation other than the Tenant
except as permitted under Article Seventh, Article Twenty-seventh or
Article Thirty-second hereof, or whenever the Tenant shall desert or
abandon the premises or the same shall become vacant (whether the keys be
surrendered or not and whether the rent be paid or not),
then in any of said cases the Landlord may give to the Tenant a notice of
intention to end the term of this Lease at the expiration of 3 days from the
date of the giving of such notice, and, in the event such notice is given, this
Lease and the term and estate hereby granted (whether or not the term shall
theretofore have commenced) shall terminate upon the expiration of said 3 days
with the same effect as if the last of said 3
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13
days were the date hereinbefore set for the expiration of the full term of this
Lease, but the Tenant shall remain liable for damages as provided in this Lease
or pursuant to law. If this Lease shall have been assigned, the term "Tenant",
as used in subparagraphs (a) to (e), inclusive, of this Article, shall be deemed
to include the assignee and the assignor or either of them under any such
assignment unless the Landlord shall, in connection with such assignment,
release the assignor from any further liability under this Lease, in which
event the term "Tenant", as used in said subparagraphs, shall not include the
assignor so released.
SIXTEENTH. Re-entry by Landlord. If this Lease shall terminate as in
Article Fifteenth hereof provided, or if the Tenant shall default in the payment
of any fixed rent, additional rent or percentage rent (if any) on any date upon
which the same becomes due, and if such default shall continue for 10 days after
the Landlord shall have given to the Tenant a notice specifying such default,
the Landlord or the Landlord's agents and servants may immediately or at any
time thereafter re-enter into or upon the premises or any part thereof in the
name of the whole, either by summary dispossess proceedings or by any suitable
action or proceeding at law or by force or otherwise, without being liable to
indictment, prosecution or damages therefor, and may repossess the same, and may
remove any persons therefrom, to the end that the Landlord may have, hold and
enjoy the premises again as and of its first estate and interest therein. The
words "reenter", "re-entry", and "re-entering" as used in this Lease are not
restricted to their technical legal meanings.
In the event of any termination of this Lease under the provisions of
Article Fifteenth hereof or in the event of the termination of this Lease by or
under any summary dispossess or other proceeding or action or other measure
undertaken by the Landlord for the enforcement of its aforesaid right of
re-entry (any such termination of this Lease being herein called a "Default
Termination"), the Tenant shall thereupon pay to the Landlord the fixed rent,
additional rent and percentage rent (if any) up to the time of such Default
Termination and shall likewise pay to the Landlord all such damages which, by
reason of such Default Termination, shall be payable by the Tenant as provided
in this Lease or pursuant to law. Also in the event of a Default Termination the
Landlord shall be entitled to retain all moneys, if any, paid by the Tenant to
the Landlord, whether as advance rent or as security for rent, but such moneys
shall be credited by the Landlord against any fixed rent, additional rent or
percentage rent (if any) due from the Tenant at the time of such Default
Termination or, at the Landlord's option, against any damages payable by the
Tenant as provided in this Lease or pursuant to law.
In the event of a breach or threatened breach on the part of the Tenant
with respect to any of the covenants, agreements, terms, provisions or
conditions on the part of or on behalf of the Tenant to be kept, observed or
performed, the Landlord shall also have the right of injunction. The specified
remedies to which the Landlord may resort hereunder are cumulative and are not
intended to be exclusive of any other remedies or means of redress to which the
Landlord may lawfully be entitled at any time, and the Landlord may invoke any
remedy allowed at law or in equity as if specific remedies were not herein
provided for.
SEVENTEENTH. Damages. In the event of a Default Termination of this Lease,
the Tenant will pay to the Landlord as damages, at the election of the Landlord,
either:
(a) a sum which, at the time of such Default Termination, represents
the then value of the excess, if any, of (1) the aggregate of the fixed
rent, the additional rent under Article Twenty-fourth hereof (if any) and
the percentage rent (if any) which, had this Lease not so terminated,
would have been payable hereunder by the Tenant for the period commencing
with the day following the date of such Default Termination and ending
with the date hereinbefore set for the expiration of the full term hereby
granted, over (2) the aggregate rental value of the premises for the same
period, or
(b) sums equal to the aggregate of the fixed rent, the additional
rent under Article Twenty-fourth hereof (if any) and the percentage rent
(if any) which would have been payable by the Tenant had this Lease not
terminated by such Default Termination, payable upon the due dates
therefor specified herein following such Default Termination and until the
date hereinbefore set for the expiration of the full term hereby granted;
provided, however, that if the Landlord shall relet all or any part of the
premises for all or any part of the period commencing on the day following
the date of such Default Termination
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and ending on the date hereinbefore set for the expiration of the full
term hereby granted, the Landlord shall credit the Tenant with the net
rents received by the Landlord from such reletting, such net rents to be
determined by first deducting from the gross rents as and when received by
the Landlord from such reletting the reasonable expenses incurred or paid
by the Landlord in terminating this Lease and of re-entering the premises
and of securing possession thereof, as well as the reasonable expenses of
reletting, including altering and preparing the premises for new tenants,
brokers' commissions, and all other expenses properly chargeable against
the premises and the rental therefrom in connection with such reletting,
it being understood that any such reletting may be for a period equal to
or shorter or longer than said period; provided, further, that (i) in no
event shall the Tenant be entitled to receive any excess of such net rents
over the sums payable by the Tenant to the Landlord hereunder, (ii) in no
event shall the Tenant be entitled, in any suit for the collection of
damages pursuant to this subparagraph (b), to a credit in respect of any
net rents from a reletting except to the extent that such net rents are
actually received by the Landlord prior to the commencement of such suit,
and (iii) if the premises or any part thereof should be relet in
combination with other space, then proper apportionment on a square foot
rentable area basis shall be made of the rent received from such reletting
and of the expenses of reletting.
For the purposes of this Article, the amount of the percentage rent (if
any) which would have been payable for the period following a Default
Termination of this Lease shall be deemed to be an amount, for each calendar
month in said period, equal to the monthly average amount of percentage rent (if
any) which became payable under this Lease during the term hereof prior to such
Default Termination. For the purposes of subparagraph (a) of this Article, the
amount of additional rent which would have been payable by the Tenant under
Article Twenty-fourth hereof shall, for each Computation Year (as hereinafter
defined) ending after such Default Termination, be deemed to be an amount equal
to the amount of such additional rent payable by the Tenant for the Computation
Year immediately preceding the Computation Year in which such Default
Termination occurs. Suit or suits for the recovery of any damages payable
hereunder by the Tenant, or any installments thereof, may be brought by the
Landlord from time to time at its election, and nothing contained herein shall
be deemed to require the Landlord to postpone suit until the date when the term
of this Lease would have expired but for such Default Termination.
Nothing herein contained shall be construed as limiting or precluding the
recovery by the Landlord against the Tenant of any sums or damages to which, in
addition to the damages particularly provided above, the Landlord may lawfully
be entitled by reason of any default hereunder on the part of the Tenant.
EIGHTEENTH. Waivers by Tenant. The Tenant, for the Tenant, and on behalf
of any and all persons, firms and corporations claiming through or under the
Tenant, including creditors of all kinds, does hereby waive and surrender all
right and privilege which they or any of them might have under or by reason of
any present or future law to redeem the premises or to have a continuance of
this Lease for the full term hereby demised after the Tenant is dispossessed or
ejected therefrom by process of law or under the terms of this Lease or after
the expiration or termination of this Lease as herein provided or pursuant to
law. The Tenant also waives (a) the right of the Tenant to trial by jury in any
summary dispossess or other proceeding that may hereafter be instituted by the
Landlord against the Tenant in respect of the premises or in any action that may
be brought to recover rent, damages or other sums payable hereunder, and (b) the
provisions of any law relating to notice and/or delay in levy of execution in
case of an eviction or dispossess of a tenant for nonpayment of rent, and of any
other law of like import now or hereafter in effect. If the Landlord commences
any such summary dispossess proceeding, the Tenant will not interpose any
counterclaim of whatever nature or description in such proceeding.
NINETEENTH. Tenant's Removal. Any personal property which shall remain in
any part of the premises after the expiration or termination of the term of this
Lease with respect to such part shall be deemed to have been abandoned, and
either may be retained by the Landlord as its property or may be disposed of in
such manner as the Landlord may see fit; provided, however, that,
notwithstanding the foregoing, the Tenant will, upon request of the Landlord
made not later than 30 days after expiration or termination of the term hereof
with respect to such part of the premises, promptly remove from the Building any
such personal property.
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If at any time during the last month of the term of this Lease with
respect to any part of the premises, such part of the premises shall no longer
be occupied by the Tenant in the conduct of its business, the Landlord may, and
the Tenant hereby irrevocably grants to the Landlord a license to, enter such
part of the premises and make such alterations in and redecorate such part of
the premises as the Landlord shall determine in its sole discretion and the
Tenant shall not be entitled to any abatement of fixed rent or other
compensation on account thereof.
TWENTIETH. Elevators, Cleaning, Services, etc. The Landlord will (i)
supply passenger elevator service during Business Hours to each floor, above the
street floor of the Building, which is served by the Building's passenger
elevators and on which the premises are, or any portion thereof is, located,
with one of said elevators being subject to call for such service during hours
other than Business Hours, (ii) supply an elevator for the transmission of
freight to said floor or floors during Business Hours, (iii) subject to any
applicable policies or regulations adopted by any utility or governmental
authority, supply during Business Hours in the cold season heat for the warming
of the premises and the public portions of the Building, (iv) subject to any
applicable policies or regulations adopted by any utility or governmental
authority, supply during Business Hours air conditioning (including cooling
during the period from May 1 to September 30 as, in the Landlord's judgment, may
be necessary) and ventilation to all portions of the premises, if any, which are
served by the Building's air conditioning and ventilation systems, and (v) clean
any portion of the premises which is located on a floor above the street floor
of the Building except any such portion used for preparing, dispensing or
consumption of food or beverages or as an exhibition area or classroom or for
storage, shipping room, mail room or similar purposes or which is a toilet
(other than a toilet shown on any diagram attached hereto as Exhibit A) or a
shop or is used for the operation of computer, data processing, reproduction,
duplicating or similar equipment. The Tenant will at all times comply with all
regulations and requirements which the Landlord may reasonably prescribe for the
proper functioning and protection of said air conditioning system. No
representation is made by the Landlord with respect to the adequacy or fitness
of such air conditioning or ventilation to maintain temperatures as may be
required for, or because of, the operation of any computer, data processing or
other equipment of the Tenant and where air conditioning or ventilation is
required for any such purpose the Landlord assumes no responsibility, and shall
have no liability, for any loss or damage however sustained, in connection
therewith.
The Landlord will, when and to the extent reasonably requested by the
Tenant, furnish additional elevator, heating, air conditioning, ventilating
and/or cleaning services upon such reasonable terms and conditions as shall be
determined by the Landlord, including the payment by the Tenant to the Landlord
of the Landlord's reasonable charge therefor, which charge for additional
heating, air conditioning and ventilation services furnished to the premises
outside of Business Hours at the request of the Tenant, such request to be given
not less than 48 hours in advance, is as of the date of this Lease the rates of
(i) for air conditioning during the cooling season: $68.54 per hour for System
A, $50.00 per hour for System B, and $118.54 for both System A and B (as such
systems are defined in Article Twenty-ninth hereof), and (ii) for heating during
the cold season, $50.00 per hour for System A, $25.00 per hour for System B, and
$75.00 per hour for both System A and B, all such rates being subject to change
at any time at the reasonable discretion of the Landlord. The Tenant will also
pay to the Landlord the Landlord's reasonable charge for (a) any additional
cleaning of the premises required because of the carelessness or indifference of
the Tenant or because of the nature of the Tenant's business, and (b) the
removal of any of the Tenant's refuse and rubbish from the premises and the
Building, except wastepaper and similar discarded material placed by the Tenant
in wastepaper baskets and left for emptying as an incident to the Landlord's
normal cleaning of the premises. If the cost to the Landlord for cleaning the
premises shall be increased due to the use of any part of the premises during
hours other than Business Hours or due to there being installed in the premises,
at the request of or by the Tenant, any materials or finish other than those
which are of the standard adopted by the Landlord for the Building, the Tenant
shall pay to the Landlord an amount equal to such increase in cost.
At any time or times all or any of the elevators in the Building may, at
the option of the Landlord, be manual or automatic elevators, and the Landlord
shall be under no obligation to furnish an elevator operator or starter for any
automatic elevator, but if the Landlord shall at any time or times furnish any
elevator
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operator or starter for any automatic elevator, the Landlord may discontinue
furnishing such elevator operator or starter.
The Landlord reserves the right, without liability to the Tenant and
without constituting any claim of constructive eviction, to stop any heating,
elevator, escalator, lighting, ventilating, air conditioning, power, water,
cleaning or other service and to interrupt the use of any Building facilities,
at such times as may be necessary and for as long as may reasonably be
required by reason of accidents, strikes, the making of repairs, alterations or
improvements, inability to secure a proper supply of fuel, steam, water,
electricity, labor or supplies, or by reason of any other cause beyond the
reasonable control of the Landlord; provided, however, that any such stoppage or
interruption for the purpose of making any alteration or improvement shall be
made at such times and in such manner as shall not unreasonably interfere with
the Tenant's use of the premises.
TWENTY-FIRST. Lease Contains All Agreements--No Waivers. This Lease
contains all of the covenants, agreements, terms, provisions, conditions and
understandings relating to the leasing of the premises hereunder and the
Landlord's obligations in connection therewith and neither the Landlord nor any
agent or representative of the Landlord has made or is making, and the Tenant in
executing and delivering this Lease is not relying upon, any warranties,
representations, promises or statements whatsoever, except to the extent
expressly set forth in this Lease. All understandings and agreements, if any,
heretofore had between the parties are merged in this Lease, which alone fully
and completely expresses the agreement of the parties.
The failure of the Landlord to insist in any instance upon the strict
keeping, observance or performance of any covenant, agreement, term, provision
or condition of this Lease or to exercise any election herein contained shall
not be construed as a waiver or relinquishment for the future of such covenant,
agreement, term, provision, condition or election, but the same shall continue
and remain in full force and effect. No waiver or modification by the Landlord
of any covenant, agreement, term, provision or condition of this Lease shall be
deemed to have been made unless expressed in writing and signed by the Landlord.
No surrender of possession of the premises or of any part thereof or of any
remainder of the term of this Lease shall release the Tenant from any of its
obligations hereunder unless accepted by the Landlord in writing. The receipt
and retention by the Landlord of fixed rent, percentage rent (if any) or
additional rent from anyone other than the Tenant shall not be deemed a waiver
of the breach by the Tenant of any covenant, agreement, term, provision or
condition herein contained, or the acceptance of such other person as a tenant,
or a release of the Tenant from the further keeping, observance or performance
by the Tenant of the covenants, agreements, terms, provisions and conditions
herein contained. The receipt and retention by the Landlord of fixed rent,
percentage rent (if any) or additional rent with knowledge of the breach of any
covenant, agreement, term, provision or condition herein contained shall not be
deemed a waiver of such breach.
TWENTY-SECOND. Parties Bound. The covenants, agreements, terms, provisions
and conditions of this Lease shall bind and benefit the respective successors,
assigns and legal representatives of the parties hereto with the same effect as
if mentioned in each instance where a party hereto is named or referred to,
except that no violation of the provisions of Article Seventh hereof shall
operate to vest any rights in any successor, assignee or legal representative of
the Tenant and that the provisions of this Article shall not be construed as
modifying the conditions of limitation contained in Article Fifteenth hereof.
The covenants and obligations on the part of the Landlord under this Lease shall
not, however, be binding upon the Landlord herein named (or any transferee of
its interest in the Building) with respect to the period subsequent to the
transfer of its interest in the Building (a lease of the entire interest being
deemed such a transfer, such covenants and obligations being binding upon the
Landlord with respect to the period prior to any transfer of its interest in the
Building; and in any such event said covenants and obligations shall thereafter
be binding upon the transferee of such interest in the Building until the next
such transfer of such interest.
TWENTY-THIRD. Curing Tenant's Defaults--Additional Rents. If the Tenant
shall default (beyond any applicable grace period) in the keeping, observance or
performance of any covenant, agreement, term, provision or condition herein
contained, the Landlord, without thereby waiving such default, may perform the
same for the account and at the expense of the Tenant (a) immediately or at any
time thereafter and without notice in the case of emergency or in case such
default unreasonably interferes with the use by any other tenant of any space in
<PAGE>
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17
the Building demised to such other tenant or with the efficient operation of the
Building or will result in a violation of law or in a cancellation of an
insurance policy maintained by the Landlord, and (b) in any other case if such
default continues after 15 days from the date the giving by the Landlord to the
Tenant of notice of the Landlord's intention so to perform the same. All
reasonable costs and expenses incurred by the Landlord in connection with any
such performance by it for the account of the Tenant and also all costs and
expenses, including reasonable counsel fees and disbursements incurred by the
Landlord in any action or proceeding (including any summary dispossess
proceeding) brought by the Landlord to enforce any obligation of the Tenant
under this Lease and/or right of the Landlord in or to the premises, shall be
paid by the Tenant to the Landlord upon demand. Except as aforesaid or as
elsewhere provided in this Lease, all costs and expenses which, pursuant to this
Lease (including the rules and regulations referred to herein) are incurred by
the Landlord and payable to it by the Tenant and all charges, amounts and sums
payable to the Landlord by the Tenant for any property, material, labor, utility
or other services which, pursuant to this Lease or at the request and for the
account of the Tenant, are provided, furnished or rendered by the Landlord shall
become due and payable by the Tenant to the Landlord in accordance with the
terms of bills therefor to be rendered by the Landlord to the Tenant. If any
cost, expense, charge, amount or sum referred to in this Article or elsewhere in
this Lease is not paid when due and payable as provided in this Lease, the same
shall become due and payable by the Tenant as additional rent hereunder. If any
fixed rent, additional rent, percentage rent (if any) or damages payable
hereunder by the Tenant to the Landlord is not paid when due (after the
expiration of any applicable grace period) as in this Lease provided, the same
shall bear interest at the rate of 2% per month (but in no event at a rate in
excess of that permitted by law) from the due date thereof until paid and the
amount of such interest shall be deemed additional rent hereunder. In the event
of nonpayment by the Tenant of any such additional rent and/or any other
additional rent and/or percentage rent (if any) becoming due hereunder, the
Landlord, in addition to any other right or remedy, shall have the same rights
and remedies as in the case of default by the Tenant in the payment of the fixed
rent. In the event that the Tenant is in arrears in the payment of fixed rent,
percentage rent (if any) or additional rent, the Tenant waives the Tenant's
right, if any, to designate the items against which any payments made by the
Tenant are to be credited, and the Landlord may apply any payments made by the
Tenant to any items the Landlord sees fit, irrespective of and notwithstanding
any designation or request by the Tenant as to the items against which any such
payments shall be credited, provided, however, that, in each instance the
Landlord shall apply any such payment to the oldest open item in the Tenant's
account. The Landlord reserves the right, without liability to the Tenant and
without constituting any claim of constructive eviction, to suspend furnishing
or rendering to the Tenant any property, material, labor, utility or other
service, wherever the Landlord is obligated to furnish or render the same at the
expense of the Tenant, in the event that (but only so long as) the Tenant is in
arrears in paying the Landlord therefor at the expiration of 10 days after the
Landlord shall have given to the Tenant notice demanding the payment of such
arrears.
TWENTY-FOURTH. Adjustments for Changes in Landlord's Costs and Expenses.
If the sum of the Square Foot Share of the Real Estate Taxes for any Computation
Year plus 107% of the Square Foot Share of the Cost of Operation and Maintenance
for such Computation Year shall be greater (resulting in an excess) or shall be
less (resulting in a deficiency) than the sum of the Building Square Foot Share
of the Real Estate Taxes plus 107% of the Square Foot Share of the Cost of
Operation and Maintenance, each for the Computation Year ending on December 31,
1989, then promptly after the Landlord shall furnish the Tenant with an
Escalation Statement relating to such Computation Year the Tenant shall, in case
of such an excess, pay to the Landlord, as additional rent for the premises for
such Computation Year, an amount equal to the product obtained by multiplying
such excess by the Tenant's Area or the Landlord shall, in the case of such a
deficiency, pay to the Tenant an amount equal to the product obtained by
multiplying such deficiency by the Tenant's Area.
In order to provide for current payments on account of the additional rent
which may be payable to the Landlord pursuant to the first paragraph of this
Article for any Computation Year, the Tenant agrees to make such payments on
account of said additional rent for and during such Computation Year in 12
monthly installments, each in an amount equal to 1/12th of the amount which
would have been payable by the Tenant to the Landlord pursuant to said first
paragraph for the period of 12 calendar months immediately preceding such
Computation Year if said 12-month period had been a Computation Year falling
entirely within the term of this Lease and if there had been no abatement of
fixed rent hereunder during such 12-month period (other than an abatement, if
any, pursuant to Article Tenth hereof) except
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18
actually payable for such month and the Cost of Operation and Maintenance for
such Computation Year as reasonably estimated by the Landlord, the installment
for each calendar month to be due and payable upon the receipt from the Landlord
of a bill for the same. If, as finally determined, the amount of additional rent
payable by the Tenant to the Landlord pursuant to the first paragraph of this
Article for such Computation Year shall be greater than (resulting in an
underpayment) or be less than (resulting in an overpayment) the aggregate of all
the installments so paid on account to the Landlord by the Tenant for such
Computation Year, then, promptly after the receipt of the Escalation Statement
for such Computation Year and, in performance of its obligations under the first
paragraph of this Article, the Tenant shall, in case of such an underpayment,
pay to the Landlord an amount equal to such underpayment or the Landlord shall,
in case of such an overpayment, pay to the Tenant an amount equal to such
overpayment.
As used in this Article:
(a) "Computation Year" shall mean each calendar year in which occurs
any part of the term of this Lease and, in the case of a Default
Termination of this Lease, in which would have occurred any part of the
full term of this Lease except for such Default Termination.
(b) "Tenant's Area" shall mean the number of square feet in the
rentable area of the premises; it being assumed for the purposes of this
Article that the rentable area of shop 'S' on the Street Floor is 8,001
square feet, and the rentable area of shop 'G-1' on the Street Floor is
3,755 square feet.
(c) "Square Foot Share" shall mean a fraction whose numerator is one
and whose denominator is the number of square feet in the rentable area of
the Building.
(d) "Real Estate Taxes" shall mean the taxes and assessments imposed
upon the Building and the Land (other than any interest or penalties
imposed in connection therewith) and all expenses, including fees of
counsel and experts, reasonably incurred by, or reimbursable by, the
Landlord in connection with any application for a reduction in the
assessed valuation for the Building and/or the Land or for a judicial
review thereof. If due to a future change in the method of taxation any
franchise, income, profit or other tax shall be levied against the
Landlord in substitution in whole or in part for or in lieu of any tax
which would otherwise constitute a Real Estate Tax, such franchise,
income, profit or other tax shall be deemed to be a Real Estate Tax for
the purposes hereof.
(e) "Cost of Operation and Maintenance shall mean the actual cost
incurred by the Landlord with respect to the operation, maintenance and
repair of the Building (as determined for shops in the Building) and the
curbs and sidewalks adjoining the same, including, without limitation, the
cost incurred for air conditioning; mechanical ventilation; heating;
interior and exterior cleaning; rubbish removal; window washing (interior
and exterior, including inside partitions); elevators; escalators; hand
tools and other moveable equipment; porter and matron service; electric
current, steam, water and other utilities; protection and security
service; repairs; maintenance; fire, extended coverage, boiler, sprinkler,
apparatus, public liability and property damage insurance; supplies;
wages, salaries, disability benefits, pensions, hospitalization,
retirement plans and group insurance respecting service and maintenance
employees; uniforms and working clothes for such employees and the
cleaning thereof; expenses imposed pursuant to any collective bargaining
agreement with respect to such employees; payroll, social security,
unemployment and other similar taxes with respect to such employees;
sales, use and other similar taxes; water rates; sewer rents; charges of
any independent contractor who does any work with respect to the
operation, maintenance and repair of the Building and the curbs and
sidewalks adjoining the same; and the annual depreciation or amortization
over the useful life thereof of costs, including financing costs incurred
for any equipment, device or other capital improvement made or acquired
which is either intended as a laborsaving measure or to effect other
economies in the operation, maintenance or repair of the Building and said
curbs and sidewalks (provided that the annual benefits anticipated to be
realized therefrom are reasonably related to the annual amount to be
amortized) or which is required by any change in laws, ordinances, rules,
orders or regulations of governmental authorities or insurance bodies,
provided, however, that the term "Cost of Operation and Maintenance" shall
not include (1) Real Estate Taxes, special assessments, franchise taxes or
taxes imposed upon or measured by the income or profits of the Landlord,
(2) except for depreciation and amortization hereinabove provided for in
this subparagraph,
<PAGE>
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19
and the depreciation and amortization of the cost of any hand tools or
other moveable equipment the cost of any item which is, or should in
accordance with sound accounting practice be, capitalized on the books of
the Landlord, (3) the cost of any electricity furnished to the premises or
any other space in the Building demised to other tenants, (4) the cost of
any work or service performed for any tenant of space in the Building
(including the Tenant) at such Tenant's cost and expense or furnished to
any other tenant of space in the Building at the Landlord's cost and
expense to the extent that such work or service is in excess of any work
or service which the Landlord is obligated to furnish hereunder to the
Tenant at the Landlord's cost and expense. (See Rider 'J' attached to this
Lease) If during any period for which the Cost of Operation and
Rider 'I' attached to and forming a part of Lease dated June 21, 1988 between
ROCKEFELLER CENTER NORTH, INC., as the Landlord and WHITE & WITKOWSKY, INC., as
the Tenant.
(5) interest and amortization of any debts, including mortgage
indebtedness, and any rents payable in respect to any underlying lease,
(6) the cost of soliciting prospective tenants (including brokerage
or other leasing commissions) and of preparing and executing leases and
management fees,
(7) the cost of any salary payable to, or the cost of any fringe
benefits in connection with, the Chairman of the Board, the President, or
any Vice President (other than any Vice President of Operations) of the
Landlord and their respective secretaries,
(8) the cost of any repair of any damage caused by fire or other
casualty to the extent that the cost of such repair is covered by
insurance or the Landlord is entitled to be reimbursed therefor by any
tenant in addition to the rent payable by such tenant, or
(9) any cost incurred in the sale or refinancing of the Building.
Rider 'J' attached to and forming a part of Lease dated June 21, 1988 between
ROCKEFELLER CENTER NORTH, INC., as the Landlord and WHITE & WITKOWSKY, INC., as
the Tenant.
When requested by the Tenant within 6 months following the receipt by it
of any Escalation Statement, the Landlord, in substantiation of its
determination of the amounts set forth in said Escalation Statement, will
furnish to the Tenant such additional information as reasonably may be required
for such purpose, and, as may be necessary for the verification of such
information, will permit the pertinent records of the Landlord to be examined by
an officer of the Tenant or by such independent certified public accountant as
the Tenant may designate; it being expressly understood that the Landlord shall
be under no duty to preserve any such records, or any data or material related
thereto, beyond such time as shall be its customary practice with respect
thereto.
<PAGE>
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TWENTY-FIFTH. Miscellaneous. If the Landlord shall have heretofore
consented to or shall hereafter consent to the omission or removal of any part
of, or the insertion of any door (other than to a public corridor) or other
opening in, any wall separating the premises from other space adjoining the
premises, then (a) the Tenant shall be deemed to have assumed responsibility for
all risks (including, but not limited to, damage to, or loss or theft of,
property) incident to the use of said door or other opening or the existence
thereof, and shall indemnify and save the Landlord harmless from and against
any claim, demand or action for, or on account of, any such loss, theft or
damage, and (b) in the event of the expiration or termination of this Lease or
any lease of said adjoining space, the Landlord may enter the premises and close
up such door or other opening by erecting a wall to match the wall separating
the premises from said adjoining space, and the Tenant shall pay the reasonable
cost thereof and such work may be done during Business Hours and while the
Tenant is in occupancy of the premises and the Tenant shall not be entitled to
any abatement of fixed rent or other compensation on account thereof; provided,
however, that nothing herein contained shall be deemed to vest the Tenant with
any right or interest in, or with respect to, said adjoining space, or the use
thereof, and the Tenant hereby expressly waives any right to be made a party to,
or to be served with process or other notice under or in connection with, any
proceeding which may hereafter be instituted by the Landlord for the recovery
of the possession of said adjoining space.
Without incurring any liability to the Tenant, the Landlord may permit
access to the premises and open the same, whether or not the Tenant shall be
present, upon demand of any receiver, trustee, assignee for the benefit of
creditors, sheriff, marshal or court officer entitled to, or reasonably
purporting to be entitled to, such access for the purpose of taking possession
of, or removing, the Tenant's property or for any other purpose (but this
provision and any action by the Landlord hereunder shall not be deemed a
recognition by the Landlord that the person or official making such demand has
any right or interest in or to this Lease, or in or to the premises), or upon
demand of any representative of the fire, police, building, sanitation or other
department of the city, state or federal government.
If an excavation shall be made upon any land adjacent to the Building, or
shall be authorized to be made, the Tenant shall afford to the person causing or
authorized to cause such excavation a license to enter upon the premises for the
purpose of doing such work as said person shall deem necessary to preserve the
Building from injury or damage, all without any claim for damages or indemnity
against the Landlord or diminution or abatement of rent.
The Tenant shall not be entitled to exercise any right of termination or
other option granted to it by this Lease at any time when the Tenant is in
default, beyond any applicable grace period, in the keeping, performance or
observance of any of the covenants, agreements, terms, provisions or conditions
on its part to be kept, performed or observed under this Lease.
The headings of the Articles of this Lease are for convenience only and
are not to be considered in construing said Articles.
As used in this paragraph, the term "facility" means stores, restaurants,
cafeterias, rest rooms, and any other facility of a public nature in the
Building. The Tenant agrees that it will not discriminate by segregation or
otherwise against any person or persons because of race, creed, color, or
national origin in furnishing, or by refusing to furnish, to such person or
persons the use of any facility in the premises, including any and all services,
privileges, accommodations, and activities provided thereby. It is agreed that
the Tenant's noncompliance with the provisions of this paragraph shall
constitute a material breach of this Lease. In the event of such noncompliance,
the Landlord may take appropriate action to enforce compliance, may terminate
this Lease in accordance with the provisions of this Lease, or may pursue such
other remedies as may be provided by law. In the event of termination, the
Tenant shall be liable to the Landlord for damages in accordance with the
provisions of this Lease.
<PAGE>
TWENTY-SIXTH. Shop Covenants. The Tenant, recognizing that the Building is
maintained as a location for an outstanding type of business occupancy and as an
additional inducement to the Landlord to enter into this Lease, covenants and
agrees that at all times (i) the business to be conducted at, through and from
the premises and the kind and quality of the merchandise and services offered in
the conduct thereof will be reputable in every respect, (ii) the sales methods
employed in said business, as well as all other elements of merchandising,
display and advertising, will be dignified and in conformity with the highest
standards of practice obtaining among superior type stores, shops and concerns
dealing in the same or similar merchandise or conducting a similar business in
the Building or in Rockefeller Center, and (iii) the appearance of the premises
(including the lighting and other appurtenances thereto), the appearance and
deportment of all personnel employed therein, and the appearance, number,
location, nature and subject matter of all displays and exhibits placed or
installed in or about the premises, and of any signs, lettering, announcements,
price schedules, tags or any other kinds or forms of inscriptions displayed in
or about the premises will be only such as meet with the Landlord's approval
and, if at any time disapproved by the Landlord, the Tenant shall remove the
basis for such disapproval in such manner and within such reasonable time as may
be specified by the Landlord in a notice given by it to the Tenant for such
purpose. No special sale shall be carried on in the premises other than such
special sale as is incident to the normal routine of the [ILLEGIBLE].
Rider 'J-1' attached to and forming a part of Lease dated June 21, 1988 between
ROCKEFELLER CENTER NORTH, INC., as the Landlord, and WHITE & WITKOWSKY, INC., as
the Tenant.
such days on which the Landlord permits the premises to be closed consisting of
those holidays for the Building as shall be determined each year by the
Landlord. Such holidays for calendar year 1988 are as follows:
New Year's Day January 1
Washington's Birthday (Observed) February 15
Memorial Day May 30
Independence Day July 4
Labor Day September 5
Presidential Election Day November 8
Thanksgiving Day November 24
Day after Christmas December 26
(d) occupy the premises as soon as the premises are available for
occupancy and the term commencement date shall have occurred and
thereafter keep the premises open for business between the hours of 11
A.M. and 12 Midnight on all days other than Sundays and days upon which
the Landlord permits the premises to be closed, (see Rider 'S-1' attached
to this Lease) and it is hereby agreed that, for the purposes of Article
Twentieth hereof, said hours shall be deemed to be "Business Hours"; and
on such other additional days and/or for such longer hours, none of which
shall be deemed Business Hours, as the Tenant may wish;
(e) place no fixtures, furnishings, decorations or equipment in the
premises except such as are satisfactory to, and, prior to being installed
or placed therein, shall have been approved by, the Landlord, such
approval not to be unreasonably withheld;
(f) display no lettering, sign, advertisement, notice or object and
permit no such display on the windows or doors or on the outside of the
perimeter walls of the premises except with the prior consent of the
Landlord such consent not to be unreasonably withheld;
(g) from time to time during the term hereof and at its expense
redecorate the premises and refinish, renew and/or replace the fixtures,
furnishings, decorations and equipment therein as in the reasonable
judgment of the Landlord may be necessary to preserve the good appearance
of the premises in keeping with the general standard maintained in similar
areas in the Building; and
(h) not install, place or permit any awning on the perimeter walls
of the premises unless provided or consented to by the Landlord and each
such awning so provided or consented to shall, to the reasonable
satisfaction of the Landlord, be kept clean and in good order and state of
repair and appearance by the Tenant, including, whenever necessary in the
reasonable judgment of the Landlord, the replacement of awning coverings
with materials reasonably approved by the Landlord; provided, however,
that, where any such awning has been provided by and at the expense of the
Landlord, the Landlord shall make all repairs and replacements of
framework and/or mechanical parts thereof except that, if any such repair
or replacement is required by reason of the Tenant's negligent act or
omission, the Tenant shall pay to the Landlord the cost and expense of
making the same.
<PAGE>
TWENTY-SEVENTH. Assignment by Tenant. Notwithstanding anything to the
contrary contained herein, the Landlord will not unreasonably withhold its
consent to (i) one assignment of this Lease by the Tenant or (ii) one transfer
of all of the issued and outstanding shares of stock of the Tenant to a person,
firm or corporation (herein called the "Assignee"), upon the express conditions
that:
(a) such assignment or transfer of stock is part of a sale of the
majority of the restaurants then doing business under the firm name and
style of WHITE & WITKOWSKY, INC., or such other name as may have been
adopted by the Tenant for such restaurants, to such Assignee;
(b) such assignment or transfer of stock will only be to an Assignee
which is controlled by a person or persons with 5 years of experience in
operating a first class restaurant of the type exemplified by The Post
House, Smith & Wollensky, The Manhattan Ocean Club, The "21" Club, or in
the reasonable discretion of the Landlord, has equivalent general business
experience;
(c) at the time of the acquisition by the Assignee of the majority
of the restaurants doing business under the firm name and style of WHITE &
WITKOWSKY, INC., or such other name as may have been adopted by the Tenant
for such restaurants, such Assignee shall have a net worth (exclusive of
the acquired assets of the restaurants of WHITE & WITKOWSKY, INC., or such
other name as may have been adopted by the Tenant for such restaurants,)
at least equal to that of all of the restaurants which had been doing
business under the firm name and style of WHITE & WITKOWSKY, INC., or such
other name as may have been adopted by the Tenant for such restuarants, as
of the term commencement date of this Lease, adjusted to reflect the
change in the CPI (as such term is defined in Article First hereof) during
the period from the term commencement date to the date of such assignment;
(d) in the event such assignment or transfer of stock shall take
place after the tenth anniversary of the term commencement date of this
Lease, then in such event and in consideration of its consent to such
assignment or transfer of stock, the Landlord shall have the right, in its
sole discretion, to adjust the fixed rent payable under this Lease for the
remainder of the term hereof to the fair market rental value of the
premises at the time of such assignment, which, if the Assignee so
requests, shall be determined by arbitration in accordance with the rules
of the American Arbitration Association, it being
<PAGE>
TWENTY-SEVENTH (continued)
understood that the amount set forth in the first paragraph of Article
Twenty-fourth hereof shall be the sum of the Square Foot Share of the Real
Estate Taxes plus 107% of the Cost of Operation and Maintenance, both for
the Computation Year immediately preceding the date on which such
assignment or transfer of stock occurs. Notwithstanding the foregoing,
such adjustment of the fixed rent may be made by the Landlord only in the
event the rental rate for the premises established by the Landlord or by
arbitration as aforesaid at the time of the assignment is 20% or more
above the rate of fixed rent then in effect under this Lease;
(e) in the event of the assignment of this Lease, the Tenant and the
Assignee will execute and deliver to the Landlord an agreement in form and
substance satisfactory to the Landlord, whereby the Assignee shall agree
to be bound by and upon all of the covenants, agreements, terms,
provisions and conditions set forth in this Lease.
<PAGE>
TWENTY-EIGHTH. Tenant's Work. The Tenant shall promptly submit to the
Landlord, for the Landlord's approval (which approval shall not be unreasonably
withheld or delayed), complete architectural and mechanical working drawings and
specifications showing a proposed renovation of the spaces designated shop 'S'
and shop 'G-1' on the Street Floor and shop 'B' and shop 'G-2' on the Mezzanine
Floor in Article First hereof (herein called "the Work Area") as desired by the
Tenant consistent with the design, construction and equipment of the Building
and in conformity with its standards, all in such form and in such detail, as
may be reasonably required by the Landlord, it being understood and agreed that
such work may include, but not be limited to, (a) provision for the construction
of raised platforms throughout the Work Area, which construction may make use of
fire retardant wood to the extent and in the manner permitted by the Building
Code of the City of New York, (b) provision for the installation of awnings
above the exterior windows of the premises, and canvas canopies extending from
the sidewalk entrance to the premises to the curb, upon condition that each such
awning and canopy meets the standard of the Landlord as to style, fabric and
color established for similar awnings and canopies in the Building and in
Rockefeller Center, (c) provision for the installation of exterior windows of
the premises which open to the outside upon condition that (i) the Tenant may
open such windows only under appropriate weather conditions and during the
months of May, June, September and October and (ii) the Tenant shall have
installed revolving doors at all doors in the premises to the lobby of the
Building, and (d) provision for the installation of containers of ornamental
plants on the sidewalk adjacent to the premises, such containers and the
location thereof being acceptable to the City of New York and to the Landlord.
It is understood and agreed that such work will be of such extent and character
that the aggregate cost thereof to the Tenant will be at least $2,000,000.00,
the expenditure of such aggregate cost to be verified by the Tenant to the
reasonable satisfaction of the Landlord. The working drawings and specifications
to be submitted to the Landlord as aforesaid shall be prepared by a competent
architect licensed in the State of New York (in consultation with a competent
engineer where required by the nature of the work), reasonably satisfactory to
the Landlord, who shall be engaged by the Tenant and who, at the Tenant's
expense, shall furnish all architectural and engineering services necessary for
the preparation of said working drawings and specifications and in connection
with securing the aforesaid approval thereof by the Landlord and with the
securing by the Tenant of such approvals as by reason of the nature of the work
shown on said working drawings and specifications, may be required from the
Department of Buildings of the City of New York and any other governmental
authorities.
If the Landlord shall not approve any working drawing or specification as
submitted by the Tenant, the Landlord shall with reasonable promptness, but in
any event within 10 business days of such submission, notify the Tenant thereof
and of the particulars of
<PAGE>
TWENTY-EIGHTH (continued)
such revisions therein as are reasonably required by the Landlord for the
purpose of obtaining its said approval and as promptly as reasonably possible
after being so informed by the Landlord the Tenant shall submit to the Landlord,
for the Landlord's approval (which approval shall not be unreasonably withheld),
a working drawing or specification, as the case may be, incorporating such
revisions or incorporating such modifications thereto as are suggested by the
Tenant and approved by the Landlord (said working drawings and specifications as
so approved, being herein called "the Working Drawings"). Any such approval by
the Landlord shall not be deemed to be a representation or warranty that the
same is properly designed to perform the function for which it is intended or
complies with any applicable law, ordinance, rule order or regulation of any
governmental authority or insurance body, but only that the work required
thereby will not interfere with the systems of the Building and is compatible
with the design and structure of the Building.
Such renovation shall be performed in accordance with, and subject to all
of the covenants, agreements, terms, provisions and conditions of this Lease
(including, but not limited to, Article Sixth hereof). Upon the approval by the
Landlord of the Working Drawings, the Tenant shall proceed with due dispatch to
cause the work as shown on such approved Working Drawings to be done at the
Tenant's sole cost and expense.
The workmen and the contractors performing the work and the manner, terms
and conditions upon which the same is performed shall be satisfactory to and
approved by the Landlord, so as to best assure the performance of the work in
accordance with the Working Drawings. The work shall at all times comply with
(a) all applicable rules and regulations and orders of any and all governmental
authorities or insurance bodies having juridsiction with respect thereto, and
(b) with the reasonable rules and regulations of the Landlord pertaining to the
performance thereof, taking into consideration that the work to be done is in
the nature of the renovation of the Work Area for use in the operation of a
first class restaurant.
The Tenant, promptly after the execution and delivery of this Lease, will
submit an alteration application to the Buildings Department of the City of New
York seeking approval of the proposed means of egress from the premises. In
connection with such application it is expected that the Buildings Department
will advise the Tenant as to whether an amended Certificate of Occupancy is
needed in order to permit the operation of a restaurant in the premises. In the
event such amended Certificate of Occupancy is deemed required by the Buildings
Department, the Tenant will immediately file for the same and at the same time
seek a temporary Certificate of Occupancy enabling the Tenant to proceed with
the work called for by this Article. The Landlord agrees that any delay
<PAGE>
TWENTY-EIGHTH (continued)
in commencing such work caused by such application for a revised Certificate
of Occupancy and a temporary Certificate of Occupancy shall cause the term
commencement date of this Lease to be [ILLEGIBLE] to the extent of such delay
provided, however, the [ILLEGIBLE] postponement shall in no event extend beyond
January 4, 1989. The Tenant agrees to diligently seek to obtain in a
timely manner the necessary permits, certificates and authorizations so
that the work to be done hereunder may commence, and the term commencement
date shall occur, with the least possible postponement of the term commencement
date.
The Tenant has submitted a sketch, attached hereto as Exhibit 'B', showing
the exterior facade of the premises, proposed tentatively by the Tenant and
approved by the Landlord. The Tenant may revise such proposed exterior facade
prior to the construction thereof, subject to the approval of the Landlord as
provided herein.
The parties hereto shall, upon the request of either party, enter into an
agreement amending this Lease for the purpose of establishing the term
commencement date hereof.
<PAGE>
TWENTY-NINTH. Modification of Existing Air Conditioning Systems. The
premises are presently served by two separate air conditioning systems, one for
shop 'S' on the Street Floor and shop 'B' on the Mezzanine Floor (herein called
"System A"), and the second for shop 'G-1' on the Street Floor and shop 'G-2' on
the Mezzanine Floor (herein called "System B").
The Landlord has ordered a study to determine those modifications needed
to System A and System B (a) to enable the Landlord to supply air conditioning
to the premises during those periods when the Tenant may elect to open the
exterior windows of the premises, (b) to enable System A alone to supply all of
the heat and air conditioning to the premises as requested by the Tenant during
hours outside of Business Hours, with System B held in readiness as a backup for
such hours outside of Business Hours, and (c) to enable the supply of heat and
air conditioning by System A outside of Business Hours to be furnished
exclusively to the premises, and the Tenant may request such exclusive supply of
air conditioning to the premises except on those occasions when another tenant
or tenants served by System A may request heat or air conditioning for the like
period outside of Business Hours. It is understood that by making such request
for the use of System A alone to supply heat or air conditioning outside of
Business Hours, the Tenant (a) assumes the risk of the adequacy of such heat and
air conditioning, and (b) agrees to pay the charges provided in Article
Twentieth hereof.
The Tenant agrees to include provision for such modifications to the air
conditioning systems in the Working Drawings (as such term is defined in Article
Twenty-eighth hereof), and to incorporate such modifications in the work to be
performed under such Article. The cost of the study ordered by the Landlord
shall be reimbursed to the Landlord by the Tenant upon demand.
<PAGE>
THIRTIETH. Asbestos Removal by Tenant. The Landlord has ordered an
inspection for the purpose of detecting the presence of asbestos in the spaces
designated shop 'S' and shop 'G-1 on the Street Floor and shop 'B' and shop
'G-2' on the Mezzanine Floor in Article First hereof (herein called the "Work
Area"), such inspection to be conducted by a licensed inspector selected by the
Landlord.
In the event that the asbestos inspection report indicates the presence of
asbestos in the premises, the Tenant shall submit to the Landlord, for the
Landlord's approval, complete working drawings and specifications showing the
proposed removal of all such asbestos from the Work Area, along with the
replacement of such asbestos, as required, with approved insulating material,
consistent with the design, construction and equipment of the Building and in
conformity with its standards, to be performed by the Tenant as part of the work
provided for in Article Twenty-eighth hereof, all in such form and in such
detail as may be reasonably required by the Landlord. The working drawings and
specifications to be submitted to the Landlord as aforesaid shall be prepared by
a competent engineer licensed in the State of New York, reasonably satisfactory
to the Landlord, who shall be engaged by the Tenant and who, at the Tenant's
expense, shall furnish all architectural and engineering services necessary for
the preparation of said working drawings and specifications and in connection
with securing the aforesaid approval thereof by the Landlord and with the
securing by the Tenant of such approvals as by reason of the nature of the work
shown on said working drawings and specifications may be required, from the
Department of Buildings of the City of New York and any other governmental
authorities.
If the Landlord shall not approve any working drawing or specification as
submitted by the Tenant, the Landlord shall with reasonable promptness, notify
the Tenant thereof and of the particulars of such revisions therein as are
reasonably required by the Landlord for the purpose of obtaining its said
approval, and as promptly as reasonably possible after being so informed by the
Landlord the Tenant shall submit to the Landlord, for the Landlord's approval
(which approval shall not be unreasonably withheld), a working drawing or
specification, as the case may be, incorporating such revisions or incorporating
such modifications thereto as are suggested by the Tenant and approved by the
Landlord and including the estimated cost to the Tenant of such work (said
working drawings and specifications, as so approved, being herein called "the
Working Drawings"). Any such approval by the Landlord shall not be deemed to be
a representation or warranty that the same is properly designed to perform the
function for which it is intended or complies with any applicable law,
ordinance, rule order or regulation of any governmental authority or insurance
body, but only that the work required thereby will not interfere with the
systems of the Building and is compatible with the design and structure of the
Building.
Such removal shall be performed in accordance with, and subject to all of
the covenants, agreements, terms, provisions and
<PAGE>
THIRTIETH (continued)
conditions of this Lease (including, but not limited to, Article Sixth hereof).
Upon the approval by the Landlord of the Working Drawings, the Tenant shall
proceed with due dispatch to cause the work as shown on such approved Working
Drawings to be done at the Tenant's sole cost and expense.
The Landlord agrees to reimburse the Tenant for the cost of the work provided
for in this Article, in the following manner:
(a) the amount of any prepayment for the work made by the Tenant, such
amount not to exceed 20% of the total cost thereof;
(b) the amount of any subsequent progress payment made by the Tenant
during the course of the work; and
(c) the amount of the final payment made by the Tenant upon receipt by the
Landlord of evidence satisfactory to it of the completion of such work in
a manner satisfactory to the Landlord and upon the furnishing by the
Tenant to the Landlord of (i) the discharge of any lien filed in
connection with such work, and (ii) certificates issued by governmental
authorities indicating the satisfactory removal of the asbestos.
The cost of the work to the Tenant to be reimbursed by the Landlord shall
consist of the actual cost to the Tenant of such work including the cost of
preparation of drawings, installation of replacement material, engineering
studies, reports, permits and approvals in connection therewith. The
reimbursement provided herein shall be made promptly upon receipt of a bill from
the Tenant consistent with the provisions of this Article.
<PAGE>
THIRTY-FIRST. Security. The Tenant shall at all times maintain on deposit
with the Landlord cash in the Required Amount as security for the full and
faithful keeping, observance and performance of all of the covenants,
agreements, terms, provisions and conditions of this Lease provided to be kept
observed or performed by the Tenant (expressly including without being limited
to, the payment as and when due of the fixed rent, percentage rent, if any,
additional rent and any other sums or damages payable by the Tenant under this
Lease) and the payment of any and all other damages for which the Tenant shall
be liable by reason of any act or omission contrary to any of said covenants,
agreements, terms, provisions or conditions. If at any time the Tenant shall be
in default in the payment as aforesaid of any such fixed rent, percentage rent,
additional rent, and/or any other sums or damages or shall otherwise be in
default in the keeping, observance or performance of any of the covenants,
agreements, terms, provisions or conditions of this Lease, then at the
Landlord's election, the cash on deposit with it as aforesaid may be applied by
the Landlord to the payment of the fixed rent, percentage rent, additional rent,
other sums or damages in respect to which the Tenant is so in default and/or, if
the Tenant is otherwise in default in the keeping, observing or performing as
aforesaid of any of the covenants, agreements, terms, provisions or conditions
of this Lease, said cash on deposit may be applied by the Landlord to the
payment of such costs and expenses as the Landlord shall incur in curing any
such default. If as a result of any such application of any such cash, the
amount of cash so on deposit with the Landlord shall at any time be less than
that hereinabove specified, the Tenant shall forthwith deposit with the Landlord
additional cash in an amount equal to the deficiency. If, at the expiration of
the term of this Lease, all of said fixed rent, percentage rent, if any,
additional rent, other sums or damages, costs or expenses shall have been paid
by the Tenant to the Landlord and the Tenant shall not be in default in the
keeping, observance or performance of any other covenant, agreement, term,
provision or condition of this Lease, then the Landlord shall return to the
Tenant all, or such part of the cash, if any, then on deposit with the Landlord
pursuant to this Article.
As used in this Article, the term "Required Amount" shall mean $236,775.00
except that, if on each of the respective anniversaries of the term commencement
date hereinafter set forth the Tenant is not in default in the due keeping,
observance or performance of any covenant, agreement, term, provision or
condition of this Lease, then, on and after each such anniversary, said term
shall mean the amount set forth opposite such anniversary in the following
schedule:
Anniversary Required Amount
----------- ---------------
First $169,125.00
Second $135,300.00
Third $101,475.00
<PAGE>
THIRTY-FIRST. (Continued)
In lieu of maintaining on deposit with the Landlord cash as aforesaid, the
Tenant may maintain with the Landlord an irrevocable letter of credit issued by
a New York clearing house bank in the Required Amount drawable upon by the
Landlord at any time when cash on deposit with it as aforesaid might and to the
extent could have been applied by the Landlord pursuant to the first paragraph
of this Article upon the delivery to said bank of the Landlord's certificate to
such effect, and otherwise containing terms and conditions satisfactory to the
Landlord. The Landlord shall use any amount so drawn in accordance with said
first paragraph. If at any time the sum of the amount drawable pursuant to said
letter of credit plus any cash on deposit with the Landlord pursuant to this
Article shall be less than the Required Amount, the Tenant agrees forthwith to
deposit with the Landlord cash equal to such deficiency.
If any letter of credit so maintained with the Landlord provides that the
amount drawable pursuant to said letter of credit shall cease to be available on
a date prior to October 31, 2009, the Tenant shall, at least 30 days prior to
the date specified in said letter of credit as being the date on which such
drawable amount will cease to be available, either furnish to the Landlord a
renewal or extension of said letter of credit, a new letter of credit complying
herewith, or deposit with the Landlord such amount of cash as shall, when added
to any cash then on deposit with the Landlord, equal, equal to the Required
Amount. Failure to comply with the provisions of the preceding sentence prior to
the commencement of said 30-day period shall be deemed to be a default under
this Lease and the Landlord may, at any time during said 30-day period, draw
upon such letter of credit and retain as security hereunder the amount so drawn.
<PAGE>
THIRTY-SECOND. Stock Control. The Tenant hereby represents that the
majority of the shares of each class of stock of the Tenant now issued and
outstanding is owned by Alan Stillman, residing at No. 322 East 57th Street, New
York, N.Y. 10022, and it is expressly understood and agreed that, except with
the prior consent of the Landlord, that a Permitted Stockholder (as herein
defined) will continue at all times throughout the term of this Lease to own at
least 35% of the shares of each class of stock of the Tenant now or hereafter
issued and outstanding, and further that the said Alan Stillman (or in the event
of his death, a qualified person having achieved and demonstrated a high level
of competence in supervising the conduct and operation of a first class
restaurant, and whose achieving and demonstrating a high level of competence
shall be subject to the approval of the Landlord, which approval shall not be
unreasonably withheld or delayed) shall at all times throughout the term of this
Lease have effective working control of the business of the Tenant, and the
breach of this condition shall be deemed for all purposes an assignment of this
Lease in violation of the covenants of Article Seventh hereof. The term
"Permitted Stockholder" shall mean (i) the said Alan Stillman or in the event of
his death his executor, administrator, heirs or devisees, and (ii) the spouse
and/or any child of the said Alan Stillman and/or a trust established by the
said Alan Stillman for the benefit of his spouse or child.
<PAGE>
THIRTY-THIRD. Assignment of Lease to a Limited Partnership. The Landlord
will not unreasonably withhold its consent to one assignment of this lease by
the Tenant to a limited partnership to be formed (herein called "the Assignee"),
upon the express condition that (a) at all times a Permitted Stockholder (as
such term is defined in Article Thirty-second hereof) owns, directly or
indirectly not less than a 35% interest in the Assignee, and (b) Alan Stillman,
residing at No. 322 East 57th Street, New York, N.Y. 10022 (or in the event of
his death, a qualified person having achieved and demonstrated a high level of
competencey in supervising the conduct and operation of a first class
restaurant, and whose achieving and demonstrating a high level of competence
shall be subject to the approval of the Landlord, which approval shall not be
unreasonably withheld or delayed) shall at all times throughout the term of this
lease have effective working control of the business of the Tenant, and the
breach of this condition shall be deemed for all purposes an assignment of this
Lease in violation of the covenants of Article Seventh hereof; and (c) in the
event of the assignment of this Lease, the Tenant and the Assignee will execute
and deliver to the Landlord an agreement in form and substance satisfactory to
the Landlord, whereby the Assignee shall agree to be bound by and upon all of
the covenants, agreements, terms, provisions and conditions set forth in this
Lease.
<PAGE>
THIRTY-FOURTH. Brokerage Commission. The Tenant represents and warrants
that neither it nor any of its directors, officers, employees or agents has
acted so as to entitle any broker, other than Helmsley-Spear, Inc. of No. 60
East 42nd Street, New York, N.Y. 10165, to a commission in connection with this
transaction, which commission shall be paid by the Landlord. The Landlord
represents that it has not dealt with any other broker with respect to this
transaction.
<PAGE>
FINALLY. Quiet Enjoyment. If, and so long as, the Tenant keeps, observes
and performs each and every covenant, agreement, term, provision and condition
herein contained on the part of the Tenant to be kept, observed and performed,
the Tenant shall quietly enjoy the premises without hindrance or molestation by
the Landlord or by any other person lawfully claiming the same, subject,
however, to the covenants, agreements, terms, provisions and conditions of this
Lease and to the underlying leases and the underlying mortgages to which this
Lease is subject and subordinate, as hereinbefore provided.
In Witness Whereof, the Landlord and the Tenant have duly executed this
Lease as of the day and year first above written.
Attest: ROCKEFELLER CENTER NORTH, INC.
/s/ Gwen A. Rowder By /s/ [ILLEGIBLE]
---------------------------- -----------------------------------
Assistant Secretary President
Attest: WHITE & WITKOWSKY, INC.,
By /s/ [ILLEGIBLE] (L.S.)
---------------------------- -----------------------------------
Assistant Secretary Vice President
<PAGE>
RULES AND REGULATIONS
1. The rights of the Tenant in the sidewalks, entrances, corridors,
elevators and escalators of the Building are limited to ingress to and egress
from the premises for the Tenant and its employees, licensees and invitees, and
the Tenant shall not invite to the premises, nor permit the visit thereto by,
persons in such numbers or under such conditions as to interfere with the use
and enjoyment by others of the sidewalks, entrances, corridors, elevators,
escalators or any other facilities of the Building. Fire exits and stairways are
for emergency use only, and they shall not be used for any other purpose by the
Tenant, its employees, licensees or invitees. The Landlord shall have the right
to regulate the use of and operate the public portions of the Building, as well
as portions furnished for the common use of the tenants, in such manner as it
deems best for the benefit of the tenants generally.
2. The Landlord may refuse admission to the Building outside of ordinary
business hours to any person not having a pass issued by the Landlord or not
properly identified, and may require all persons admitted to or leaving the
Building outside of ordinary business hours to register. Any person whose
presence in the Building at any time shall, in the judgment of the Landlord, be
prejudicial to the safety, character, reputation and interests of the Building
or of its tenants may be denied access to the Building or may be ejected
therefrom. In case of invasion, riot, public excitement or other commotion the
Landlord may prohibit all access to the Building during the continuance of the
same, by closing doors or otherwise, for the safety of the tenants or protection
of property in the Building. The Landlord shall, in no way, be liable to the
Tenant for damages or loss arising from the admission, exclusion or ejection of
any person to or from the premises or the Building under the provisions of this
rule. The Landlord may require any person leaving the Building with any package
or other object to exhibit a pass from the tenant from whose premises the
package or object is being removed, but the establishment or enforcement of such
requirement shall not impose any responsibility on the Landlord for the
protection of the Tenant against the removal of property from the premises of
the Tenant.
3. The Tenant shall not obtain or accept for use in the premises ice,
drinking water, food, beverage, towel, linen, uniform, barbering, bootblacking
or similar or related services from any persons not authorized by the Landlord
to furnish such services. Such services shall be furnished only at such hours,
in such places within the premises and under such regulations as may be fixed by
the Landlord.
4. Where any damage to the public portions of the Building or to any
portions used in common with other tenants is caused by the Tenant or its
employees, licensees or invitees, the cost of repairing the same shall be paid
by the Tenant on demand.
5. Except in the case of a shop, no lettering, sign, advertisement,
trademark, emblem, notice or object shall be displayed in or on the windows or
doors, or on the outside of the premises, or at any point inside the premises
where the same might be visible outside the premises, except that the name of
the Tenant may be displayed on the entrance door of the premises, subject to the
approval of the Landlord as to the location, size, color and style of such
display. The inscription of the name of the Tenant on the door of the premises
shall be done by the Landlord and the expense thereof shall be paid by the
Tenant to the Landlord.
6. No awnings or other projections of any kind over or around the windows
or entrances of the premises shall be installed by the Tenant, and only such
window blinds and shades as are approved or supplied by the Landlord shall be
used in the premises. Linoleum, tile or other floor covering shall be laid in
the premises only in a manner approved by the Landlord.
7. The Landlord shall have the right to prescribe the weight and position
of safes and other objects of excessive weight, and no safe or other object
whose weight exceeds the lawful load for the area upon which it would stand
shall be brought into or kept upon the premises. If, in the judgment of the
Landlord, it is necessary to distribute the concentrated weight of any safe or
heavy object, the work involved in such distribution shall be done in such
manner as the Landlord shall determine and the expense thereof shall be paid by
the Tenant. The moving of safes and other heavy objects shall take place only
upon previous notice to, and at times and in a manner approved by, the Landlord,
and the persons employed to move the same in and out of the Building shall be
acceptable to the Landlord. No machines, machinery or electrical or electronic
equipment or appliances of any kind shall be placed or operated so as to disturb
other tenants. Freight, furniture, business equipment, merchandise and packages
of any description shall be delivered to and removed from the premises only in
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by the Landlord.
8. No noise, including the playing of any musical instrument, radio or
television, which, in the judgment of the Landlord, might disturb other tenants
in the Building, shall be made or permitted by the Tenant. No animal shall be
brought into or kept in the Building or the premises. No dangerous, inflammable,
combustible or explosive object or material shall be brought into or kept in the
Building by the Tenant or with the permission of the Tenant, except as permitted
by law and the insurance companies insuring the Building or the property
therein. Any cuspidors or containers or receptacles used as such in the
premises, or for garbage or similar refuse, shall be emptied, cared for and
cleaned by the Tenant.
9. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows in the premises and no lock on any door shall be changed or
altered in any respect. Duplicate keys for the premises and toilet rooms shall
be procured only from the Landlord, and the Tenant shall pay to the Landlord the
Landlord's reasonable charge therefor. Upon the termination of the Lease, all
keys of the premises and toilet rooms shall be delivered to the Landlord.
10. All entrance doors in the premises shall be left locked by the Tenant
when the premises are not in use. No door (other than a door in an interior
partition of the premises) shall be left open at any time.
11. The Landlord reserves the right to rescind, alter or waive any rule or
regulation at any time prescribed by the Landlord when, in its judgment, it
deems it necessary, desirable or proper for its best interest or for the best
interests of the tenants, and no recision, alteration or waiver of any rule or
regulation in favor of one tenant shall operate as an alteration or waiver in
favor of any other tenant. The Landlord shall not be responsible to the Tenant
for the nonobservance or violation by any other tenant of any of the rules or
regulations at any time prescribed by the Landlord.
<PAGE>
RULES AND REGULATIONS (Continued)
12. Potentially hazardous foods under heat or refrigeration shall be
maintained at appropriate temperatures in accordance with the New York City
Health Code and other applicable legal requirements.
13. Garbage and waste material shall not be permitted to accumulate or
become a nuisance. All refuse shall be disposed of by the Tenant in sealed
plastic bags of adequate strength and size.
14. The Tenant shall promptly notify the Landlord of any inspection of the
premises by governmental agencies having jurisdiction over matters involving
health or safety.
15. The Tenant shall maintain all garbage dumpsters in a clean and
sanitary condition as directed by the Landlord.
16. The Tenant shall be responsible for maintaining the premises rodent
and insect free. Extermination services shall be provided by the Tenant on a
monthly basis and additionally as required by the Landlord.
17. All food storage areas shall be adequately protected against vermin
entry.
18. Drain pipes shall be kept free of obstructions and operable at all
times.
19. Restrooms and lockerrooms shall be kept clean and sanitary at all
times.
20. Exit signs shall be illuminated at all times.
21. Emergency lighting, including battery components, shall be in good
working condition at all times.
<PAGE>
Exhibit 10.4
SITE NAME: SOUTH POINTE PARK RESTAURANT FACILITY
LEASE DATE:
LESSOR: CITY OF MIAMI BEACH
LESSEE: SPECIALTY RESTAURANT CORPORATION
RFP NO. 134-84
<PAGE>
INDEX
1. DESCRIPTION
2. TERM
3. CONDITIONS SUBSEQUENT
(Zoning, Liquor License, Building Permits)
4. USE
5. IMPROVEMENTS OF LESSOR
6. IMPROVEMENTS OF LESSEE
7. CONSTRUCTION BOND
8. OWNERSHIP OF IMPROVEMENTS
9. PLEDGE OF LEASEHOLD INTEREST
10. RENT
11. RENT DEPOSITS
12. GROSS RECEIPTS
13. RECORDS, ACCOUNTS, STATEMENTS, AND AUDITS
14. PROPERTY TAXES
15. LICENSES AND PERMITS
16. MANNER OF OPERATION
17. CONFORMITY TO LAW
18. MAINTENANCE AND REPAIRS
19. DESTRUCTION
20. INDEMNIFICATION
21. INSURANCE
22. UTILITIES
23. DEFAULT
RFP NO. 134-84
<PAGE>
INDEX (Continued)
24. BANKRUPTCY OR INSOLVENCY
25. SUBLEASE AND ASSIGNMENT
26. INSPECTION OF PREMISES
27. NOTICES
28. ATTORNEY FEES
29. WAIVER
30. TIME OF ESSENCE
31. TERMS BINDING ON SUCCESSORS
32. SIGNS
33. FEDERAL APPROVAL
34. AUTOMOBILE PARKING
35. FORCE MAJEURE
RFP NO. 134-84
<PAGE>
This lease is executed on February 8, 1985, between THE CITY OF MIAMI
BEACH, a Municipal Corporation of the State of Florida whose principal office is
located at 1700 Convention Center Drive, Miami Beach, Florida 33139, as LESSOR,
and SPECIALTY RESTAURANTS CORPORATION; as LESSEE.
IT IS AGREED AS FOLLOWS:
1. DESCRIPTION OF THE PREMISES:
For and in consideration of the mutual promises herein contained, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor certain real
property (hereinafter referred to as the Premises) described in "Exhibit
A-1" signed by the parties hereto and incorporated by reference.
2. TERM:
The term shall be twenty (20) years commencing six months after the date
Lessor notifies Lessee in writing that Lessor's work (as hereinafter
defined) is completed, or the date Lessee commences business, whichever
occurs first. This lease agreement shall have two (2), ten-year options
for renewal provided that the Lessee will request each option from the
Lessor by writing the City Manager at least one (1) year prior to the
expiration of the term preceding the term of the requested option.
3. CONDITIONS SUBSEQUENT:
Liquor License: Lessee shall promptly apply for a liquor license from the
appropriate governmental authorities. Lessee shall use every reasonable
effort and due diligence to obtain a liquor license permitting only the
dispensing and sale of alcoholic beverages on the premises for consumption
on the premises. It is understood and agreed that the Lessee shall obtain
a liquor license within one hundred twenty (120) days from the execution
of this contract. If for a bona fide reason, not the fault of the Lessee,
the Lessee does not obtain a liquor license for the premises; then this
lease shall immediately terminate and Lessee's rent deposit shall be
refunded. The Lessee shall be required to use its best efforts and shall
use due diligence in obtaining a liquor license from the appropriate
governmental authorities.
Upon termination of this lease for any cause whatsoever, the licenses,
including the liquor license, shall become the property of the City of
Miami Beach, its successors or assigns and the Lessee shall fully
cooperate in gratuitously transferring the licenses to the Lessor.
4. USE:
Lessee shall use the Premises for the sole purpose of constructing,
equipping, furnishing, and operating a dining facility, cocktail lounge,
and/or banquet facility, as herein defined, and for purposes incidental
thereto, and for no other purpose whatsoever, the latter subject to the
written approval of the City Manager.
RFP NO. 134-84
<PAGE>
5. IMPROVEMENTS OF LESSOR:
Lessor agrees to commence construction and installation on the Premises of
the following improvements and pursue said work with due diligence:
To the Site
City to provide the following installations up to the site:
(1) Roads with landscaping and street lighting
(2) Electricity (not transformer)
(3) Water supply
(4) Sanitary sewer
(5) Gas
(6) Telephone
6. IMPROVEMENTS OF LESSEE:
Within ninety (90) days after Lessor notifies Lessee in writing of
Lessor's approval of final working drawings and specifications, Lessee
shall commence construction and installation on the Premises of the
following improvements and pursue said work with due diligence:
(1) The LESSEE offers to enter into an agreement with the City of Miami
Beach, Florida for the exclusive development, construction and
operation of a first-class, 200-seat (minimum), restaurant whose
quality of food, service, atmosphere, personnel and equipment shall
be comparable to other first-class restaurants in Dade and Broward
Counties for South Pointe Park, per the specifications of the bid
proposal found in RFP No. 134-84.
(2) Item 1 shall consist of a restaurant of not less than 16,000 to
18,000 square feet with not less than 200-person dining capacity and
cocktail lounges, serving not less than 200-seated guests.
(3) Within thirty (30) days after the lease agreement is signed, the
Lessee shall submit to the Lessor schematic design plans. Thirty
(30) days after approval by the City Manager of the schematic plans,
design development plans shall be submitted. Final working drawings,
specifications and construction contract documents shall be
submitted ninety (90) days after the City Manager's approval of the
preliminary plans. After approval by the City Manager of working
drawings, sixty (60) days will be allowed for the receiving of bids
and thirty (30) days to award same and commence construction. Upon
award of bid, the Lessee shall be permitted nine (9) months for the
construction of the above-mentioned facilities.
(4) The Lessee shall be solely responsible for complete utility service
of the facility. All improvements of Lessee shall be solely at
Lessee's cost and expense and shall be performed in a good
workmanlike manner in accordance with sound construction practices.
Lessee shall keep the Premises and said improvements free and clear
of liens for labor and material and shall hold Lessor harmless from
any responsibility in respect thereto.
The total cost of Lessee's Improvements on the Premises shall not be
less than one million seven hundred thousand dollars ($1,700,000).
RFP NO. 134-84
<PAGE>
7. CONSTRUCTION BOND:
Lessee shall, prior to commencement of construction on the Premises by
Lessee, furnish Lessor a surety bond from a company duly authorized to do
business in Florida naming Lessor and Lessee as the principals and owners,
covering 100% of the cost of constructing the improvements, including
labor and material.
8. OWNERSHIP OF IMPROVEMENTS:
All improvements, furnishings, and equipment constructed or installed on
the Premises by the Lessee, shall be personal property and Lessee shall
have legal title thereto during the term of this lease. Upon the
expiration or termination of this lease, title to all permanent
improvements constructed on the Premises shall vest in Lessor. Title to
all supplies, furnishings, inventories, and removable equipment and other
personal property shall remain in Lessee, and Lessee shall have the right
to remove such items, excepting licenses, from the Premises without
damaging the Premises unless Lessee is in default hereunder.
9. PLEDGE OF LEASEHOLD INTEREST:
Lessee may from time to time pledge this leasehold interest as security
for any bona fide loan or loans from reputable lenders or lending
institutions, but not beyond the original lease term. Leasehold interest
shall not include public land. Copies of all agreements and legal
instruments pertaining thereto involving the pledge of the leasehold
interest as security, as contained in this paragraph, shall be furnished
to the City Manager of the Lessor whose approval must be obtained prior to
their execution.
10. RENT:
(1) Minimum Monthly Rent: During the term of this lease, Lessee shall
pay Lessor as minimum monthly rent, two thousand five hundred
dollars ($2,500) per month payable in advance at the address of
Lessor on the first day of each month beginning on the day Lessee
commences business or two hundred forty (240) days from the date
Lessor notifies Lessee of Lessor's approval of final working
drawings and specifications, whichever date occurs first. If rent
begins in the middle of the month, rent for such month shall be
prorated and paid in advance. If the restaurant facility in the
future becomes subject to real property or possessory interest
taxes, the Lessee will be responsible for said taxes.
(2) Percentage Rent: The Lessee shall pay Lessor as percentage rent, in
accordance with the following:
2 1/2% to $2,500,000
3% $2,500,001 - $4,800,000
3 1/2% over $4,800,000
or two thousand five hundred dollars ($2,500)
per month minimum guarantee, whichever is the greater
11. RENT DEPOSITS:
On the date this lease is executed, Lessee shall pay to Lessor the sum of
fifteen thousand dollars ($15,000) as advance payment of the first six (6)
months minimum monthly rent due hereunder. The bid security of fifteen
hundred dollars ($1,500) shall be credited to the rent deposit. In the
event the Lessee defaults, the Lessor shall be entitled to retain the rent
deposit as liquidated damages.
RFP NO. 134-84
<PAGE>
12. GROSS RECEIPTS:
The term "gross receipts" as used herein shall include all receipts,
whether collected or accrued, derived by Lessee or any licensee,
concessionaire, or tenant of Lessee, from all business conducted upon or
from the Premises, including but not limited to receipts from sale of
food, beverages, alcoholic beverages, merchandise, and rental of space, or
from any source whatsoever. The following items are excluded from gross
receipts, however:
(1) Receipts from the sale of waste or scrap materials resulting from
Lessor's operations on the Premises.
(2) Receipts from the sale or trade-in value of any furniture, fixtures,
or equipment used on the Premises.
(3) The cost or value of meals or discounts given to employees of
Lessee.
(4) The cost or value of food and beverage used for entertainment and
business promotion purposes by officers and employees of Lessee. No
trade outs may be deducted from gross sales under this provision.
13. RECORDS, ACCOUNTS, STATEMENTS AND AUDITS:
Lessee shall keep on the Premises, or such other place within Dade County,
Florida approved by Lessor, true, accurate, and complete records and
accounts of all sales, rentals, and business being transacted upon or from
the Premises and shall give Lessor or Lessor's representative access
during reasonable business hours to examine and audit such records and
accounts.
Within thirty (30) days after each month of the term hereof, Lessee shall
deliver to Lessor a written monthly statement of the gross receipts for
such month certified by Lessee to be true, accurate, and complete.
Within sixty (60) days after each fiscal year, Lessee shall deliver to
Lessor a written annual statement of the gross receipts for such fiscal
year. Said statement shall be certified as true, accurate, and complete by
Lessee, by and through a duly authorized officer of Lessee. The City's
Auditor or his designee shall have the right, during regular business
hours and upon the City's written request to Lessee to audit, inspect,
examine and copy the Lessee's fiscal and financial records, books,
ledgers, statements, reports, tax returns and documents relating to this
agreement and the Lessee's revenues thereunder throughout the term(s) of
this agreement and for three (3) years following its expiration or
cancellation. The Lessee agrees to have such audit(s) conducted at such
locations within Dade County, Florida as are mutually convenient to the
parties.
14. PROPERTY TAXES:
During the term hereof, Lessee shall pay all taxes of whatever nature
lawfully levied upon or assessed against the Premises and improvements,
property, sales, rentals or operations thereon, including but not limited
to, ad valorem sales and use taxes.
15. LICENSES AND PERMITS:
Lessee shall pay for all licenses, permits, and fees necessary for Lessee
to conduct Lessee's business on the Premises.
RFP NO. 134-84
<PAGE>
16. MANNER OF OPERATION:
(1) Lessee shall keep the restaurant and cocktail lounge reasonably
stocked with food and beverage and reasonably staffed to serve the
patrons thereof, and Lessee shall maintain a standard of quality of
food and beverage at least equal to similar operations in the area
at reasonably comparable prices.
(2) The facilities to be constructed by the Lessee shall be open seven
(7) days a week, with the exception of Christmas Eve, or such other
days that are approved in writing by the City Manager.
(3) Minimum hours of operation.
Lunch and Dinner, five (5) days a week - 11:00 a.m. to 11:00 p.m.
Dinner two additional days a week - 5:00 p.m. to 11:00 p.m.
Any changes in hours of operation are subject to approval of the
City Manager.
Nothing herein contained shall be construed to authorize hours
contrary to the laws governing such operations.
17. CONFORMITY TO LAW:
Lessee shall comply with all laws, ordinances, regulations, and orders of
Federal, State, County and Municipal authorities pertaining to the
Premises and Lessee's improvements and operations thereon.
That the Lessee covenants and agrees that there will be no discrimination
as to race, color, creed or national origin in the use of the demised
Premises.
18. MAINTENANCE AND REPAIRS:
During the term hereof, Lessee, at Lessee's expense, shall, to the
satisfaction of the Lessor, keep and maintain the Premises and all
improvements thereon in good and sanitary order, condition, and repair,
consistent with the operation of a first-class quality restaurant in the
Dade and Broward County area. Upon expiration or termination hereof,
Lessee shall surrender and deliver up to Lessor the Premises and all
permanent improvements thereon in good and usable condition, ordinary wear
and tear excepted.
19. DESTRUCTION:
In the event the Premises shall be destroyed or so damaged or injured by
fire or other casualty during the life of this agreement whereby the same
shall be rendered untenantable, then the Lessee shall render said Premises
tenantable by repairs within two hundred forty (240) days therefrom, or
such additional period of time as agreed to by Lessor's City Manager in
writing. Rent shall abate during the time the premises are untenantable,
provided, however that if the period of untenability shall exceed two
hundred forty (240) days the City shall have the sole option of cancelling
or renegotiating this agreement, at its discretion.
In the event the Premises are substantially destroyed or so damaged or
injured by fire or other casualty that the Premises cannot be rendered
tenantable or that Lessee elects not to replace within the two hundred
forty (240) day period as set forth above, or such additional period of
time as agreed to by the Lessor's City Manager, then the proceeds of the
insurance policy or policies covering such loss or damage shall be paid to
the City of Miami Beach and the Lessee as their interests appear, and this
agreement shall be deemed terminated and the rent shall be payable only to
the date [ILLEGIBLE] Premises are rendered untenantable.
RFP NO. 134-84
<PAGE>
20. INDEMNIFICATION:
Lessee shall indemnify and hold harmless Lessor, its employees, and
officials from claims, causes, demands, suits, actions, damages and
liabilities arising from liens or claims of any kind or nature whatsoever
resulting from the use, activities, and operations of Lessee on or about
the Premises and shall pay all judgments (including costs, interest and
attorney's fees) which may be rendered thereon.
21. INSURANCE:
At all times during the term hereof, Lessee shall maintain in full force
and effect the following described insurance covering the Premises and
Lessee's improvements and operations thereon:
(1) Public Liability Including Products Liability Insurance:
Not less than one million dollars ($1,000,000) for death of, or
injury to, any one person in any one occurrence.
Not less than one million dollars ($1,000,000) for death of, or
injury to, two or more persons in any one occurrence.
Not less than one million dollars ($1,000,000) property damage.
(2) Fire and Extended Coverage:
Ninety percent (90%) of replacement value of all improvements.
Certificates of such insurance shall be delivered to Lessor prior to
the beginning of any construction by Lessee; such policies shall
name Lessor as additional insured and shall provide that Lessor's
Insurance Manager be given at least thirty (30) days advance written
notice of cancellation or material modification. All Certificates of
Insurance shall be filed with the City Insurance Department of the
City of Miami Beach, Florida.
The insurance provided for herein shall be written by a company who is
rated A:X or better in Best's Key Rating Guide (latest edition) who is
authorized to do business in the State of Florida and countersigned
through an agent authorized to do business in the State of Florida. The
insurance company and the amount of coverage shall be subject to the
approval of the Lessor's City Manager, and the proceeds payable under
section (2) hereof shall be assignable to the City of Miami Beach pursuant
to paragraph 19 of this lease.
22. UTILITIES:
Lessee shall promptly pay for charges for water, gas, sewer, electricity,
telephone, and all other charges for utilities which may be furnished to
the Premises during the term hereof.
RFP NO. 134-84
<PAGE>
23. DEFAULT:
(1) If Lessee abandons or vacates the Premises prior to the expiration
of the term hereof, or
(2) If Lessee fails to make the rent payments as set forth herein and
said payment is not made within 15 days after written notice is
given to Lessee, or
(3) If Lessee fails to perform in accordance with any of the other terms
and conditions herein contained, and such default is not cured
within thirty (30) days after written notice is given to Lessee then
Lessor, at Lessor's option and without further notice or demand to
Lessee, may enter into possession of the Premises and all
improvements thereon and remove all persons therefrom and may either
take possession of all furniture, equipment, and other personal
property of Lessee found on the Premises or remove such property or
any part of it and store it at Lessee's expense. Lessor may then
either terminate this lease or re-let the Premises without prejudice
to Lessor's lawful rights and remedies against Lessee. In the event
Lessor elects to re-let the Premises for such rent and upon such
terms as Lessor may be able to obtain, Lessee shall continue to pay
any difference between the rent obtained by such re-letting and the
rent due hereunder.
24. BANKRUPTCY OR INSOLVENCY:
If Lessee is adjudicated a bankrupt or makes an assignment for the benefit
of creditors, or if the leasehold interest is sold under a legal order, or
judgment, Lessor shall have the right to immediately terminate this lease
and re-enter the Premises without notice or demand.
25. SUBLEASE AND ASSIGNMENT:
Lessee shall not sublease the Premises or any part thereof nor assign this
lease to any other person or firm without first obtaining City Commission
approval therefor.
26. INSPECTION OF PREMISES:
For the purpose of inspection, Lessor hereby reserves the right to enter
upon any part of the Premises at any time during the period the business
is to be open under the terms of this lease.
27. NOTICES:
All notices and rental payments shall be sent to the parties at the
following addresses:
LESSOR: The City of Miami Beach
City Manager
1700 Convention Center Drive
Miami Beach, Florida 33139
LESSEE: Specialty Restaurants Corporation
President
2977 Redondo Avenue
Long Beach, CA 90806
RFP NO. 134-84
<PAGE>
27. NOTICES: (Continued)
Lessor and Lessee may change such addresses at any time upon giving the
other party written notification.
All notices under this lease must be in writing and shall be deemed to be
served when delivered to the address of the addressee. All notices served
by mail shall be registered mail, return-receipt requested.
Lessee may designate additional persons for notification of default.
28. ATTORNEY FEES:
Lessee agrees to pay the cost of collection and twenty percent (20%)
attorneys' fees on any part of said rental that may be collected by suit
or by attorney after the same is past due.
29. WAIVER:
No waiver by Lessor at anytime of any of the terms or conditions of the
lease shall be deemed a waiver at any time thereafter of the same or any
other terms or conditions hereof.
30. TIME OF ESSENCE:
Time shall be of the essence of this lease.
31. TERMS BINDING ON SUCCESSORS:
All of the terms and conditions of this lease shall insure to the benefit
of and be binding upon the successors and assigns of the parties hereto.
32. SIGNS:
No signs whatsoever, including advertising signs, shall be erected or
permitted upon the Premises until the plans therefor have first been
submitted to the City Manager of the City of Miami Beach, and he shall
approve said plans for the design and construction thereof in writing.
33. FEDERAL APPROVAL:
The parties to this agreement recognize that this agreement shall be
subject to receiving written approval from the Federal Agencies having
jurisdiction over development, construction and operation of the South
Pointe Park. This Lease shall not be effective until Lessee has been
notified by registered mail that all applicable Federal Agency approvals
have been granted.
RFP NO. 134-84
<PAGE>
34. AUTOMOBILE PARKING:
Lessor warrants that adequate automobile parking space adjacent to the
premises for Lessee's patrons and employees shall be made available by
Lessor. In the event that Lessor charges a parking fee, Lessor agrees to
refund any parking fees to the patrons of the restaurant upon presentation
of a validated restaurant parking ticket.
35. FORCE MAJEURE:
The performance of any act by Lessor or Lessee hereunder may be delayed or
suspended at any time while, but only so long as, either party is hindered
in or prevented from performance by acts of God, the elements, war,
rebellion, strikes, lockouts, or any other cause beyond the reasonable
control of such party, providing, however that if the condition of force
majeure exceeds a period of two hundred forty days (240) days the City may
at its sole option and discretion, cancel or renegotiate this lease.
RFP NO. 134-84
<PAGE>
IN WITNESS WHEREOF, the parties have executed this lease on the date first
above written.
LESSOR: By:
------------------------------------------
CITY OF MIAMI BEACH
By: /s/ [ILLEGIBLE]
------------------------------------------
MAYOR
Attest: /s/ Elaine M. Baker
------------------------------------------
CITY CLERK 2-8-85
LESSEE: SPECIALTY RESTAURANTS CORPORATION
------------------------------------------
NAME
By: /s/ Charles E. White, EVP
------------------------------------------
Type Name: CHARLES E. WHITE, EXECUTIVE VICE PRESIDENT
------------------------------------------
By: /s/ David C. Tallichet, Jr.
------------------------------------------
DAVID C. TALLICHET, JR., PRESIDENT
By:
------------------------------------------
Attest: /s/ Jacqueline Whitbeck
------------------------------------------
SECRETARY
JACQUELINE WHITBECK
FORM APPROVED (CORPORATE SEAL)
LEGAL DEPT.
By /s/ RSR
-------------------
Date 1/31/85
-----------------
RFP NO. 134-84
<PAGE>
STATE OF CALIFORNIA
------------------------
COUNTY OF LOS ANGELES
------------------------
ON JANUARY 30, 1985, before me the undersigned Notary Public in and
for said County and State, personally appeared DAVID C. TALLICHET, JR.,
PRESIDENT CHARLES E. WHITE, EXECUTIVE VICE PRES. known to me to be the person(s)
whose name(s) is(are) subscribed to the attached instrument and acknowledged
that he (they) executed the same.
WITNESS my hand and official seal
- ------------------------------------------
OFFICIAL SEAL /s/ Carole M. Couillard
CAROLE M. COUILLARD ----------------------------------
[SEAL] Notary Public - California NOTARY PUBLIC in and for said
PRINCIPAL OFFICE IN County and State
LOS ANGELES COUNTY CAROLE M. COUILLARD
MY COMMISSION EXPIRES JANUARY 23, 1987
- ------------------------------------------
RFP NO. 134-84
<PAGE>
EXHIBIT "A-1"
DESCRIPTION OF PROPERTY
A 100' x 160' parcel of land within South Pointe Park located 30 feet north of
Government Cut and adjacent to the Amphitheater structure which is west of the
Coastal Construction Line.
<PAGE>
ADDENDUM TO LEASE
THIS ADDENDUM is made as of the 1st day of June, 1997, by and between the
City of Miami Beach, a Municipal Corporation of the State of Florida ("Lessor")
and 1 Washington Avenue Corp. ("Lessee").
W H E R E A S:
A. Lessor and Lessee are the present parties to that certain Lease (the
"Lease") dated February 8, 1985 with respect to certain real property located in
Dade County, Florida, as more particularly described in Exhibit "A-1" to the
Lease (the "Premises").
B. The parties desire to amend the Lease in certain respects as more
particularly set forth below.
NOW THEREFORE, in consideration of the execution and delivery of the Lease
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby further agree as follows:
1. This Addendum shall be deemed a part of, but shall take precedence over
and supersede any provisions to the contrary contained in the Lease.
2. All initial capitalized terms used in this Addendum shall have the same
meaning as set forth in the Lease unless otherwise provided.
3. Lessor and Lessee acknowledge and agree that the Commencement Date of
the Lease was November 7, 1985. In this regard, the latest date for Lessee to
exercise its first ten (10) year renewal option shall be November 6, 2004 and
the latest date for Lessee to exercise its second ten (10) year renewal option
shall be November 6, 2014.
4. Lessor and Lessee acknowledge and agree that Lessee shall be making
certain improvements to the Premises. In this regard, Lessee shall not be
obligated to pay any minimum monthly rent and/or Parking Fees (as hereinafter
defined) until the earlier to occur of: (i) December 1, 1997; or (ii) the date
upon which Lessee opens for business to the public, whichever is earlier (the
"Rent Commencement Date").
5. In addition to the uses set forth in paragraph 4 of the Lease, Lessee
shall be entitled to also use the Premises for: (i) the retail sale of goods and
merchandise to patrons on the Premises ("Onsite Retail Sales"); and (ii) the
mail order marketing, distribution and sale of such goods and merchandise for
off site retail sales ("Offsite Retail Sales").
<PAGE>
6. Gross Receipts, as defined in paragraph 12 of the Lease, shall include
all receipts from Onsite Retail Sales. Subparagraphs 12(1) and 12(2) are hereby
deleted in their entirety. The following additional exclusion from Gross
Receipts shall be added as a new paragraph 12(5):
"(5) Receipts from Offsite Retail Sales."
7. Percentage Rent to be paid by Lessee, as defined in paragraph 10(2) of
the Lease, is amended as follows:
2 1/2% to $2,500,000.00
3% to $2,500,000.00 - $3,000,000.00
3 1/2% over $3,000,000.00
8. During the Term or any renewal of the Lease, Lessor agrees to make
available to Lessee the use of 105 parking spaces located immediately adjacent
to the Premises. In consideration of the foregoing, upon commencement of the
Rent Commencement Date, Lessee shall pay to Lessor (together with each payment
of minimum monthly rent) a parking fee equal to $6,250.00 per month (i.e.
$75,000.00 annually) (the "Parking Fee"). Notwithstanding anything to the
contrary contained in the Lease, all Parking Fees paid by Lessee shall be
credited against Lessee's percentage rent obligations.
9. Within three (3) business days following the occurrence of the Rent
Commencement Date, Lessee shall pay to Lessor, annually, the sum of Nine
Thousand Six Hundred and No/100 ($9,600.00) Dollars as payment of all current
applicable parking impact fees, as required by City of Miami Beach Ordinance No.
89-2665, Section 7-7, as same may be amended from time to time. Said $9,600.00
parking impact fee shall represent payment for use, as made available to Lessee,
of an additional 32 parking spaces throughout the Term of the Lease or any
renewal of the Lease, making the total number of parking spaces available to
Lessee equal to 137. Notwithstanding anything to the contrary contained in the
Lease, half of all parking impact fees paid by Lessee, as same may be amended
from time to time, shall be credited against Lessee's percentage rent
obligations.
10. During the term of the first ten (10) year renewal period, Lessee
shall pay to Lessor the additional sum of Twenty Five Thousand and No/100
($25,000.00) Dollars at the end of each applicable lease year (the "Renewal
Bonus Fee"). During the second ten (10) year renewal, the Renewal Bonus Fee
shall be increased to Sixty Five Thousand and No/100 ($65,000.00) Dollars.
11. Upon execution of this Addendum, Lessee agrees to contribute the sum
of Thirty Five Thousand Two Hundred and No/100 ($35,200.00) Dollars to Lessor,
to be used by Lessor for the demolition and clearing of the bandshell in South
Pointe Park and such other improvements to South Pointe Park as Lessor deems
appropriate. Lessor agrees to complete the demolition and clearing of the
bandshell no later than the date on which Lessor opens for business to the
public.
2
<PAGE>
12. The following language shall be added to the end of paragraph 25 of
the Lease:
"......, which approval shall not to be unreasonably withheld."
13. Paragraph 27 of the Lease is hereby modified to replace the address of
the Lessee as follows:
1 Washington Avenue Corp.
c/o The New York Restaurant Group, L.L.C.
1114 First Avenue
New York, New York 10021
Attn: Mark Levine, C.F.O.
14. Lessor acknowledges and agrees that the Lease is presently in good
standing and free from default.
15. Except as specifically modified hereby, all of the provisions of the
Lease which are not in conflict with the terms of this Addendum shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the date first above written.
Signed, sealed and delivered LESSOR:
in the presence of:
The City of Miami Beach, a Municipal
ATTEST: Corporation of the State of Florida
/s/ Robert Parcher By: /s/ Seymour Gelber
- ------------------------------------ ---------------------------------
Robert Parcher, City Clerk Title: Seymour Gelber, Mayor
- ------------------------------------ ------------------------------
APPROVED AS TO LESSEE:
FORM & LANGUAGE
& FOR EXECUTION 1 Washington Avenue Corp.
/s/ [ILLEGIBLE] 7/9/97 By: /s/ [ILLEGIBLE]
- -------------------- ------------ ---------------------------------
City Attorney Date
Title: EXECUTIVE DIRECTOR & SECRETARY
------------------------------
- ------------------------------------
- ------------------------------------
3
<PAGE>
RESOLUTION NO. 97-22359
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA APPROVING, IN SUBSTANTIAL FORM, AN ADDENDUM TO THE
LEASE AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND ONE WASHINGTON
AVENUE CORPORATION, FOR THE PREMISES CURRENTLY KNOWN AS SOUTH POINTE
SEAFOOD HOUSE, SUBJECT TO AND CONTINGENT UPON FINAL NEGOTIATION
BETWEEN THE CITY MANAGER OR HIS DESIGNEE AND NEW YORK RESTAURANT
GROUP, L.L.C., AS SUCCESSOR IN INTEREST TO ONE WASHINGTON AVENUE
CORPORATION, OF OUTSTANDING TERMS IN THE ADDENDUM REGARDING
AUTOMOBILE PARKING; AND FURTHER AUTHORIZING THE MAYOR AND CITY CLERK
TO EXECUTE SAID ADDENDUM TO THE LEASE AGREEMENT SHOULD SAME BE
SUCCESSFULLY NEGOTIATED BY THE PARTIES HERETO.
WHEREAS, pursuant to Resolution No. 85-18223, the City entered into a
Lease Agreement with Specialty Restaurants Corporation, dated November 7, 1985,
for the premises situated at South Pointe Park, One Washington Avenue, Miami
Beach, Florida, and commonly described as Crawdaddy's Restaurant and now known
as South Pointe Seafood House (Lease Agreement); and
WHEREAS, on September 2, 1993, the Mayor and City Commission approved
Resolution No. 93-20899, approving an assignment of the Lease Agreement from
Specialty Restaurants Corporation, as assignor, to One Washington Avenue
Corporation, as assignee; and
WHEREAS, on July 26, 1996, One Washington Avenue Corporation filed for
bankruptcy; and
WHEREAS, the New York Restaurant Group, L.L.C. now proposes to acquire the
assets and interests in One Washington Avenue Corporation, including the South
Pointe Seafood House Restaurant building and interest in the leasehold, for the
purpose of opening a restaurant to be known as Smith & Wollensky; and
WHEREAS, as a condition to its approval of the transaction, the City and
the New York Restaurant Group, L.L.C. are in the process of negotiating an
Addendum to the Lease Agreement, attached hereto in substantial form as Exhibit
"A"; and
WHEREAS, the Administration would request that the Mayor and City
Commission herein approve, in substantial form, the attached Addendum to Lease
Agreement and further authorize the City Manager to continue negotiations with
the New York Restaurant Group, L.L.C. and finalize the outstanding terms in the
Addendum with regard to automobile parking; and
<PAGE>
WHEREAS, the Administration would further recommend that the Mayor and
City Clerk be authorized to execute the finalized Addendum to the Lease
Agreement, subject to and contingent upon satisfactory negotiations of the
aforestated term by the City Manager or his designee.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission herein
approve, in substantial form, the attached Addendum to the Lease Agreement
between the City of Miami Beach and One Washington Avenue Corporation, for the
premises currently known as South Pointe Seafood House, subject to and
contingent upon the final negotiation between the City Manager or his designee
and New York Restaurant Group, L.L.C., as successor in interest to One
Washington Avenue Corporation, of outstanding terms in the Addendum regarding
automobile parking, and further authorizing the Mayor and City Clerk to execute
the finalized Addendum to the Lease Agreement should same be successfully and
satisfactorily negotiated by the parties hereto.
PASSED and ADOPTED this 16th day of April, 1997.
/s/ Seymour Gelber
----------------------------------------
ATTEST: MAYOR
/s/ Robert Parcher
- ------------------------------------
CITY CLERK
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
/s/ [ILLEGIBLE] 4/16/97
----------------------- ---------------
City Attorney Date
2
<PAGE>
Exhibit 10.5
MARINA CITY RETAIL LEASE
THIS LEASE is made as of the 31st day of July, 1997 by and between MARINA
CITY HOTEL ENTERPRISES, L.L.C., an Illinois limited liability company
("Landlord") and S & W CHICAGO, L.L.C., a Delaware limited liability company
("Tenant").
WITNESSETH THAT, in consideration of the rents, covenants and agreements
hereinafter set forth, Landlord and Tenant enter into the following agreements:
BASIC LEASE PROVISIONS
The descriptions, capitalized words and amounts set forth below are hereby
incorporated into and made a part of this Lease, as the same may be qualified by
their language elsewhere in this Lease, including those Articles and/or Sections
referred to in parentheses:
A. Project (Section 1.2): Marina City, Chicago, Illinois (the
"Project")
B. Premises (Section 2.1): Space Number: G
C. Square Footage (Section 2.1): Approximately 21,543 square feet, of
which not less than 17,503 square feet is on the concourse level
with an additional approximate 4,040 square feet of enclosed space
on the plaza level of the State Street river side of Marina City,
subject to final measurement as herein provided.
D. Term (Section 2.3): an initial partial Lease Year (if the
Commencement Date does not occur on the first day of a Lease Year)
and thereafter fifteen (15) full Lease Years, and if exercised, the
option periods provided for herein.
E. Option (Section 2.8): two five (5) year options.
F. Commencement Date (Section 2.3): Subject to adjustment as provided
herein at Section 2.5.A and Section 24.6, the earlier to occur of:
(i) the date Tenant opens the Premises for business to the general
public; or (ii) the later of either:
(a) January 1, 1998; provided the Possession Date occurs on or
before July 18, 1997; or
(b) February 1, 1998 in the event the Possession Date occurs
subsequent to July 18, 1997. It is agreed that if the
Possession Date has not occurred on or before August 7, 1997,
then, and in only such event, provided the Tenant has not
opened for business to the general public on or before
February 1, 1998, the Commencement Date shall be delayed and
extended by an additional one day for each day beyond August
7, 1997 that the Possession Date occurred.
G. Expiration Date (Section 2.3): last day of the fifteenth (15th) full
Lease Year of the Term, unless extended pursuant to the option
described in Section E of these Basic Lease Provisions.
H. Possession Date (Section 3.4): see Section 3.4 and Exhibit D,
Section 1.02(c) hereof.
I. Permitted Use (Section 2.5): A high end, white table cloth style
steakhouse or seafood restaurant and food service which (subject to
obtaining appropriate permits and licenses) may serve liquor for
consumption on the Premises, and including the following ancillary
uses: (i) the sale of merchandise of an advertising and promotional
nature which merchandise contains the proprietary names of the New
York Restaurant Group restaurant operations, as generally sold in
Tenant's or the Guarantor's other restaurant operations; (ii) the
sale of uncooked meats and seafood for home consumption; and (iii)
live entertainment on a limited basis, such as jazz combo in the bar
area of the Premises, or musicians hired for private parties held at
the Premises; and (iv) incidental thereto, office, storage and other
ancillary uses; provided that in the case of both (i) and (iii)
above, Tenant shall not conduct its business in such a manner that
it will cause Landlord to be in violation of the restrictive
covenant described at the second paragraph of Article II, Section
2.5 of this Lease and, provided further that Tenant agrees that it
will not advertise and/or promote, to the public at large, the live
entertainment components of its business. The Tenant's menu will be
similar to Smith & Wollensky (if the Premises are used as a
steakhouse) or The Manhattan Ocean Club (if the Premises are used as
a seafood restaurant); provided, however, in no event shall the
Premises utilize an Italian themed menu. Initially, Tenant agrees to
open for business as a Smith & Wollensky and Wollensky's Grill.
<PAGE>
J. Base Rent (Section 4.4):
Per
Initial Term Annually Monthly Sq.Ft.
------------ -------- ------- ------
Commencement Date to the expiration of
the first (1st) full Lease Year $428,060.00 $35,671.67 $19.87
Next four (4) full Lease Years $509,923.40 $42,493.62 $23.67
Next five (5) full Lease Years $557,318.00 $46,443.17 $25.87
Next five (5) full Lease Years $621,947.00 $51,828.92 $28.87
Option Periods:
For purposes of this Section, "Effective Rent" shall mean the sum of
the Base Rent and Percentage Rent paid or payable during any Lease
Year, PROVIDED THAT THE PERCENTAGE RENT OFFSET PROVISIONS OF SECTION
4.5(b) HEREOF SHALL NOT BE USED FOR PURPOSES OF CALCULATING THE BASE
RENT DURING THE OPTION PERIODS PURSUANT TO THIS SECTION J.
OPTION 1 (16th Lease Year through 20th Lease Year): Annual Base Rent
shall be equal to 85% of the average Effective Rent during the last
three (3) Lease Years of the initial Term of this Lease (i.e., the
13th Lease Year through 15th Lease Year of the Term); provided,
however, in no event shall the annual Base Rent for Option 1 be less
than the greater of the Effective Rent during the fifteenth (15th)
Lease Year (if Percentage Rent was payable for the fifteenth Lease
Year), or the Base Rent payable for the 15th Lease Year (if no
Percentage Rent was payable for the 15th Lease Year.)
OPTION 2 (21st Lease Year through 25th Lease Year): Annual Base Rent
shall be equal to 85% of the average Effective Rent during the last
three (3) Lease Years of Option 1 (i.e., the 18th Lease Year through
20th Lease Year of the Term); provided, however, in no event shall
the annual Base Rent for Option 2 be less than the greater of the
Effective Rent during the 20th Lease Year (if Percentage Rent was
payable for the 20th Lease Year), or the Base Rent payable for the
20th Lease Year (if no Percentage Rent was payable for the 20th
Lease Year of the Term).
Landlord and Tenant acknowledge that the actual amount of Base Rent
payable during the option periods will be computed on an Effective
Rent basis and, therefore, may not be determinable until the
submittal of Tenant's annual Gross Sales statement (due ninety (90)
days after the expiration of each Lease Year). Accordingly, Landlord
and Tenant agree that, until the determination of Tenant's actual
Gross Sales (and the Percentage Rent due Landlord, if any) for the
applicable Lease Year can be made, Tenant shall be permitted to
continue to pay to Landlord the Monthly Base Rent paid by Tenant
during the final Lease Year of the Term which has just expired. At
such time as the Base Rent for the applicable Option can be
determined, Landlord shall invoice Tenant for the new amount of
Monthly Base Rent due for the then current option period based on
the formulas set forth above, together with the amount of any
deficiency in Tenant's Monthly Base Rent payments which has accrued
to the date of such invoicing. Within ten (10) days after receipt of
Landlord's invoice, Tenant shall pay Landlord any deficiency in Base
Rent. From and after the date of Landlord's invoice, Monthly Base
Rent shall be adjusted to the amount set forth in the invoice,
provided, however, in no event shall the Base Rent be less than the
amounts set forth above.
In the event Tenant believes that Landlord's calculations of the
annual Base Rent for either of the Option Periods is incorrect,
Tenant shall, within thirty days after receipt of the invoice
described in the preceding paragraph, provide Landlord with a
written statement enumerating in reasonable detail the reasons for
Tenant's objections to such calculations; provided, that if within
thirty (30) days after Landlord's receipt of Tenant's aforesaid
written statement, Landlord and Tenant are unable to resolve
Tenant's objections, then, unless otherwise mutually agreed, any
such dispute shall be resolved by binding arbitration in the
jurisdiction in which the Premises are located in accordance with
the then Commercial Rules of the American Arbitration Association,
and the respective costs of such arbitration incurred by each party
with respect to such arbitration shall be borne by each such party
in equal shares, provided each party shall be responsible to pay its
own legal fees and costs for such arbitration.
K. Percentage Rent (Section 4.5):
Commencement Date to the expiration of the first (1st) full Lease
Year, 5.5% of annual Gross Sales exceeding a Breakpoint of
$7,782,909.09 per annum.
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Next four (4) full Lease Years, 5.5% of annual Gross Sales exceeding
a Breakpoint of $9,271,334.55 per annum.
Next five (5) full Lease Years, 5.5% of annual Gross Sales exceeding
a Breakpoint of $10,133,054.54 per annum.
Next five (5) full Lease Years, 5.5% of annual Gross Sales exceeding
a Breakpoint of $11,308,127.27 per annum.
The annual Breakpoint at which Tenant shall be obligated to commence
the payment of Percentage Rent during the Option Periods shall be
adjusted by dividing the annual Base Rent payable during the
applicable Option Period by five and one-half percent (5.5%).
L. Trade Name (Section 8.1): Initially as a Smith & Wollensky and
Wollensky's Grill and thereafter as a Smith & Wollensky and
Wollensky's Grill or The Manhattan Ocean Club.
M. Security Deposit (Section 4.1): None
N. Notices (Section 24.9):
Tenant Notices: S & W CHICAGO, L.L.C., Attn: Executive Director,
1114 First Avenue, New York, New York 10021; with copies of any and
all notices given to Tenant to also be sent to the Tenant at the
same address but to the attention of the Chief Financial Officer.
Landlord Notices: House of Blues Hospitality, Inc., 333 North
Dearborn Street, Suite 606, Chicago, IL 60610; Attn: Jeffrey Lapin
Copies of any and all notices given to the Landlord above shall also
be sent to: Partnership Acquisition Trust XII, 311 South Wacker
Drive, Suite 6100, Chicago, IL 60606, Attn: David Murdoch
With an additional copy of any notices to: BECKER & GURIAN, 513
Central Avenue, Highland Park, Illinois 60035, Attention: Martin
Becker, Esq.
0. Landlord Rent Payment Address: Malet Realty, Ltd., 14 East Jackson
Boulevard, Chicago, IL 60604.
P. Guarantor(s): The New York Restaurant Group, L.L.C., a Delaware
limited liability company.
Guarantor's Address: 1114 First Avenue, New York, New York 10021
Q. Brokers (Section 24.14): Equis Corporation and MidAmerica Real
Estate Corp.
R. Tenant's Share of Costs (Section 6.2): Tenant's Proportionate Share
S. Tenant's Share of Taxes (Section 6.3): Tenant's Proportionate Share
T. Annual Advertising Fee (Section 14.1): None.
U. Radius Restriction (Section 8.5): two (2) miles from any exterior
boundary of the Project.
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ARTICLE I
EXHIBITS AND DEFINITIONS - MULTI-USE PROJECT
--------------------------------------------
Section 1.1 Exhibits. The exhibits identified below and attached to this
Lease are incorporated herein by this reference:
EXHIBIT "A" Legal description of the Retail Area (hereinafter
defined) of the Project.
EXHIBIT "B" Plan showing the Retail Area and other portions of the
Project.
EXHIBIT "C" Lease Plan and Concept Plan showing generally the
location of the Premises. Exhibit C also contains the
Tenant Sign Criteria.
EXHIBIT "D" Description of Landlord's Work.
EXHIBIT "E" Description of Tenant's Work.
EXHIBIT "E-1" Tenant's Plans and Specifications.
EXHIBIT "F" Design and Construction for Tenant HVAC Systems.
EXHIBIT "G" INTENTIONALLY DELETED
EXHIBIT "H" Rules and Regulations.
EXHIBIT "I" Memorandum of Lease.
EXHIBIT "J" Form of Subordination, Non-Disturbance and Attornment
Agreement.
EXHIBIT "K" Form of Tri-Party Agreement.
EXHIBIT "L" Lease Guarantee.
EXHIBIT "M" FORM OF HOB AND LANDLORD CONSENT LETTERS
It is understood and agreed that Exhibit "B" and Exhibit" C" attached
hereto are for informational purposes only, and shall not be deemed to be a
warranty, representation or agreement on the part of Landlord or Tenant that the
Retail Area (hereinafter defined) will be exactly as indicated on said Exhibits,
that other tenants which may be shown on said Exhibits will be occupants in the
Retail Area, that the number of square feet designated on said Exhibits are
accurate, or that the configuration of various premises and the Common Areas
shown thereon are accurate.
Notwithstanding the Exhibits or anything else in this Lease contained,
Landlord reserves the right: to add, alter or remove (in whole or in part)
buildings, structures or Common Areas (as hereinafter defined) to change the
location of structures; to change building dimensions; to change the number of
floors in any building or structure; to provide, and thereafter, alter, relocate
or otherwise change subterranean, ground level or multiple level parking areas;
to provide enclosed or exposed passageways and pedestrian bridges connecting
buildings; to convert Common Areas into leasable areas; to erect both temporary
and permanent kiosks within the Common Areas; to reduce the size of the Project
or the Retail Area or to expand the size thereof by acquiring or making
available additional property; to change the number, location and the identity,
type and location of other stores and tenants and the size, shape, location and
arrangements of the Common Areas; and to design and decorate any portion of the
Retail Area as it desires; provided that: (i) the Access Areas (hereinafter so
called) to the Premises identified on Exhibit B and C shall not be materially
interfered with by Landlord; and (ii) there shall be no permanent and material
obstruction of the visibility of the facade of the Premises from either side of
the Chicago River and from State Street, in connection with Landlord's exercise
of any of the rights described above.
Notwithstanding anything to the contrary set forth in the preceding two
paragraphs, Landlord hereby agrees that Landlord shall in no event exercise any
of its rights as set forth in this Section 1.1 within the portions of the Retail
Area as shown on Exhibit "C" and identified thereon as the "No Disturbance
Area", nor shall Landlord construct (or permit the construction of any building,
improvement or other structure within such No Disturbance Area, nor shall
Landlord permit any reduction, enlargement, relocation of any Common Areas
located within such No Disturbance Area, except as may be otherwise contemplated
elsewhere in this Lease to the contrary, nor shall Landlord conduct any actions
within such No Disturbance Area that materially and adversely impedes pedestrian
access to the Premises.
Landlord agrees to use reasonable efforts to cause any exercise of
Landlord's rights under the preceding paragraphs to be conducted in such a
manner so as to not unreasonably interfere with, and so as to minimize, to the
extent reasonably possible, disruptions of, the use, occupancy and enjoyment of
the Premises or any part thereof by Tenant and Tenant's customers, licensees and
invitees. Landlord agrees to use its reasonable efforts to provide Tenant with
reasonable prior notice of Landlord's intent to exercise any of its rights
pursuant to the preceding paragraphs.
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Section 1.2. Definitions.
The following terms shall have the meanings set forth below:
(a) CURRENT EASEMENT AND OPERATING AGREEMENT. That certain Grants and
Reservations of Easements pertaining to Harper's Resubdivision, dated December
9, 1977, (as amended on or about February, 1996) entered into by and among
Amalgamated Trust and Savings Bank, not individually but as Trustee under Trust
No. 300 and Marina City Corporation, as the same may be amended, supplemented,
restated, extended, superseded or replaced from time to time.
Landlord represents that the use and occupancy of the Premises and the
conduct of business operations therein, all as described and provided in Article
VIII hereof, shall not violate the terms and provisions of the foregoing
described operating agreement, and Landlord further hereby agrees that any such
future amendments, supplements, restatements, extensions, superseding documents,
or replacements for, the operating agreement shall not impose any greater
obligations on Tenant than are contemplated by this Lease and that Tenant's
right to possession of the Premises and the conduct of business therein shall
not be interfered with as a result of such amendments, supplements,
restatements, extensions, superseding documents or replacements to the operating
agreement.
(b) LAND. That land, exclusive of any improvements thereon, situated in
Chicago, Illinois, within the area bounded by State Street, Dearborn Street,
Kinzie Street and the Chicago River, with that area hereinafter defined as the
Retail Area and being legally described on Exhibit A attached hereto.
(c) MAJOR COMPONENTS. The Residential Area and the Retail Area (as defined
in subsection (1.2.(e)).
(d) MAJOR OCCUPANT. Any occupant of the Project that leases or has the
right to occupy at least 20,000 square feet of floor area in any building.
(e) PROJECT. Marina City being a vertical mixed use development consisting
of commercial and residential condominium components which, together with the
land upon which the foregoing are located, are hereinafter collectively referred
to as the "Project". The Landlord has undertaken to redevelop the Retail Area of
Marina City which areas constitute the limit of Landlord's ownership. Each
residential condominium unit, together with a certain portion of the Common Area
devoted to the exclusive use of the occupants of the Residential Area units
("Residential Area"), is separately owned and is separate and apart from the
commercial component constituting Marina City. The Retail Areas of Marina City
include retail, commercial and parking and other Common Areas which from time to
time may include, but are not limited to, general retail, entertainment,
restaurant and hospitality types of uses.
(f) RETAIL AREA. The Leasable Area of the Project which Landlord intends
to develop for commercial purposes, which are, as of the date of this Lease,
indicated on Exhibit B attached hereto as "Retail Area" or "Retail Space".
ARTICLE II
LEASED PREMISES AND TERM
------------------------
Section 2.1. Leased Premises.
Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord,
the space in the Retail Area of the Project identified in Section B. of the
Basic Lease Provisions and outlined on Exhibit "C" attached hereto (the
"Premises"), together with any and all easements, rights, privileges and
appurtenances granted or created hereunder to or for the benefit of Tenant and
all of Landlord's right, privileges, easements and appurtenances belonging or
pertaining to the said Premises and all improvements erected or to be erected
thereon. The Premises contains the square footage set forth in Section C of the
Basic Lease Provisions. Upon Landlord's request, Tenant agrees to execute and
deliver to Landlord a certificate stating the dimensions and square footage of
the Premises. In the event the actual square footage of the Premises, as
determined by the process set forth at Section 2.1.A. below, is more than, or
less than, the square footage set forth above, this Section 2.1 shall be
modified accordingly, as will Section C of the Basic Lease Provisions hereof for
purposes of determining Base Rent on a square foot basis and the Additional Rent
which are calculated on the basis of the square footage of the Premises.
Section 2.1.A. Measurement of Retail Area and the Premises.
The actual "as built" square footage of the Retail Area and the Premises
shall be determined by measuring such areas to the center line of all party or
common walls, to the exterior faces of all other walls, and to the lease line(s)
where there is no wall. After the Commencement Date, Landlord or Landlord's
Architect or Agent may measure the Retail Area and the Premises to determine the
actual "as built" square footage of the Retail Area and of the Premises. If such
determination shall yield an amount less than or greater than the square footage
as set forth either Section 1.2.(f) (with respect to the Retail Area) or Section
2.1.A with respect to the Premises, then Landlord and Tenant shall execute and
deliver to each other an Amendment to this Lease stating the actual square
footage of the Retail Area and if applicable, the Premises as determined by such
"as built" determination. The Landlord and Tenant agree,
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<PAGE>
that for purposes of determining Tenant's Proportionate Share (for the uses
contemplated at Section 2.6 hereof), in no event shall the square footage of the
Retail Area be less than 100,000 square feet. The parties agree that in the
event of a dispute between Landlord's architect and Tenant's architect as to
such dimensions and square footage, the decision of a mutually acceptable third
party architect (the cost of which shall be shared equally by Landlord and
Tenant) shall be final and conclusive.
Section 2.2. Roof and Walls.
Landlord, except as provided herein to the contrary, shall have the
exclusive right to use all or any part of the roof or exterior walls and area
beneath the floor of the Premises for any purpose, including, but not limited
to: erecting signs or other structures on or over all or any part of the same;
erecting scaffolds and other aids to the construction, maintenance and
installation of the same; and in installing, maintaining, using, repairing and
replacing pipes, ducts, conduits and wires and all other mechanical equipment
leading through, to or from the Premises and serving other parts of the Project
in locations which do not materially interfere with Tenant's use of the
Premises. Notwithstanding the terms of this paragraph to the contrary, Landlord
agrees to use its good faith efforts to perform any work done by it pursuant to
the foregoing, above Tenant's finished ceiling, below the floor or in the
demising walls. Any such work shall be done on reasonable prior written notice
to Tenant and Landlord agrees to use its good faith efforts to perform such work
in such a manner as to minimize any interference with the conduct of Tenant's
business in the Premises. In the event the performance of such work exceeds two
(2) business days and the performance of same requires Tenant to cease the
conduct of its business on a day where it would otherwise be operating, then
beginning on the third date of such cessation until the earlier of the
completion of such work or the date Tenant reopens for business, Base Rent,
Additional Rent and all other charges due and payable by Tenant hereunder shall
abate.
Landlord agrees that scaffolding erected either on the exterior or
interior of the Building of which the Premises form a part might constitute a
material interference with Tenant's operation, and Landlord agrees that it will
exercise its good faith efforts to limit, from time to time, the existence of
scaffolding, which constitutes such material interference, to no more than a
consecutive thirty day period.
Section 2.3. Term.
The Term of this Lease shall be as set forth in Section D of the Basic
Lease Provisions, commencing on the Commencement Date specified in Section F of
the Basic Lease Provisions and ending on the Expiration Date specified in
Section G of the Basic Lease Provisions, unless sooner terminated pursuant to
any provision of this Lease. The Term shall include the Option Periods described
at Section E of the Basic Lease Provisions, and Section 2.8 of this Lease, if
any, as validly extended by Tenant.
Notwithstanding the Commencement Date of the Term, the provisions of this
Lease shall apply as of the date hereof (other than with respect to the payment
of Base Rent and Additional Rent, which shall commence on the Commencement
Date).
Section 2.3.A(i) Tenant Conditions Precedent.
This Lease is subject to, and contingent upon, the satisfaction and/or
waiver by Tenant of the following "Tenant Conditions Precedent" (herein so
called) on or before the dates specified below:
1. On or before JUNE 15, 1997, Tenant obtaining reasonable assurances that
a liquor license will be available to Tenant at the Premises at such time
as Tenant has completed Tenant's Work and a certificate of occupancy has
been issued by the City of Chicago (the "City");
2. On or before JUNE 15, 1997, Tenant having received reasonable
assurances from the City that the architectural concepts described in the
Concept Plans have been approved by the City;
3. On or before the execution of this Lease by both Landlord and Tenant,
the Tri-Party Agreement and the letters of consent to be executed by HOB
Marina City Partners and HOB Chicago, Inc. and by the Landlord, each in
the form and content of those letters attached hereto as Exhibit "M" and
made a part hereof will ALL have been executed by all of the parties
thereto;
4. On or before the execution of this Lease by both Landlord and Tenant,
the Subordination, Non-Disturbance and Attornment Agreement will have been
executed by all parties thereto; and
5. On or before the execution of this Lease by both Landlord and Tenant,
Tenant shall have received reasonable evidence of the full and
unconditional waiver or release of each and every mechanic's lien claim
encumbering or affecting the RETAIL AREA as of the date of this Lease
(including, without limitation, all of those certain mechanic's lien
claims described in that certain Commitment for Title Insurance (THE
"COMMITMENT") dated effective 11/25/96 and issued by Chicago Title
Insurance Company under Order No. 1401 007642557 D2).
Tenant agrees to exercise its best and continuous efforts to obtain the
assurances described at 1 and 2 above on or before JUNE 15, 1997. In connection
therewith, Tenant agrees to file, on or before the execution of this Lease by
both Landlord and Tenant, all appropriate documentation in connection with
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obtaining the assurances described at 2 above in accordance with all applicable
laws, rules and regulations. In the event the City is only willing to provide
the Tenant with the assurances contemplated at 2 above, if TENANT is willing to
agree to make reasonable modifications to the Concept Plan, Tenant agrees that
it will make such reasonable modifications. If the Tenant Conditions Precedent
described at 1, 2, 3, 4 or 5 above have not been satisfied to Tenant's complete
satisfaction (in the sole determination of Tenant) on or before the respective
dates specified in items 1, 2, 3, 4 and 5 above, then, and in such event, Tenant
shall have the right to either waive such unsatisfied TENANT Condition(s)
Precedent or to terminate this Lease by giving Landlord written notice of
Tenant's election of such waiver or termination not later than 5 p.m. on the
respective dates specified in items 1, 2, 3, 4 and 5 above. If Tenant does not
deliver notice of such waiver or termination to Landlord on or before 5 p.m. on
the respective dates specified in items 1, 2, 3, 4 and 5 above, such failure
shall be deemed to be a waiver of Tenant's right to terminate this Lease
pursuant to this Section 2.3.A.(i), in which event the Tenant Conditions
Precedent shall be deemed to have been satisfied. Landlord shall use all
reasonable efforts to cooperate with Tenant in obtaining the assurances and
other items described in this Section 2.3.A.(i).
In the event Tenant has elected to terminate this Lease for the failure of
any one or more of the Tenant Conditions Precedent, Landlord shall have an
additional 30 day period immediately subsequent to the receipt of Tenant's
termination notice in which to attempt to obtain the satisfaction of such
condition(s). In the event Landlord makes such election, Tenant agrees to
provide its full cooperation to Landlord.
If Landlord successfully obtains the satisfaction of such condition(s)
during such additional 30-day period, then Tenant's termination of this Lease
pursuant to this Section 2.3 A.(i) shall be void but the Commencement Date shall
be extended by an additional 30 days. If Landlord is unsuccessful in obtaining
the satisfaction of such condition(s) during such additional 30-day period, then
this Lease shall automatically terminate at the conclusion of such 30-day period
without necessity of further notice.
Section 2.4. Lease Year Defined.
The term "Lease Year" means a period of twelve (12) consecutive calendar
months, the first full Lease Year commencing on the first day of January
following the Commencement Date of the Term, and each succeeding Lease Year
shall commence upon the anniversary date of the preceding Lease Year. Any
portion of the Term of this Lease commencing prior to the first full Lease Year
or commencing after the last full Lease Year shall be deemed a "Partial Lease
Year".
Section 2.5. Use of Premises.
Tenant is permitted to use the Premises for the purposes specified in
Section I of the Basic Lease Provisions, and for no other purpose whatsoever.
The specific use specified in said Section I is a material consideration to
Landlord in order that there be maintained within the Project an appropriate
tenant mix so as to achieve the maximum gross sales for all tenants and to
assure the continued operation of a multi-use development. Tenant shall obtain,
at its own expense, all necessary governmental licenses and permits for such
use. Tenant acknowledges that no representations have been made to Tenant that
any other tenant will lease space within the Project, and that, except to the
extent of the restrictive covenant set forth below, Tenant has no exclusive
right to sell merchandise, goods or services of any type or character.
Except as specifically contemplated at Section I of the Basic Lease
Provisions, the permitted use of the Premises does not include (and specifically
excludes) the right to provide theme oriented merchandise, food, drink and/or
multi-media and/or live or prerecorded entertainment in connection with a
"theme-oriented" venue such as "Hard Rock Cafe", "Planet Hollywood",
"Harley-Davidson Cafe", "Mo-Town Cafe", "Billboard Cafe" or any similar
operations. Furthermore, the Permitted Use of the Premises does not include (and
specifically excludes) the docking, loading, or unloading any boat which might
or could compete with the "Blues Boat" or any other boat operated, docked, or
loaded or unloaded by HOB Chicago, Inc. or the tenant, subtenant or any occupant
of the theater building (identified as such on Exhibit B hereof) or any portion
of the Project, or their respective successors or assigns.
Notwithstanding anything contained herein to the contrary, and so long as
Tenant is (and has not previously ceased) continuously (except as otherwise set
forth herein) operating its business at the Premises for the operation of a high
end, white tablecloth style steak house (and is not otherwise in default of its
obligations hereunder beyond any applicable cure period) Landlord agrees not to
hereafter lease premises within the Retail Areas of the Project to any tenant
whose primary use is the operation of a steakhouse restaurant. The following are
examples of operators whose primary use is the operation of steakhouse
restaurants: Ruth's Chris, Chop House, The Outback, Lone Star, Morton's,
Ponderosa and Sizzler. "Primary use", as used herein, shall mean that fifty
percent (50%) or more of said tenant's proposed menu is composed of steaks
and/or chops. Tenant acknowledges and agrees the provisions of this paragraph
shall not apply to any land not owned or controlled by Landlord or leases
entered into prior to the date of this Lease (excepting, however, any such prior
leases under which Landlord still has rights of approval or control over the use
of the premises leased pursuant thereto). Tenant's sole remedy for a violation
of this restrictive covenant shall be a reduction of Base Rent by fifty percent
(50%) for a period of one (1) year. At the expiration of such one (1) year
period, Tenant shall and must elect to either: (1) terminate this Lease; or (2)
resume payment of full Base Rent without regard to the provisions of this
paragraph. If Tenant fails to make such election, Tenant shall be deemed to have
elected (2) above.
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Provided Tenant is not then in default of this Lease beyond any applicable
cure period, Tenant shall have the right to change the restaurant concept to be
operated from the Premises, so long as Landlord gives its prior written consent,
not to BE unreasonably withheld or delayed, provided:
A. Tenant provides at least ninety (90) days' prior written notice to
Landlord of Tenant's intention to change the restaurant concept to
be operated from the Premises, which notice shall specify the
effective date of such change, the proposed concept and the menu
therefor.
B. In no event shall the proposed concept cause Landlord to be in
violation of any exclusive use or restrictive covenant previously
entered into with respect to the Project (whether entered into prior
or subsequent to the date of this Lease), including, without
limitation, the restrictive covenant set forth above in this Article
II (provided, that Landlord shall, upon receipt of request therefor
by Tenant, deliver to Tenant within fifteen (15) days following
Landlord's receipt of such request, a description of any and all
such exclusive uses or restrictive covenants existing at such time
with respect to the Project and/or as shall be then in force and
effect with respect to the Project).
C. In no event shall the menu or merchandise of any new concept
duplicate the primary uses of any other tenant or occupant of the
Project; and
D. The concept is one that is suitable for first class mixed use
developments in the Chicago downtown area.
Notwithstanding anything to the contrary set forth herein, it is agreed
that Tenant shall have the right one time during the Term of this Lease,
including the options, to change the restaurant concept to be operated from the
Premises to another currently existing New York Restaurant Group concept,
without Landlord's consent provided that:
A. Tenant provides at least ninety (90) days' prior written notice to
Landlord of Tenant's intention to change the restaurant concept to be
operated from the Premises, which notice shall specify the effective date
of such change, the proposed concept and the menu therefor;
B. In no event shall the proposed concept cause Landlord to be in violation
of any exclusive use or restrictive covenant previously entered into with
respect to the Project (whether entered into prior or subsequent to the
date of this Lease), including, without limitation, the restrictive
covenant set forth above in this Article II (provided, that Landlord shall
deliver to Tenant within fifteen (15) days following Landlord's receipt of
the notice described at A above, a description of any and all such
exclusive uses or restrictive covenants existing at such time with respect
to the Project and/or as shall be then in force and effect with respect to
the Project);
C. In no event shall the menu or merchandise of any new concept duplicate the
primary uses of any other tenant or occupant of the Project; and
D. The concept is one that is suitable for first class mixed use developments
in the Chicago downtown area.
The following are existing New York Restaurant Group restaurants: Smith &
Wollensky, The Manhattan Ocean Club, Maloney and Porcelli, Wollensky Grill, The
Posthouse, Cite', Cite' Grill, Park Avenue Cafe, and Mrs. Park's Tavern.
It is agreed that in the event the Premises, subsequent to such change in
concept, are no longer used as a high end, white table cloth style steakhouse,
then the restrictive covenant (relating to the white table cloth restaurant
operation of Tenant) set forth above shall thereafter be of no further force and
effect.
Section 2.5.A. Tenant's Failure to Initially Obtain a Liquor License.
In the event Tenant fails initially to obtain a liquor license from the
City for the Premises and such failure was attributable to reasons out of
Tenant's reasonable control, then, and in such event, Tenant shall have the
right to terminate this Lease (which termination shall be effective as of the
date of expiration of the Cure Period) by giving Landlord no less than six
months notice (the "Cure Period") of its intention to terminate this Lease,
which notice, if given, must be given no later than the sixth month anniversary
after the occurrence of the Commencement Date. During the Cure Period both
Landlord and Tenant agree to diligently attempt to obtain a liquor license and
if such license is obtained during the Cure Period the Lease shall not be
terminated; provided, however, that if the liquor license is obtained during
such Cure Period but on a date which is subsequent to the Commencement Date
provided in Section F of the Basic Lease Provisions, then such Commencement Date
shall be automatically extended to the date of issuance of such liquor license
to Tenant.
In the event the Lease is terminated for the reasons stated in this
Section 2.5.A, as a condition of and concurrently with the final effective date
of such termination, Tenant shall reimburse Landlord the portion of Tenant's
Improvement Allowance theretofore paid to and received by Tenant.
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Section 2.6. Proportionate Share.
A. Tenant's Proportionate Share shall be the percentage equal to a
fraction, the numerator of which shall be the square footage of the Premises
specified in Section C of the Basic Lease Provisions and the denominator of
which shall be the square footage of the Retail Area as specified at Section
2.1.A. Tenant's Proportionate Share shall be subject to adjustments contemplated
at Section 2.1.A. hereof.
Section 2.7. Intentionally Omitted.
Section 2.8. Option to Extend Term.
Tenant, by written notice to Landlord given no later than 6 months before
the end of the then applicable Lease Term, shall have the option to renew this
Lease for two (2) additional consecutive five (5) Lease Year periods (the
"Option Periods") commencing, with respect to Option 1, on the expiration of the
then current Term of this Lease and, with respect to Option 2, on the expiration
of option 1, pursuant to all of the terms, covenants, and conditions of this
Lease and at the Base Rent and Percentage Rent set forth in Sections J and K of
the Basic Lease Provisions hereof, provided that at the time the notice
hereinabove referred to is given and at the time the applicable Option Period
commences, and at all times in between, Tenant is not in default hereunder
beyond any applicable cure period set forth in this Lease.
ARTICLE III
LANDLORD AND TENANT'S WORK
--------------------------
Section 3.1. Landlord's Work.
Landlord shall, at its expense (except as otherwise provided for in
Exhibit D and/or Exhibit F attached hereto with respect to the Structure, as
such term is defined in Section 3.2) construct the Premises in substantial
accordance with plans and specifications prepared or to be prepared by
Landlord's architect, incorporating in such construction all work described in
said Exhibit D and/or Exhibit F as being required of Landlord (herein called
"Landlord's Work"). All of Landlord's Work shall be performed in a good and
workmanlike manner and be in compliance with all applicable laws, ordinances,
codes, and building regulations.
Section 3.2. Tenant's Work.
Tenant, at Tenant's expense, shall construct or make or shall cause to be
constructed or made the improvements provided for in Exhibit E attached hereto,
which work shall be deemed to be Tenant's Work, including all work designated as
Tenant's Work in said Exhibit "E", and Tenant shall do and perform, at its
expense, all of Tenant's Work diligently and promptly and in accordance with the
following provisions. Tenant's Work shall specifically include the design and
construction of a one (1) story structure (with roof) covering the existing ice
skating rink and a portion of the plaza, substantially in accordance with the
Concept Plan prepared by Haverson Architecture and Design, P.C., which concept
drawing is attached hereto and made a part hereof as Exhibit C and which concept
drawing is hereby approved by Landlord for all purposes (subject to minor
changes to such concept drawings as may be agreed upon by Landlord and Tenant in
writing ("Structure")). Landlord, at Landlord's expense, shall be responsible
for the obtaining of necessary approvals for the Structure (including and not
limited to governmental agencies having appropriate jurisdiction). The
approximate location of the Structure is depicted on Exhibit C.
Section 3.2.A. Design and Construction of Ramp.
The proposed handicap accessible ramp from the State Street elevation to
the plaza level is depicted on Exhibit C hereof. Landlord shall reimburse the
Tenant (or, alternatively, at Tenant's sole election, Landlord shall pay the
contractor(s) directly upon Landlord's receipt of statement therefor) for the
actual direct out of pocket costs incurred by Tenant or owing to such
contractors in connection with the design and construction of such ramp, within
thirty (30) days after the completion of such ramp and the delivery to Landlord
of those documents contemplated to be delivered by Tenant pursuant to the
provisions of Section 3.6 hereof. The design and construction of said ramp shall
be deemed to be a part of Tenant's Work, BUT THE REIMBURSEMENT OF THE COST
THEREOF BY LANDLORD PURSUANT HERETO SHALL BE IN ADDITION TO (AND NOT INCLUDED
IN) THE TENANT IMPROVEMENT ALLOWANCE.
Section 3.3. Tenant's Obligations Before Commencement Date.
A. Plans.
Landlord has previously delivered to Tenant an architectural plan of the
Premises depicting the demising partitions and the approximate square footage of
the Premises (the "Tenant Print Package"). On or before June 30, 1997, Tenant
will submit to Landlord a reproducible (sepia) set of plans and specifications
(the "Plans") and five (5) prints of Tenant's Work to be done within the
Premises prepared in conformity with the applicable Exhibits (including the
Tenant Print Package). No later than ten (10) business days thereafter, Landlord
shall notify Tenant of any failure of the Plans to conform to the applicable
Exhibits hereto or otherwise to meet with Landlord's approval. Tenant shall,
within ten (10) business days after receipt of any such notice, cause the Plans
to be revised and resubmitted to the
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Landlord for Landlord's approval. Landlord shall notify Tenant no later than
five (5) business days following Landlord's receipt of such resubmitted Plans of
any failure of such resubmitted Plans to conform to the applicable Exhibits
hereto or to otherwise meet with Landlord's approval and Tenant shall, within
five (5) business days after receipt of any such notice cause the Plans to again
be revised and resubmitted to the Landlord for Landlord's approval, and this
procedure shall be repeated until the Plans are mutually and reasonably approved
by both Landlord and Tenant. If Landlord fails to notify Tenant of any failures
of or desired revisions to the Plans within any of the respective ten and/or
five-business day periods set forth in this Section 3.3. A. hereinabove, then
Landlord shall be deemed to have approved the version of the Plans then last
submitted by Tenant hereunder for all purposes under this Lease. Notwithstanding
anything to the contrary set forth herein, Tenant agrees that the Plans shall be
drawn so as to conform substantially to the improvements contemplated by the
concept drawing set forth in Exhibit "C" attached hereto, and Tenant further
agrees that the Plans shall be prepared in compliance in all material respects
with all governmental codes and ordinances applicable thereto. Landlord agrees
that if the aforesaid concept plans have been approved by the City of Chicago
(as contemplated in Section 2.3. A. hereof) and if such Plans are otherwise
prepared in compliance with the requirements of the immediately preceding
sentence, Landlord will not unreasonably withhold, condition or delay its
approval of such Plans.
When Landlord or its designated agent has approved the original or revised
Plans, Landlord shall initial and return one set of approved Plans to Tenant and
the same shall become a part hereof as Exhibit "E-1". Tenant shall not commence
any of Tenant's Work until Landlord has approved Exhibit "E-1".
Tenant agrees that: (i) no later than ten (10) days after the Landlord and
Tenant have both approved the Plans, Tenant shall submit to the City and all
other applicable governmental authorities, the Plans; (ii) it will diligently
pursue the obtaining of such permits; and (iii) it will use all reasonable
continuous efforts to comply with all requirements with regard to obtaining its
permits, including all requests for information by applicable governing
authorities. Landlord shall use all reasonable efforts to cooperate with Tenant
in obtaining such permits, which shall include attendance of a representative of
Landlord at zoning variance meetings where Tenant requests the same with
reasonable prior notice to Landlord, and Landlord's signature on applications
where required. In no event shall Landlord be deemed to be required to engage
attorneys or bring legal action against the City or any other governmental
authority for any denial of such permits or licenses.
In the event, on or before June 30, 1997, Tenant has not received permits
from the City of Chicago which would enable it to commence construction of the
Structure and other improvements comprising Tenant's Work, Tenant shall have the
option to terminate this Lease by written notice to Landlord given by Tenant on
or before June 30, 1997.
If Tenant does not deliver notice of such termination to Landlord on or
before 5 p.m. on June 30, 1997, such failure shall be deemed to be a waiver of
Tenant's right to terminate this Lease pursuant to this Section 3.3.A.
In the event Tenant has elected to terminate this Lease for the reasons
described in this Section 3.3.A, Landlord shall have an additional 30 day period
immediately subsequent to the receipt of Tenant's termination notice in which to
attempt to obtain the satisfaction of such condition(s). In the event Landlord
makes such election, Tenant agrees to provide its full cooperation to Landlord.
If Landlord successfully obtains the satisfaction of such condition(s) during
such additional 30-day period, then Tenant's termination of this Lease pursuant
to this Section 3.3.A. shall be void but the Commencement Date shall be extended
by an additional 30 days. If Landlord is unsuccessful in obtaining the
satisfaction of such condition(s) during such additional 30-day period, this
Lease shall automatically terminate at the conclusion of such 30-day period
without necessity of further notice.
B. Landlord's Disclaimer.
Landlord's approval of Tenant's plans and specifications and preliminary
design concept drawings shall not in any manner constitute a representation or
warranty by Landlord that: (i) said plans and specifications comply with
applicable laws, codes or building requirements; (ii) the work specified or
depicted therein is fit for its intended purpose or is structurally safe and/or
sound; (iii) the cost of performance thereof by Tenant shall be in any specific
amount or in the amount estimated or calculated by Tenant; or (iv) that all or
any required permits and licenses will be issued predicated thereupon.
C. Failure to Comply.
Unless this Lease has previously been terminated pursuant to the terms
contained herein, in the event Tenant:
(A) fails to open its business to the public within sixty (60) days
following the occurrence of the Commencement Date for reasons other than
force majeure or delays caused by Landlord, then, and in such event,
Landlord shall have all of the following rights, in addition to any other
right or remedy it may have pursuant to this Lease, or at law or at
equity, to:
(i) Terminate this Lease upon ten (10) days' prior written notice to
Tenant and recover from Tenant an amount equal to the cost of any
work done by Landlord pursuant to this
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Lease (or any subsequent agreement between Landlord and Tenant) for
Tenant's account (on the basis of the actual cost) including
electrical work, plumbing, concrete floor slabs and heating and air
conditioning equipment and facilities; or
(ii) Collect rent from the Commencement Date to the date on which
Tenant opens for business at a per diem amount equal to 125% of the
Base Rent and Additional Rent payable by Tenant hereunder, plus all
reasonable expenses incurred by Landlord pursuant to this Lease.
(B) Shall not have furnished Landlord with Tenant's plans and
specifications within seventy five (75) days of the date specified herein
for reasons other than force majeure or delays caused by Landlord, then,
and in such event, the Landlord shall have the right in addition to any
other right or remedy it may have pursuant to this Lease or at law or at
equity to:
(i) Terminate this Lease upon ten (10) days' prior written notice to
Tenant and recover from Tenant an amount equal to the Base Rent for
one (1) Lease Year, along with the cost of any work done by Landlord
pursuant to this Lease (or any subsequent agreement between Landlord
and Tenant) for Tenant's account (on the basis of the actual cost)
including electrical work, plumbing, concrete floor slabs and
heating and air conditioning equipment and facilities; or
(ii) collect Base Rent and Additional Rent from the date upon which
such plans were due to the date on which Landlord receives such
plans at a per diem amount equal to the Base Rent and Additional
Rent payable by Tenant hereunder, plus all reasonable expenses
incurred by Landlord pursuant to this Lease.
The liquidated damage provisions of (A) and (B) above are intended as
reasonable estimates of Landlord's damages because of Tenant's failure to take
possession and open the Premises and/or submit plans and specifications on a
timely basis and as a settlement of the actual damages that might arise because
of such failure. The parties agree that these damages are reasonable, bear
significant relation to the actual damages that Landlord might sustain, which
damages Tenant and Landlord agree would be uncertain and difficult to prove, and
is not a penalty for Tenant's failure to perform. The acceptance by Landlord of
the liquidated damages set forth in (A) and (B) above shall not be deemed
permission for Tenant to continue to violate the provisions of this Lease by not
taking possession and/or opening the Premises for business, and shall not
preclude Landlord from seeking any other remedy (other than money damages) for
such violation including, without limitation, specific performance or
termination of this Lease or termination of Tenant's right to possession as
described in Article XVIII, which Landlord may pursue at any time while the
violation continues.
Section 3.4. Possession Date - Tenant's Construction.
A portion of the Premises, consisting of approximately 2,800 square feet
is currently occupied by a grocery store. That portion is highlighted, in blue,
on page A-5 of Exhibit B, and is herein referred to as "Space G-2". The Landlord
expects that it will be able to deliver possession of Space G-2, free and clear
of such tenancy, no later than August 7, 1997. The Landlord and Tenant each
desire that Tenant commence Tenant's Work as soon as possible. Landlord shall
deliver possession of the Premises (except for Space G-2) upon the mutual
execution and delivery of this Lease. Landlord further agrees to deliver
possession of Space G-2 at such time as Space G-2 has been vacated by said
grocery store and Landlord has completed the abatement of the asbestos in Space
G-2. Tenant agrees to accept possession at the times hereinabove contemplated
and provided that the other conditions to Landlord's delivery of possession of
the Premises and determination of the Possession Date, as set forth in Exhibit D
hereto, have at such times been fully satisfied. The Landlord and Tenant further
agree that for purposes of paragraph F of the Basic Lease Provisions, that the
Possession Date shall not be deemed to have occurred until all of the Premises
have been delivered to Tenant.
Tenant shall commence such Tenant's Work as soon as is reasonably possible
following the delivery of the Premises to Tenant in accordance with the terms
and conditions of Exhibit D hereto. Tenant shall complete Tenant's Work in
substantial accordance with applicable Exhibits hereto and install all store and
trade fixtures, signs, equipment, stock in trade, merchandise and inventory, and
open for business therein not later than the Commencement Date. Tenant shall
notify Landlord of any material variation between Tenant's plans as approved by
Landlord and the as-built construction of the Premises.
All construction work to be performed by Tenant hereunder shall be
performed in a good and workmanlike manner in material compliance with all
applicable laws, codes and building requirements of the local authorities.
Except as otherwise expressly set forth herein (for example, with respect to the
Structure), Tenant agrees to procure and pay for all necessary permits, licenses
and consents required in connection with Tenant's Work. Tenant agrees that
Tenant's Work shall not unreasonably interfere with the conduct of Landlord's or
any other parcel owner's business or work in the Project.
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Section 3.5. Condition of Premises.
A. Subject to Landlord's representation in Article XXV with respect to the
environmental condition of the Premises at the time of delivery of possession to
Tenant, and the punchlist procedure provided for in Exhibit D of this Lease,
Tenant's taking possession of the Premises shall be prima facie evidence of
Tenant's acceptance thereof in good order and satisfactory condition. Tenant
agrees that no representations respecting the condition of the Premises and no
promises to decorate, alter, repair or improve the Premises either before or
after the execution hereof have been made by Landlord or its agents to Tenant
unless the same are contained herein or made a part hereof.
B. By opening for business with the public, and subject to the punch list
procedures set forth in Exhibit D, Tenant shall be deemed to have (1) accepted
the Premises; (2) acknowledged that the same are in the condition called for
hereunder; and (3) agreed that the obligations of Landlord under Article III
hereof have been fully performed.
Section 3.6. Tenant's Improvement Allowance; Construction Escrow.
Landlord shall pay to Tenant, a Tenant Improvement Allowance equal to
$120.45 times the actual number of square feet within the Premises. Tenant's
Improvement Allowance shall be paid to Tenant thru a construction escrow with a
title company or other party to be mutually and reasonably agreed upon by and
among Tenant, Landlord and Landlord's Lender, acting as the Construction
Escrowee, pursuant to a written Construction Escrow Agreement between Landlord,
Tenant, Landlord's Lender and the general contractor engaged by Tenant. It is
agreed that all payments with respect to Tenant's Work shall be made thru and
pursuant to the Construction Escrow. The Construction Escrow Agreement shall be
the standard form construction escrow agreement typically utilized by the
Construction Escrowee and said Agreement shall be modified to accommodate the
specific agreements between Landlord and Tenant as hereinafter set forth.
From time to time Landlord shall deposit with the Construction Escrowee,
Landlord's Fraction (as defined below) of the amount of each draw request
submitted by Tenant (or, as applicable, Tenant's general contractor), not to
exceed, however, when combined with all prior payments by Landlord hereunder,
the total amount of Tenant's Improvement Allowance as aforesaid. Each such
payment shall be made on or before the expiration of the 30 days following the
day in which each such draw request is submitted by Tenant (or, as applicable,
Tenant's general contractor); provided, that Tenant shall furnish Landlord and
the Construction Escrowee with evidence reasonably satisfactory to Landlord and
the Construction Escrowee of the payment or arrangement for payment of Tenant's
Fraction (as defined below) of the amount of each such draw request on or prior
to the date on which Landlord is obligated to pay the Landlord's Fraction of
each such draw request.
As used herein, the term "Landlord's Fraction" shall be equal to a
fraction, the numerator of which shall be $120.45 times the actual number of
Square Footage contained in the Premises and the denominator of which shall be
the Construction Costs for performing Tenant's Work (but in no event shall
Landlord's fraction be more than 1). The term "Construction Costs" as used
herein shall mean the full amount of all costs (both so-called "hard costs" and
so-called "soft costs") of performing Tenant's Work and shall include and shall
not be limited to, permit and license fees, architect's fees, engineering fees,
financing charges, costs of labor and materials or of contracts and subcontracts
for work, labor and materials and all other costs required to be expended by
Tenant in connection with the performance of Tenant's Work. The term "Tenant's
Fraction" shall be the fraction which is determined by subtracting the amount of
the Landlord's Fraction from 100%. Concurrently with Landlord's deposit of the
Landlord's Fraction of the Tenant's Improvement Allowance with respect to each
draw request submitted by Tenant pursuant to this Section 3.6, Tenant agrees to
deposit with the Construction Escrowee an amount equal to Tenant's Fraction of
the amount of the subject draw request. The Escrowee shall not be obligated to
disburse funds with respect to any draw request unless and until it receives
from Tenant (or Tenant's general contractor) each of the following in connection
with each such draw request, to-wit: (a) a written request for payment signed by
Tenant; (b) a copy of a certificate signed by Tenant's architect certifying the
percentage of completion of Tenant's Work and approving payment of an amount at
least equal to the amount set forth in Tenant's request for payment; (c) a duly
executed and acknowledged Contractor's Sworn Statement showing all
subcontractors with whom Tenant's general contractor has entered into
subcontracts, the amount of such subcontract, the amount requested for any
subcontractor in the payment application and the amount to be paid to Tenant's
general contractor from such progress payment; (d) duly executed partial waivers
of mechanics' and materialmen's liens from the general contractor establishing
payment or satisfaction of the payment requested by the general contractor in
the immediately preceding payment application (unless waivers are required by
the Lender to be deposited by the general contractor into the construction
escrow, pending payment) and duly executed partial waivers of mechanics' and
materialmen's liens from each subcontractor and material supplier included in
the immediately preceding payment application (unless waivers are required by
the Lender to be deposited by the general contractor into the construction
escrow, pending payment); provided, that interim subcontractor and material
supplier lien waivers covering a payment application may be delivered to
Construction Escrowee no later than the date of said general contractor's next
payment application; (e) with respect to the initial draw request: (i) the
Landlord shall have received from the Tenant, construction contracts and other
evidence reasonably satisfactory to Landlord that the amounts set forth in the
budget for the Tenant's Work accurately reflect all of the costs of such work;
(ii) a statement from Tenant's architect that the plans are complete in all
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material respects, comply in all material respects with all laws and ordinances,
and contain all details requisite for the completion of Tenant's Work and, when
built in accordance therewith, shall be ready for use and occupancy by Tenant as
contemplated by this Lease; (iii) the Landlord shall have received complete
copies of all required permits and licenses necessary to commence Tenant's Work;
(f) no event of default has occurred beyond expiration of all applicable notice
and cure periods; and (g) such other terms as Landlord, Tenant and Landlord's
lender may determine pursuant to the Tri-Party Agreement, hereinafter described
between such parties. Notwithstanding anything to the contrary set forth herein,
it is agreed that Tenant's Improvement Allowance shall be a specific "line-item"
of Landlord's construction loan in effect with respect to the Project. It is
agreed that Tenant, Landlord and Landlord's lender shall endeavor to mutually
and reasonably agree to the terms and conditions of a Tri-Party Agreement in the
form of that attached hereto as Exhibit "K" and made a part hereof and/or in
such other form and content as may be mutually and reasonably agreed upon
between said parties; provided further, that if said Tri-Party Agreement has not
been fully executed by each of such parties on or before the execution of this
Lease by both Landlord and Tenant, then Landlord or Tenant shall be entitled, at
either party's sole option, to terminate this Lease by written notice to all of
the other parties hereto of such party's election to terminate on or before the
execution of this Lease by both Landlord and Tenant, whereupon, subject to the
provisions of Section 2.3.A. hereof, the Landlord and Tenant shall have no
further obligations or liabilities hereunder.
It is hereby agreed that to the extent that Tenant has satisfied the
conditions set forth herein with respect to payment of any portion of Tenant's
Improvement Allowance but said portion is not paid to Tenant (or, as applicable,
to Tenant's Contractor) in accordance herewith, then, in such event, Tenant may
remedy such failure by Landlord by payment of any and all such sums, and any and
all such sums expended or obligations incurred by Tenant in connection therewith
shall be paid by Landlord to Tenant upon demand; provided, that if Landlord
fails to immediately reimburse and pay Tenant any such sums advanced by Tenant
on Landlord's behalf, Tenant may, upon giving Landlord no less than 30 days
prior written notice, deduct such amount (together with interest thereon at the
rate equal to the prime rate of interest then being charged by First Chicago NBD
Bank from the date of any such expenditure by Tenant until the date of repayment
thereof by Landlord to Tenant) from subsequent installments of Base Rent,
Additional Rent and any other charges (if any) that from time to time thereafter
may become due and payable by Tenant to Landlord hereunder, and any such
deductions shall not constitute a default by Tenant hereunder.
Anything contained at this section to the contrary notwithstanding, it is
expressly understood and agreed that the construction draws hereinabove
contemplated shall at all times be "in balance". The term in balance shall mean
that undistributed proceeds of Landlord's Fraction and Tenant's Fraction, shall
equal or exceed the amount necessary, based on the Lender's architect's
reasonable estimate of the cost of Tenant's Work.
Landlord, the Lender, and the respective agents, contractors and
architects shall have access to the Premises and all parts thereof at all
reasonable times for inspection thereof. Landlord agrees that it will exercise
its inspection rights in a manner that does not unreasonably interfere with
Tenant's Work. Tenant acknowledges that neither the Landlord or the Lender
assume any responsibility or liability to any person by reason of such
inspections, and that the Tenant may not rely upon such inspections for any
purposes whatsoever (including but not limited to, matters of design, adequacy
of workmanship, or materials, compliance with law or conformance to the plans
and specifications).
ARTICLE IV
BASE RENT AND PERCENTAGE RENT
-----------------------------
Section 4.1. Intentionally Omitted.
Section 4.2. Base Rent.
All Base Rent shall be payable in advance, without prior demand or any
right of offset or deduction except as provided herein, in monthly installments
on the first day of each calendar month of the Term hereof. Tenant shall pay all
Base Rent to Landlord in lawful money of the United States of America at the
address stated in Section O of the Basic Lease Provisions or to such other
persons or at such other places as Landlord may designate in writing delivered
to Tenant.
Section 4.3. Past Due Base Rent and Late Charge.
Any Base Rent or Additional Rent to be paid by Tenant which are not paid
within ten (10) days after the same shall be due and payable, shall bear
interest from the date due until the date paid at the then current prime rate of
First Chicago NBD Bank, plus two and one-half percent (2.5%) per annum. In
addition, if Tenant shall fail to pay any Base Rent or Additional Rent within
ten (10) days after written notice from Landlord that same was not received when
due, Tenant shall be obligated to pay a late payment charge of Five Hundred
Dollars ($500.00) to reimburse Landlord for its additional administrative costs.
Any payment by Tenant or acceptance by Landlord of a lesser amount than
that due from Tenant to Landlord shall be treated as a payment on account. The
acceptance by Landlord of a check for a lesser amount with an endorsement or
statement thereon, or upon any letter accompanying such check, that such lesser
amount is payment in full shall be given no effect, and Landlord may accept such
check without prejudice to any other rights or remedies which Landlord may have
against Tenant.
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Section 4.4. Base Rent.
Payment of Base Rent shall begin on the Commencement Date. If the
Commencement Date occurs on a day other than the first day of a calendar month,
then Base Rent (as well as all Additional Rent) shall be prorated for the
balance of that month based upon the actual number of days from the Commencement
Date through the last day of said calendar month. The amount of each monthly
installment of Base Rent for the Premises for the Term of this Lease shall be as
specified in Section J of the Basic Lease Provisions.
Section 4.5. Percentage Rent
A. Tenant shall pay Landlord as Percentage Rent the percentage of Gross
Sales (as hereinafter defined) stated in Section K of the Basic Lease
Provisions. Gross Sales shall be reported by Tenant no later than the twentieth
(20th) day after the end of each month, and a statement thereof submitted to
Landlord showing the Gross Sales for the Premises during the preceding month and
for the Lease Year to date. At such time during any Lease Year as Tenant's Gross
Sales exceed the amount(s) stated in said Section K hereof (which amount(s) are
referred to herein as the "Breakpoint"), Tenant shall pay Landlord monthly
thereafter the percent stated in said Section K hereof multiplied by the excess
of the then year-to-date Gross Sales over the Breakpoint, less any Percentage
Rents previously paid for the current Lease Year. Percentage Rent payable for
any Partial Lease Year shall be calculated by pro-rating Gross Sales for the
number of months that Tenant was open for business in the Lease Year. If Base
Rent is abated or reduced for any reason during the Lease Year, the Breakpoint
for such period shall be reduced proportionally. Tenant makes no
representations, express or implied, that its Gross Sales from the Premises will
be sufficient to generate Percentage Rent.
"Gross Sales", as used in this Lease, shall mean and include the sale
price of all food, beverages and merchandise sold (including gift and
merchandise certificates) and charges paid to Tenant for all services and all
other receipts from the business performed by Tenant or any other person, firm
or corporation selling merchandise or services in, upon or from any part of the
Premises, whether for cash or credit, and shall include (without limitation)
gross sales from vending machines (except telephone and postage stamp), mail or
telephone orders received or filled at the Premises, take out and delivery
orders, all deposits not refunded to purchasers, and orders taken at the
Premises although such orders may be filled elsewhere.
The following shall not be included in "Gross Sales": (a) refunds and
trade-in allowances to customers; (b) the amount of all sales, use, excise,
retailer's occupation or similar taxes imposed in a specific amount, or
percentage of, or determined by, the amount of retail sales made upon the
Premises; (c) returns to suppliers and manufacturers; (d) the amount of sales
not in the ordinary course of Tenant's business of fixtures, machinery or
equipment which Tenant has the right to remove from the Premises after use in
the conduct of Tenant's business in the Premises; (e) the value of any exchange
or transfer of merchandise between restaurants of Tenant where such exchange or
transfer is made solely for the convenient operation of Tenant's business and
not for the purpose of consummating a sale made in, at, or from the Premises;
(f) tips and gratuities; and (g) service charges on Visa, Mastercard, American
Express and other nationally recognized credit cards shall be deducted from
Gross Sales in the Lease Year in which same are incurred; (h) the unpaid balance
of any credit sale which is written off as uncollectible in accordance with
generally accepted accounting principles, and if previously reported in the
Gross Sales of Tenant, shall be deducted from Gross Sales in the Lease Year in
which so written off, (and if later collected, same shall be included in Gross
Sales) to an aggregate amount not exceeding two percent (2%) of the total Gross
Sales in such Lease Year determined on a non-cumulative basis; (i) the actual
amount of any Gross Sales (up to a maximum of $10,000.00 per calendar year) of
complementary food and beverages given away from the Premises to Landlord to
promote Marina City pursuant to Article XIV hereof; and (j) sales to employees
at a discount, not to exceed two percent (2%) of Tenant's Gross Sales per annum
(determined on a non-cumulative basis). No deduction shall be allowed for
uncollected or uncollectible credit accounts, except as expressly set forth
herein.
Tenant shall keep and maintain, in a manner consistent with generally
accepted accounting principles, accurate and complete records of its Gross Sales
for each Lease Year and for three (3) years after the end of each such Lease
Year. Within ninety (90) days of the end of each Lease Year, Tenant shall submit
to Landlord a statement of total Gross Sales made during the previous Lease
Year, said statement shall be certified as accurate by an officer, owner or
partner of Tenant, and shall be signed by Tenant. Landlord shall have the right
as it deems necessary upon ten (10) days' advance notice to Tenant, and at
Tenant's main office, to audit all books and records relating to said statement
at any time. Such audit shall be performed at Landlord's sole cost and expense,
provided, however, that if any audit reveals that Gross Sales for any Lease Year
have been under reported by more than five percent (5%), Tenant shall pay any
Percentage Rent found to be due, the cost of the audit, and interest on the
unpaid Percentage Rent from the date due at the prime rate of First Chicago NBD
Bank, plus two and one-half percent (2.5%) per annum.
Landlord agrees to keep any information obtained from Tenant confidential,
except that Landlord may give such information to Landlord's accountants and
attorneys, to any mortgagee or party secured by a deed of trust on Landlord's
interest in the Project, to a prospective purchaser of Landlord's interest
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in the Project, in connection with any litigation or arbitration proceedings
between the parties, or as may be required by any competent judicial or other
legally constituted authority.
B. Tenant shall receive a credit equal to Twenty Five and 00/100 Dollars
($25.00) times the number of square feet of floor area of the Premises against
fifty percent (50%) of the Percentage Rent first becoming due hereunder. Nothing
contained herein shall be deemed a representation or warranty by Landlord that
Percentage Rent shall be sufficient over the Term to recapture the amount(s)
described herein and Tenant agrees that in no event shall Base Rent or Charges
ever be subject to reduction or diminution if Tenant is unable to recapture the
full amount of the credit described in this paragraph.
For example, assuming the square footage of the Premises is 14,000 square
feet, Tenant's total credit would be equal to $350,000.00 (14,000 x $25). If the
Percentage Rent payable by Tenant in the first full Lease Year were $300,000.00,
Tenant would be permitted to deduct $150,000.00 from the Percentage Rent payable
for that Lease Year. If, in the second full Lease Year, Tenant's Percentage Rent
obligation were $100,000.00, Tenant would be permitted to deduct $50,000.00 from
the Percentage Rent due Landlord, and so on, until the credit has been exhausted
in full: provided that in the event Percentage Rent is not payable to Landlord
in any Lease Year, no deduction against Base Rent or Additional Rent shall be
permitted.
Section 4.6. Additional Rent.
Tenant and Landlord agree that all other sums excepting Base Rent which
may become due under this Lease shall be deemed "Additional Rent". Payment of
Additional Rent shall commence on the Commencement Date. Additional Rent shall
include, and shall not be limited to: late charges, interest, Tenant's
Proportionate Share of Landlord's Common Area Costs, Tenant's Proportionate
Share of Taxes and Tenant's Proportionate Share of Insurance, attorneys' fees
and security deposits and any other sum coming due to or advanced by Landlord in
performance of its obligations or as provided in Section 4.7 below. Additional
Rent of a recurring nature shall be payable monthly in advance on the first
(1st) day of each month on and after the Commencement Date.
Section 4.7. Payment by Landlord on behalf of Tenant.
If Landlord pays any monies or incurs any expense in accordance with the
terms of this Lease to remedy a breach of this Lease by Tenant or to do anything
in this Lease required to be done by Tenant, all amounts so paid or incurred
shall, on written notice to Tenant, be considered Additional Rent payable by
Tenant with the first Base rent installment thereafter becoming due and payable,
and may be collected as by law provided in the case of rent. It is understood
and agreed that Tenant shall not be deemed in breach of its obligations
hereunder until the notice and Opportunity to cure provided for in Article XVIII
hereof shall have passed without compliance by Tenant.
ARTICLE V
COMMON AREAS
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Section 5.1 Common Areas.
As used herein, the term "Common Areas" means those portions of the Land
and Project that are from time to time designated by Landlord for use in common
by Landlord, Tenant (and their respective subtenants, agents, employees,
customers, licensees and invitees) and any other owners or tenants of portions
of the Project. Common Areas shall include, without limitation, package pickup
stations, elevators, escalators, stairways, corridors, pedestrian bridges, any
pedestrian walkway system, walkways and sidewalks, including city owned
sidewalks adjacent to the Land, malls, courts, arcades, concourses, service
corridors, loading platforms and Delivery Facilities, signs and sign equipment,
public restrooms, entrances, information and telephone booths, drinking
fountains, lounges and shelters, all furniture and decorations, structural
portions of the Retail Area (including the roof, the roof membrane and roof
structure, foundations, footings, flashings, structural portions of the walls
and similar items) landscaped areas, retaining walls, perimeter walls and
fences, common lighting facilities, and other such central utility systems,
including common area heating, ventilating and cooling systems, fixtures,
chattels, systems, decor, facilities, other public facilities in respect of
which Landlord is from time to time subject to obligations arising from the Land
and Project, whether above or below grade, and such other improvements and areas
in and of the Project which are not otherwise intended for the exclusive use or
occupancy of any particular tenant. The Common Areas shall not include those
areas and improvements intended for the exclusive use, benefit or occupancy of
the tenants or owners of the Residential Area, all or a portion of the parking
areas within the Project (hereinafter defined), or the Common Areas within the
Hotel, hotel portion of Project which are exclusive to the occupants of such
hotel portion of the Project.
Landlord agrees that Landlord shall (at Landlord's sole expense) comply
with all laws, ordinances, statutes, codes, rules, regulations, orders and
decrees of the United States and of the state, county, city or any other
political subdivision in which the Project is located or which exercises
jurisdiction over the Project (including, without limitation, all environmental
laws, zoning and other ordinances, laws and ordinances relating to the
handicapped or disabled, and other governmental requirements) and Landlord shall
obtain and maintain any and all governmental approvals or permits required in
connection with the
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construction, operation, maintenance, repair, alteration and replacement of the
Common Areas and any and all buildings and Improvements located thereon.
Section 5.1.A Parking.
Landlord shall provide, or cause to be provided, during all operating
hours of the Premises, on a nonexclusive basis and at customary rates as charged
by the then current operator of the parking garage, valet customer parking: (i)
on the bridge level of the Project (at the Plaza deck central entry), as such
areas are depicted on the Site Plan; and (ii) at Tenant's State Street entry;
provided that with respect to valet service at Tenant's State Street entrance,
such obligation to provide, or to continue to provide, such service shall be
contingent upon approval, from time to time, of the terms and conditions under
which such service shall be provided by Landlord and Tenant, the City of
Chicago, and the then current parking garage operator. Tenant agrees to
participate in any parking validation program reasonably initiated by Landlord.
In the event Landlord fails to provide the valet customer parking contemplated
to be provided by Landlord pursuant to this Section 5.1.A. or in the event the
valet customer parking provided by Landlord pursuant to this Section 5.1.A. is
not provided in a manner satisfactory to Tenant, then in either such event,
Tenant shall be entitled to contract for its own independent valet customer
parking service.
Section 5.2 Delivery Facilities.
As used herein, the terms "Delivery Facility" or "Delivery Facilities"
(each herein so-called), shall mean those portions of the Project as are from
time to time designated by Landlord as facilities to be used in common by
Landlord, Tenant, any tenants of the Project and their respective agents,
employees, contractors and invitees and such other persons as Landlord may
designate, for purposes of loading, unloading, delivery, dispatch and holding of
merchandise, goods and materials entering or leaving the Project, and giving
vehicular access to the Project and any such facilities within the Project
whether or not same are for the exclusive or priority use of any owner or
occupant of the Project. Landlord reserves the right to designate any portion of
the Delivery Facilities for the exclusive use of any owner and/or occupant as it
deems appropriate as long as Tenant is not denied reasonable use of other
Delivery Facilities. Notwithstanding the foregoing, it is hereby agreed that the
Delivery Facilities that are depicted (and labeled and identified as "Delivery
Facilities") on Exhibit "B" attached hereto shall at all times during the Lease
Term be available to Tenant for Tenant's non-exclusive use, and Tenant shall, at
all times, have access to and from said Delivery Facilities as depicted and so
identified on Exhibit "B" attached hereto.
Section 5.3. Delivery Facilities Costs.
Delivery Facilities Costs, as used herein, means all costs, charges, and
expenses (including those of a capital nature which would reduce Delivery
Facilities Costs) in respect of a Lease Year which are directly attributable to
the operation, repair, maintenance, replacement, alteration or improvement of
the Delivery Facilities, including without limitation HVAC Costs attributable to
the Delivery Facilities.
Section 5.4. Rules and Regulations and Use of Common Areas.
The Common Areas shall at all times be subject to the exclusive control
and management of Landlord. Landlord shall have the right, from time to time, to
establish, modify and enforce reasonable rules and regulations with respect to
the Common Areas. Tenant agrees to comply with all rules and regulations set
forth on Exhibit "H" hereto attached and all amendments thereto and to cause its
employees, concessionaires and agents to abide thereby provided, however, that
in the event of a conflict between the rules and regulations and the other terms
of this Lease, the terms of this Lease shall control. Tenant and its agents,
business invitees, employees and customers shall have the nonexclusive right, in
common with Landlord and all others to whom Landlord has granted or may
hereafter grant rights, including without limitation, the owners of the
Residential Area, to use the Common Areas and Delivery Facilities subject to
such reasonable rules and regulations as Landlord may from time to time impose
provided, however, that in the event of a conflict between the rules and
regulations imposed from time to time by Landlord and the other terms of this
Lease, the terms of this Lease shall control.
Except as otherwise specifically provided in this Lease to the contrary,
Landlord may at any time close temporarily any portion of the Common Areas to
make repairs or changes, prevent the acquisition of public rights therein or for
other reasonable purposes. Tenant shall not interfere with Landlord's or any
other entitled person's rights to use any part of the Common Areas. Landlord
agrees that any such temporary closings and such rules and regulations shall not
be exercised, enforced or applied so as to unreasonably interfere with Tenant's
permitted use of or access to or from the Premises. Landlord agrees that
Landlord shall exercise commercially reasonable efforts to apply such rules and
regulations in a uniform and non-discriminatory manner among tenants and
occupants of the Project. Notwithstanding anything to the contrary set forth
herein, it is agreed that Tenant shall have access to and from the Premises from
State Street, as well as access to and from the aforesaid Delivery Facilities
depicted on Exhibit "B" attached hereto and the freight elevators to the
Premises, on a 24 hour per day, seven day per week basis throughout the Lease
Term.
Landlord hereby grants to Tenant license during the Lease Term to maintain
and operate restaurant seating areas on the sidewalk spaces adjacent to the
Premises that are depicted (and labeled and identified as the "Outside Seating
Area" or "Exterior Dining") on Exhibit "C" attached hereto (the "Outside Seating
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Area"). The dimensions, design and operation of the Outside Seating Area will
comply in all material respects with all applicable laws, ordinances and
regulations (provided, that Landlord agrees to reasonably cooperate with Tenant
in connection with the application for, and procurement and maintenance of, any
and all permits required with respect to such Outdoor Seating Area under any
such applicable laws, regulations or ordinances). All of the provisions of this
Lease applicable to the Premises shall apply to the Outdoor Seating Area, except
that (i) the Outdoor Seating Area shall not be included in the square footage of
the Premises for purposes of determining Tenant's Proportionate Share hereunder,
and (ii) Tenant's use of the Outdoor Seating Area shall be free of charge.
Landlord shall not be deemed to be in default of this Lease if any applicable
law, ordinance or regulation prohibits Tenant from using the Outside Seating
Area. Tenant agrees to comply with such reasonable rules and regulations as may
be promulgated by Landlord in accordance with this Lease from time to time with
respect to such Outside Seating Area.
ARTICLE VI
COST AND MAINTENANCE OF COMMON AREAS; REAL ESTATE TAXES
-------------------------------------------------------
Section 6.1. Expense of Operating and Maintaining the Common Areas.
Landlord will operate, maintain and repair or cause to be operated,
maintained or repaired, the Common Areas, to a standard equal to other similar
first class mixed use projects in the downtown Chicago area.
"Landlord's Common Area Costs" shall mean all reasonable costs of
operating, maintaining, replacing, reconstructing, managing, and repairing the
Common Areas and all improvements situated thereon in a manner deemed by
Landlord appropriate for the best interests of the Project and the Retail Area
occupants, tenants, invitees and customers. Included among the costs and
expenses which constitute Landlord's Common Area Costs, but not limited thereto,
shall be, at the option of Landlord, all costs and expenses of maintaining,
protecting, operating, repairing, replacing, lighting, heating, cooling,
repairing and maintaining machinery and equipment used in the operation and
maintenance of the Common Areas, including all heating, ventilating and
air-conditioning machinery and equipment, if any, depreciation of machinery and
equipment used exclusively in the Common Area, Delivery Facilities Cost,
cleaning, painting, insuring (including, but not limited to, fire and extended
coverage insurance on the Common Areas and the Project, insurance against
liability for personal injury, death and property damage and workmen's
compensation insurance), expenses of utilities, maintenance of sanitary sewers,
storm sewers, domestic water, storm water, detention and retention basins and
other utilities relating to the Common Areas, striping and restriping the
parking areas, removing of snow, ice and debris, police protection, security and
security patrols, fire protection, inspecting, cost and expense of installing,
maintaining and repairing burglar or fire alarm systems, cost and expense of
on-site personnel (including without limitation, salaries and other wages and
employee benefits) and landscaping, any replacement of all of the foregoing and
a management fee not to exceed FIVE PERCENT (5%) of gross revenues of the Retail
Area and parking areas of the Project payable to Landlord.
Notwithstanding anything contained in this Lease to the contrary, Common Area
Costs shall not include the following:
1. ground rental payments, interest and principal payments on
mortgages, or similar financing;
2. the cost of providing tenant services for specific tenants of the
Project as opposed to services offered to all similarly situated
tenants of the Project on a non-discriminatory basis;
3. leasing commissions and attorneys' fees and costs relating to lease
negotiations or enforcement;
4. expenses for which Landlord is reimbursed from insurance, or if it
failed to obtain insurance, expenses for which Landlord would have
been reimbursed had it maintained the coverages customarily
maintained in the area for similar properties;
5. costs for altering or renovating space for tenants of the Project
other than ordinary and normal maintenance generally provided to all
tenants in the Project;
6. capital costs of improvements, replacements, additions and
alterations of the Common Area, but such costs and expenses, to the
extent the same would result in a savings in Landlord's Common Area
Costs, may be depreciated or amortized according to generally
accepted accounting principles over the applicable useful lives and
such annual depreciation or amortization may be included in the
expenses for Common Area Costs;
7. costs attributable to maintaining areas of the Project which are
accessible exclusively to the condominium residents at the Project,
or any other portion of the Project which is accessible,
exclusively, to any other occupant of the Project;
8. costs of operating any parking garage in the Project;
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9. costs of operating a hotel, if any, located at the Project;
10. costs which are otherwise covered by warranties;
11. costs of maintaining areas of the Project which are not owned by
Landlord; and
12. Expenses for which Landlord is entitled to be reimbursed by other
tenants or occupants of the Project (as an additional charge over
the base rent or operating costs otherwise payable by such tenant or
occupant under the lease with such tenant or occupant).
Landlord's Common Area Costs shall be at rates which are competitive for
the operation of a first class mixed use development of similar size and quality
in the Chicago metropolitan area. Landlord shall be deemed to have complied with
the foregoing so long as it has competitively bid contracts for Landlord's
Common Area Costs; it being understood that Landlord shall choose contractors,
materials and services for Common Area services using reasonable judgment, based
on reasonable price, qualifications, durability and reliability.
There shall be no duplication of any costs or expenses under this Lease
including without limitation, charges for energy or HVAC, insurance, Taxes,
Common Area Costs, administration, or any other charge.
If any facilities, services or utilities for the operation, repair and
maintenance of any building in the Project or for the operation, repair and
maintenance of the Common Areas are provided from or to another building or
other buildings owned or operated by Landlord or the owner of any other portion
of the Project (including, without limitation, the Residential Area), then the
costs, charges and expenses therefor shall, for the purposes of Section 6.2, be
allocated by Landlord between the various parties owning portions of the
Project, or among the buildings in the Project, as the case may be, on a fair
and equitable basis as determined by Landlord.
Section 6.2. Tenant to Pay Share of Expenses.
Tenant agrees to pay to Landlord, as Additional Rent hereunder, Tenant's
Proportionate Share of Landlord's Common Area Costs (as allocated by Landlord).
Landlord shall reduce the amount of Landlord's Common Area Costs by the
contributions received from either: (a) the owners of other parcels within the
Project, or (b) by any Major Occupant, if any, to the extent, in either case,
that the square footage of the Leasable Area of the Retail Area excludes the
square footage of improvements contained on other parcels within the Project
which are: (i) not owned by Landlord, or (ii) occupied by Major Occupants.
Tenant's Proportionate Share of Landlord's Common Area Costs shall be paid
in monthly installments, without offset, deduction or set off of any kind except
as otherwise provided herein, in amounts reasonably estimated from time to time
by Landlord, due on the first day of each month of each calendar year during the
Term. After the end of each calendar year, the total Landlord's Common Area
Costs for such year (and, at the end of the Lease Term, the total Landlord's
Common Area Costs for the period since the end of the immediately preceding
calendar year) shall be determined by Landlord. (Until Tenant's receipt of such
determination, Tenant shall be permitted to continue to pay its monthly
estimated share of Landlord's Common Area Costs based on the last estimate
received from Landlord). On or before the expiration of six (6) months following
the end of each calendar year (or partial calendar year) during the Lease Term,
Tenant shall receive a statement of such actual Landlord's Common Area Costs,
itemized by expense category and reasonably detailed as to the method used to
calculate Tenant's Proportionate Share. If Tenant's Proportionate Share of
Landlord's Common Area Costs exceeds Tenant's payments paid for such period,
Tenant shall upon such determination pay Landlord the deficiency within thirty
(30) days after the Landlord's furnishing to Tenant of a statement of such
deficiency. Tenant's obligation to pay Tenant's Proportionate Share of
Landlord's Common Area Costs shall survive the expiration (or sooner
termination) of the Lease. Upon Landlord's determination of the actual amount of
Tenant's Proportionate Share of Landlord's Common Area Costs for the preceding
year, Landlord may readjust the amount of Tenant's estimated monthly payments
for such costs for the year and if Tenant's monthly payments previously made to
Landlord for the current year are less than the readjusted estimated amount
Tenant shall thereupon pay to Landlord any deficiency in such payments. If
Tenant's payments exceed Tenant's Proportionate Share of Landlord's Common Area
Costs, Tenant shall be entitled to a credit for such excess against payments
next to become due Landlord; or, if at the expiration of the Term, Landlord
shall refund such excess to Tenant within thirty (30) days after determination
of Tenant's actual Proportionate Share for the period in question. This
obligation to refund shall survive the expiration (or sooner termination) of the
Lease.
Notwithstanding the foregoing or anything else to the contrary contained
herein:
(i) Landlord and Tenant agree that Tenant's Proportionate Share of
Landlord's Common Area Costs, excluding snow removal, insurance and
utility costs as provided in subsection (vi) below, for each
calendar year subsequent to the expiration of calendar year 2001
shall not increase by more than five percent (5%) over Tenant's
Proportionate Share of Landlord's Common Area Costs for the
immediately preceding calendar year, prorated for partial calendar
years;
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(ii) During the period commencing with the Commencement Date and expiring
December 31, 1998, the Tenant's Proportionate Share of Landlord's
Common Area Costs (excluding snow removal, insurance and utility
costs) shall not exceed Three and 50/100 Dollars ($3.50) per square
foot per annum of floor area of the Premises;
(iii) During the period commencing with January 1, 1999 and expiring on
December 31, 1999 Tenant's Proportionate Share of Landlord's Common
Area Costs (excluding snow removal, insurance and utility costs)
shall not exceed Three and 675/1000 Dollars ($3.675) per square foot
per annum of floor area of the Premises;
(iv) During the period commencing January 1, 2000 through December 31,
2000 Tenant's Proportionate Share of Landlord's Common Area Costs
(excluding snow removal, insurance and utility costs) shall not
exceed Three and 859/1000 Dollars ($3.859) per square foot per annum
of floor area of the Premises;
(v) During the period commencing January 1, 2001 and expiring December
31, 2001 Tenant's Proportionate Share of Landlord's Common Area
Costs (excluding snow removal, insurance and utility costs) shall
not exceed Five and No/100 Dollars ($5.00) per square foot per annum
of floor area of the Premises;
(vi) During the Lease Term, including Option Periods, excluded from the
aforesaid limitation described at (i) thru (v) above shall be that
portion of Landlord's Common Area Costs which are attributable to
snow removal, insurance and utilities; Tenant hereby agreeing to pay
its Proportionate Share of such snow removal, insurance and utility
costs, calculated without regard to subsections (i) thru (v) above.
Section 6.3. Taxes.
A. Real Estate Taxes. Tenant shall, in all instances, pay Tenant's
Proportionate Share of all real estate taxes, assessments and other governmental
levies and charges, general and special, ordinary and extraordinary, unforeseen
as well as foreseen, of any kind and nature (except as otherwise set forth
herein) imposed, levied, assessed or confirmed by any lawful taxing authorities
which may accrue during the period of the Term of this Lease for the whole or
any part of the Retail Area and the land situated thereunder during the Term of
this Lease (excluding any portion of the Retail Area which is not owned by
Landlord and which is separately assessed, and for which the Taxes are paid for
by the owners or occupants of such area) or any taxes in lieu thereof, and also
all reasonable and customary costs and fees (including attorneys' fees)
reasonably incurred by Landlord in contesting any such taxes, levies, charges or
assessments and/or in negotiating with the public authorities as to the same,
all of which real estate taxes, assessments, levies, charges, costs and fees are
hereinafter collectively referred to as "Taxes." To the extent any taxes within
the Project are not separately assessed, Landlord shall reasonably allocate the
Taxes payable with respect to the Retail Area between the various uses and areas
of the Project, and shall reduce the amount of Taxes by the contributions made
towards same by the owners of other parcels.
Commencing on the Commencement Date and without thereby waiving Tenant's
liability for the entire amount of Tenant's Proportionate Share of Taxes, until
Landlord receives the next notice of assessment or tax bill, Tenant shall pay to
Landlord, monthly, in advance, as Additional Rent, Tenant's Proportionate Share
of Taxes reasonably estimated for the prior calendar year and payable during the
then current calendar year, subject to adjustment, when the amount of such Taxes
shall be determined. Therefore, during the Term of this Lease, Tenant shall pay
to Landlord monthly, in advance, on the first day of each month, as Additional
Rent, an amount equal to one-twelfth (1/12th) of the amount which is reasonably
estimated to be Tenant's Proportionate Share of Taxes. After receipt of the
actual bill for Taxes, Landlord shall determine the actual amount of Tenant's
Proportionate Share of Taxes. If the amount of such monthly payments paid by
Tenant exceeds the actual amount thereafter due from Tenant, the overpayment
shall be credited on Tenant's next succeeding payment; or, if at the expiration
or sooner termination of the Lease Term, Landlord shall refund such excess to
Tenant within thirty (30) days after determination of Tenant's actual
Proportionate Share of Taxes for the period in question. If the amount of such
monthly payments paid by Tenant shall be less than the actual amount due from
Tenant, Tenant shall pay to Landlord the difference between the amount paid by
Tenant and the actual amount due within thirty (30) days after Landlord's
written demand accompanied by copies of tax bills and a reasonably detailed
computation of Tenant's Proportionate Share. In addition, after Landlord's
receipt of the actual bill for Taxes, Landlord may on such basis readjust the
amount of Tenant's estimated monthly tax payments for the current tax fiscal
year and if Tenant's monthly payments previously made to Landlord for such
current tax fiscal year are less than the readjusted estimated amount Tenant
shall thereupon pay to Landlord any deficiency in such payments within thirty
(30) days after Landlord's written demand. Tenant's obligation to pay any
deficiency in its monthly deposits for Taxes shall survive the expiration of the
Term hereof. Landlord shall have the right, if permitted, by law, to make
installment payments of any Taxes levied against the Retail Area, and in such
event, Tenant's Proportionate Share of Taxes shall be computed upon the
installments and interest thereon paid by Landlord in each Lease Year.
Landlord shall contest any or all such Taxes and Landlord shall have the
sole, absolute and unrestricted right to settle any such contest, proceeding or
action upon whatever terms Landlord may, in its sole but reasonable business
judgement, determine. In the event Landlord receives any refund of such
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Taxes (and provided Tenant is not then in default of any of the terms of this
Lease beyond any applicable cure period set forth herein), Landlord shall credit
such portion of such refund as shall be allocated to payments of Tenant's
Proportionate Share of Taxes actually made by Tenant (less reasonable and
customary costs, expenses and attorneys' fees) against the next succeeding
payment of Tenant's Proportionate Share of Taxes due from Tenant or, if received
during the last Lease Year, Landlord will refund the same to Tenant following
the expiration or sooner termination of the Lease or the Lease Term at such time
as it is determined that Tenant's obligations to pay Tenant's Proportionate
Share of Taxes for the last Lease Year has been fulfilled. In the event Landlord
fails to contest Taxes as hereinabove contemplated, Tenant shall have the right
to contest such Taxes provided Tenant shall coordinate such contest with all
other tenants and occupants of the Project having a similar right.
Except as provided in Section 6.3.B. hereof, it is hereby agreed that the
term "Taxes" shall, for purposes of this Lease, specifically not include at any
time (i) any franchise, corporation, income or profit tax that is or may be
imposed upon Landlord, (ii) any inheritance, estate, succession, transfer, gift
or other tax, charge or imposition, by whomsoever levied or assessed, (iii) any
fine, penalty, cost or interest for any tax or assessment which Landlord failed
to pay (except to the extent same may have been imposed by reason of Tenant's
default hereunder).
B. Other Taxes. Any governmental tax or charge (other than income tax)
levied, assessed or imposed on account of the payment by Tenant of, or receipt
by Landlord of, or based in whole or in part upon, the rents in this Lease
reserved or the value thereof shall be paid by Tenant.
Section 6.4. Tenant's Right to Audit.
Tenant shall have the right, at Tenant's sole cost and expense, to audit
Landlord's records of Common Area Costs ("CAM Costs") and Taxes provided that
all the following criteria are met: (a) before conducting any audit, Tenant must
pay the full amount of Tenant's Proportionate Share of Landlord's Common Area
Costs and Taxes due, and must not be in default of any other provisions of this
Lease beyond any applicable cure periods set forth herein; (b) in conducting the
audit, Tenant must utilize an independent certified public accountant ("CPA")
experienced in auditing the records of a multi-use project, which CPA will be
subject to Landlord's reasonable prior approval; (c) the audit shall be
conducted at Landlord's main offices in Chicago, Illinois, or such other site as
Landlord may reasonably determine; (d) upon receipt thereof, Tenant will deliver
to Landlord a copy of the audit report and all accompanying data; (e) Tenant
will keep confidential all agreements involving the right provided in this
section and the results of any audit conducted hereunder, and shall cause the
CPA conducting said audit to keep such information confidential (except that
such information may be disclosed to an entity providing financing to Tenant, a
prospective purchaser of Tenant's interest in the Premises, Tenant's officers,
agents, employees, accountants, attorneys and other professionals, or in
connection with any litigation or arbitration proceedings between the parties,
or as may be required by any competent judicial or other legally constituted
authority); and (f) Tenant shall not conduct an audit more often than once each
calendar year. In the event Landlord has misstated the actual amount of Tenant's
Proportionate Share (as opposed to Tenant's estimated share) of Landlord's
Common Area Costs or Taxes for a Lease Year by five percent (5%) or more,
Landlord shall pay the reasonable actual out-of-pocket costs and expenses
incurred by Tenant in connection with said audit.
In the event that a dispute exists between Tenant and Landlord with
respect to the actual amount of Tenant's Proportionate Share of Landlord's
Common Area Costs or Taxes for a Lease Year, and if Landlord and Tenant are
unable to resolve any such dispute by mutual agreement, then, unless otherwise
mutually agreed by Landlord and Tenant, any such dispute shall be resolved by
binding arbitration in the jurisdiction in which the Premises are located in
accordance with the then Commercial Rules of the American Arbitration
Association, and the respective costs of such arbitration incurred by each party
with respect to such arbitration shall be borne by each such party in equal
shares, provided each party shall be responsible to pay its own legal fees and
costs for such arbitration. Notwithstanding the existence of any such audit or
any dispute by Tenant with respect to the amount of Tenant's Proportionate Share
of Landlord's Common Area Costs or Taxes, however, Tenant shall continue to
timely pay the amount of any and all payments required to be made by Tenant
hereunder with respect to Tenant's Proportionate Share of Landlord's Common Area
Costs or Taxes as and when required under this Lease, provided that the payment
of such disputed amount and other amounts shall be without prejudice to Tenant's
position.
Landlord agrees to maintain the records pertaining to Landlord's Common
Area Costs and Taxes for a period of 36 months after the end of the Lease Year
to which they relate.
ARTICLE VII
UTILITIES AND SERVICES
----------------------
Section 7.1. Utilities.
At all times throughout the Lease Term, Landlord will install and maintain
or will cause to be installed and maintained systems which provide chilled and
hot water to service Tenant's heating, ventilating and air conditioning system.
Landlord shall pay all utility hookup or connection charges with respect to the
aforesaid utilities; however, Tenant shall thereafter pay, no later than thirty
(30) days after being billed for same, all charges during the term of this Lease
for utility services used on the Premises,
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including, specifically and not limited to the amounts described on Exhibits D
and F for the chilled and hot water, provided, that Tenant shall not be
obligated to pay for any such services an amount greater than the amount that
Tenant would be charged if Tenant had contracted for such services directly with
a public or private utility provider other than Landlord.
Except as contemplated in Exhibit F hereto, Tenant will not install any
equipment which can exceed the capacity of any utility facilities and if any
equipment installed by Tenant requires additional utility facilities, the same
shall be installed at Tenant's expense in compliance with all governmental and
utility company requirements and plans and specifications which must first be
approved in writing by Landlord which approval shall not be unreasonably
withheld. Tenant shall be solely responsible for and promptly pay all charges
for use or consumption of sewer, gas, electricity, water, scavenger and all
other utility services (the "Utilities") with respect to the Premises. Landlord
shall have the right, but not the obligation, to furnish, and in such event
Tenant shall purchase from Landlord, any such utility services as Landlord
desires. If Landlord elects to supply or contract with any other party to supply
any such utility services, Tenant shall purchase and pay for the same as
Additional Rent at a rate determined and published by Landlord from time to
time, provided, however, that said rate shall be reasonably competitive with
rates which Tenant would be charged by the utility company which would otherwise
furnish such service to the Premises. In the event Landlord elects to cease
providing any utility previously provided through a central system operated by
Landlord, Landlord shall deliver reasonable advance prior notice of such
cessation, to the end that Tenant shall have a reasonable opportunity to connect
(or convert as the case may be) to an alternate utility service. Landlord agrees
to cooperate with Tenant with such connection and/or conversion.
Landlord and Tenant acknowledge that at the time of delivery of possession
of the Premises to Tenant, the only Landlord provided central utility system
shall be the chilled water/hot water service described on Exhibit F hereof
provided for purposes of heating, ventilating and air conditioning the Premises.
Water, electric, telephone cable, sewer and natural gas shall be available to
the Premises (with connections to main lines to be provided by Tenant) and shall
be separately metered to and controlled by Tenant and shall be billed directly
to Tenant by the applicable public utility.
Section 7.2. Landlord's Liabilities for Interruption.
Landlord shall not be liable in any way to Tenant or to any other party
occupying any part of the Premises for any failure or defect of any utility
service furnished to the Premises (whether furnished by Landlord or others) by
reason of any act or omission of the public utility company or other service
supplying the Retail Area with electricity, gas, water or other utility service
or because of necessary repair or improvements; provided, however, that Landlord
agrees to reasonably endeavor to avoid any interruptions in said utility
services, by virtue of repairs or improvements to the Project or otherwise. If
Tenant is substantially precluded from conducting its business within the
Premises for more than forty eight (48) consecutive hours as a result of a
failure or defect of any utility service caused by Landlord, and closes as a
result thereof, then Base Rent and all Additional Rent and other charges
provided for herein shall thereafter abate until such time as the failure has
been remedied. If any Landlord provided utility service to the Premises is
interrupted for reasons other than damage, destruction or causes beyond the
reasonable control of Landlord (including, without limitation, offsite
interruption) and, as a result thereof, Tenant is precluded from operating its
business in the Premises, and closes as a result thereof, and such utility
service is not restored within ninety (90) days, then Tenant may, at the
expiration of such 90 day period, elect to terminate this Lease by providing
Landlord ten (10) days' prior written notice, and the Lease shall terminate as
of the tenth (10th) day after Landlord's receipt of such notice, unless during
such 10 day period such service is restored.
ARTICLE VIII
CONDUCT OF BUSINESS BY TENANT
-----------------------------
Section 8.1. Prompt Occupancy and Use.
A. Subject to the provisions of Section 8.2 hereof, Tenant covenants and
agrees that, continuously and uninterruptedly from and after its initial
opening for business, it will operate and conduct within the Premises the
business it is permitted to operate and conduct under the provisions of this
Lease, except while the Premises are untenantable by reason of fire or other
casualty, condemnation, or causes beyond the reasonable control of Tenant and
except as is otherwise provided herein. Tenant agrees to conduct its business at
all times in a first class manner consistent with reputable business standards,
and that it will at all times keep and maintain within and upon the Premises an
adequate stock of merchandise and trade fixtures to service and supply the usual
and ordinary demands and requirements of its customers and that it will keep the
Premises in a neat, clean and orderly condition. Tenant also agrees to conduct
Tenant's business under one of the trade names as stated in Section L of the
Basic Lease Provisions and for the uses stated in Section L of the Basic Lease
Provisions; provided that said tradename may be changed in connection with a
change of the concept of Tenant's business upon the Premises, as same may be
permitted hereunder.
Tenant shall have the right to close the Premises temporarily (hereinafter
defined) for the following purposes: (i) remodeling the interior of the
Premises, provided, however, that such remodeling is consistent with the
provisions of this Lease and its Exhibits, the permitted closing for such
remodeling shall not
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exceed one hundred twenty (120) days and Tenant commences such remodeling work
on or before the ninetieth (90th) day after its initial closing for remodeling;
(ii) special events, such as weddings or other private parties, provided the
permitted closing for such special event does not exceed twenty four (24) hours.
Tenant agrees to deliver written notice to Landlord of such temporary closing,
and the reason therefor, no later than five (5) days prior to the first date of
such temporary closing.
B. The parties agree that Tenant's obligations under this Article go to
the essence of the parties' agreement hereunder and the parties covenant and
agree that it will be extremely difficult if not impossible to determine
Landlord's damages by way of loss of the anticipated Percentage Rental from
Tenant, or other tenants or occupants in the Retail Area, should Tenant fail to
continuously keep open the Premises and operate a business conducted thereon as
provided in this Article, and that Landlord's remedies at law for such failure
will not be adequate. Accordingly, and as a fair and reasonable estimate and
liquidation of Landlord's damages and not as a penalty if Tenant fails to
perform its obligations under this Article, and in addition to Tenant's
continued payment of Base Rent and Additional Rent, Tenant shall pay Landlord,
upon demand by Landlord, as Additional Rent an amount equal to twenty five
percent (25%) of the Base Rent then in effect prorated on a per diem basis for
the period that Tenant has failed to operate and conduct its business as
required under this Article. Acceptance by Landlord of such liquidated damages
shall not be deemed permission for Tenant to continue such violation, and shall
not preclude Landlord from seeking any other remedy (other than money damages)
for such violation including, without limitation, specific performance or
termination of this Lease or Tenant's right to possession as described in
Article XVIII, which Landlord may pursue at any time while such violation
continues.
Section 8.2. Business Hours.
Commencing with the Commencement Date, Tenant agrees to keep open the
Premises and to operate the business conducted therein five days (during lunch
hours) and five (5) nights per week (i.e., Tuesday through Saturday) and such
additional hours as Tenant desires. Landlord hereby agrees that Tenant shall be
permitted to close on the following holidays: Christmas Day, New Years Day and
Thanksgiving Day.
Section 8.3. Operation by Tenant.
Tenant covenants and agrees that it will: not place or maintain any
merchandise, vending machines or other articles in any vestibule or entry of the
Premises or outside the Premises; store garbage, trash, rubbish and other refuse
in rat-proof and insect-proof containers inside the Premises, and remove the
same frequently and regularly and, if directed by Landlord, by such means and
methods and at such times and intervals, and to such locations, as are
reasonably designated by Landlord, all at Tenant's cost; not use any advertising
medium that might constitute a nuisance, such as loudspeakers, sound amplifiers,
phonographs or radios, or television broadcasts in a manner which can be heard
outside of the Premises of the Tenant; keep all mechanical equipment free of
vibration and noise and in good working order and condition; not commit or
permit waste or a nuisance upon the Premises; not permit or cause unpleasant
odors to emanate or be dispelled from the Premises; not solicit business in the
Common Areas; comply in all material respects with all laws, recommendations,
ordinances, rules and regulations of governmental, public, private and other
authorities and agencies applicable to Tenant's business upon the Premises,
including specifically, but not by way of limitation, those which relate to
environment, insurance rates and/or the Williams-Steiger Occupational Safety and
Health Act, but as to structural alterations, the provisions of Sections 9.1 and
9.2 hereof shall control; light the show windows of the Premises (if any) and
all signs each night of the year and keep same lit for not less than one (1)
hour after the Premises is permitted to be closed; not permit any noxious, toxic
or corrosive fuel or gas, dust or dirt on the Premises; not place a load on any
floor in the Retail Area which exceeds the floor load per square foot which such
floor was designed to carry.
Section 8.4. Labor Relations.
During any period that the Premises is under construction or is being
remodeled, Tenant agrees to use its good faith efforts to conduct its labor
relations and its relations with its employees and agents in such a manner as to
avoid all strikes, picketing and boycotts of, on or about the Premises, the
Common Areas and the Project.
Section 8.5. Other Operations.
If during the Term Tenant directly or indirectly operates, manages or has
any interest whatsoever in any other store or business operated under the same
trade name as the Premises for a purpose or business similar to or in
competition with all or any part of the business permitted under Section I of
the Basic Lease Provisions within the radius set forth in Section U of the Basic
Lease Provisions, it will injure Landlord's ability and right to receive
Percentage Rent (such ability and right being a major consideration for this
Lease). Accordingly, if Tenant operates, manages or has such interest in any
store or business within such radius, one hundred percent (100%) of all Gross
Sales made from any such other store or business shall be included in the
computation of Gross Sales for the purpose of determining Percentage Rent under
this Lease as though said Gross Sales had actually been made at, in or from the
Premises. Landlord shall have all rights of inspection of books and records with
respect to such store or business as it has with respect to the Premises.
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The inclusion of one hundred percent (100%) of all sales made from any
such other store or business in the computation of Gross Sales for the purpose
of determining Percentage Rent under this Lease is intended as a reasonable
estimate and liquidation of Landlord's damages because of Tenant's breach of the
above stated radius restriction and as a settlement of the actual damages that
might arise because of such breach. The parties agree that these damages are
reasonable, bear significant relation to the actual damages that Landlord might
sustain, which damages Tenant and Landlord agree would be uncertain and
difficult to prove, and is not a penalty for Tenant's breach. The inclusion of
the sales made from such other store in the computation of Gross Sales for the
purpose of determining Percentage Rent under this Lease shall not be deemed
permission for Tenant to continue to breach the radius restriction set forth
above, and shall not preclude Landlord from seeking any other remedy (other than
money damages) for such violation including, without limitation, specific
performance or termination of this Lease or Tenant's right to possession as
described in Article XVIII, which Landlord may pursue at any time while the
breach of the radius restriction continues.
For purposes of this Section 8.5, the term Tenant shall include Tenant,
the Guarantor, that being The New York Restaurant Group, L.L.C., and all of
their respective successors and assigns. The obligations of the Guarantor are
contained in the Lease Guarantee, a copy of which is attached hereto as Exhibit
L.
Section 8.6. Sales and Dignified Use.
No public or private auction or any fire, "going out of business,"
bankruptcy, sidewalk or similar sales or auctions shall be conducted in or from
the Premises and the Premises shall not be used except in a dignified manner
consistent with the general high standards of merchandising in the Retail Area
and not in a disreputable manner or in violation of any national, state or local
law.
ARTICLE IX
MAINTENANCE OF LEASED PREMISES
------------------------------
Section 9.1. Maintenance by Landlord.
Except as is provided in the next sentence, Landlord shall keep or cause
to be kept the central utility systems (to the point of connection to the
Premises), the foundations, roof, structural portions of the walls of the
Premises (and those other portions of the Project owned by Landlord) in good
order, repair and condition in a manner comparable to other first class mixed
use projects of a similar nature in the Chicago metropolitan area, except for
damage thereto due to the act or omissions of Tenant, its employees, agents or
contractors, including (but not limited to) doing such things as are necessary
to cause all such portions of the Project OWNED BY LANDLORD to comply in all
material respects with applicable laws, ordinances, rules, regulations and
orders of governmental and public bodies and agencies (such as, but not limited
to, the Williams-Steiger Occupational Safety and Health Act). Tenant shall be
responsible for repair, maintenance and replacement (structural or otherwise) of
the Structure (as that term is defined in Article III, Section 3.2). Landlord
shall commence required repairs as soon as reasonably practicable after
receiving written notice from Tenant thereof, and prosecute the same to
completion with due diligence. This paragraph shall not apply in case of damage
or destruction by fire or other casualty or condemnation or eminent domain, in
which event the obligations of Landlord and Tenant shall be controlled by
Articles XVI and XVII. Except as provided in this Section 9.1, and Articles XVI
and XVII and except to the extent damaged by the act or omission of Landlord or
Landlord's employees, agents, or contractors, Landlord shall not be obligated to
make repairs, replacements or improvements of any kind upon the Premises, or to
any equipment, merchandise, stock in trade, facilities or fixtures therein, all
of which shall be Tenant's responsibility, but Tenant shall give Landlord prompt
written notice of any accident, casualty, damage or other similar occurrence in
or to the Premises or the Common Areas of which Tenant has knowledge. If
Landlord shall default in its obligations under this Section 9.1 (which shall in
no event be deemed to have occurred until after the notice, and the applicable
cure periods in Section 19.1 hereof shall have passed without compliance by
Landlord, except that no such notice shall be required in the event of an
emergency situation), and provided that such default shall have a material and
adverse effect on the operation of Tenant's business from the Premises, Tenant
shall then have the right (but not the obligation), to perform such act or acts
and the reasonable amount of the cost and expense so incurred shall be due and
owing by Landlord to Tenant within thirty (30) days after notice from Tenant
together with evidence of payment therefor. Sums not reimbursed to Tenant within
the aforesaid thirty (30) day period shall bear interest at the annual rate
specified in Section 4.3 hereof incurred from the expiration of the thirty (30)
day period described herein.
Section 9.2. Maintenance by Tenant.
Except as otherwise expressly set forth under the provisions of Section
9.1, Tenant shall at all times keep the Premises (including all entrances and
vestibules) and all partitions, windows and window frames and moldings, signs,
glass, doors, door openers, fixtures, equipment and appurtenances thereof
(including lighting, heating, electrical, plumbing, ventilating and air
conditioning fixtures and systems and other mechanical equipment and
appurtenances) and all parts of the Premises not required herein to be
maintained by Landlord, in good order, condition and repair, and clean, orderly,
sanitary and safe, normal wear and tear and damage or destruction by fire or
other casualty or condemnation or eminent domain excepted, and except for damage
thereto due to the act or omissions of Landlord, its employees, agents or
contractors (including, but not limited to, doing such things as are necessary
to cause the Premises to
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comply in all material respects with applicable laws, ordinances, rules,
regulations and orders of governmental and public bodies and agencies, such as,
but not limited to, the Williams-Steiger Occupational Safety and Health Act)
subject to the limitations set forth in the next sentence. Notwithstanding
anything contained herein to the contrary, Tenant shall not be required to make
any structural alterations to those portions of the Premises which Landlord is
required to maintain pursuant to Section 9.1 hereof, unless arising from
Tenant's Work, subsequent alterations performed by Tenant, or Tenant's specific
use of the Premises. Tenant shall also be responsible, at Tenant's expense, for
the repair, maintenance and replacement of the Structure (as that term is
defined in Section 3.2).
During the term of this Lease, Tenant agrees to employ a suitable
contractor to perform Tenant's obligations for maintenance of the heating,
cooling and ventilating units on the Premises and a suitable contractor to
perform Tenant's obligations for maintenance of all fire protection systems
within the Premises. Such maintenance shall include at least semi-annual
inspections and cleaning of said units and systems, together with such
adjustments and servicing as each such inspection discloses to be required and,
in addition, all repairs, testing and servicing as shall be necessary or
reasonably required by Landlord or Landlord's insurance underwriter. A suitable
contractor shall be one who is reliable and capable of performing Tenant's
obligations hereunder and approved by Landlord, which approval shall not be
unreasonably withheld.
If replacement of equipment, fixtures and appurtenances thereto are
necessary, Tenant shall replace the same with equipment, fixtures and
appurtenances of the same quality, and repair all damage done in or by such
replacement.
In the event the HVAC system or any structural component of the Structure
is required to be replaced by Tenant during the last two years of the Lease Term
(as such term may be extended pursuant to Option 1 and Option 2), Landlord
agrees that it will, upon the termination of the Lease, reimburse Tenant for the
unamortized capital expenses incurred by Tenant in connection with such
installation or replacement. Such capital expenditures shall be amortized over
the useful life of such capital expenditure in accordance with generally
accepted accounting principles. In order for Tenant to avail itself of the
benefits of such reimbursement, it is agreed that Tenant shall, prior to
incurring any such capital expenditures, provide Landlord with notice of and an
opportunity to approve such proposed capital expenditure. Landlord agrees that
it will not unreasonably withhold or delay such approval.
The interior of the Premises shall be painted or otherwise refurbished
(including, but not limited to, signs, floor and wall coverings) by Tenant as
and when reasonably necessary to keep the Premises in first class condition,
consistent with other restaurants in the Retail Area.
If Tenant fails to perform its obligations hereunder, Landlord, following
the notice and opportunity to cure provided for in Article XVIII hereof and
Tenant's failure to cure during such period, may, but shall not be obligated to,
perform work resulting from Tenant's acts or omissions and add the cost of the
same (which shall be deemed to be Additional Rent) to the next installment of
Base Rent due hereunder; provided however, no notice shall be required in the
event of an emergency situation.
Section 9.3. Surrender of Premises.
Upon the termination of this Lease or any renewal term thereof, Tenant
shall surrender the Premises in a broom-clean condition, free of debris and in
the same condition (subject to the removals hereinafter required) as the
Premises were on the date the Tenant opened the Premises for business to the
public, approved (or otherwise permitted) alterations and reasonable wear and
tear and damage by casualty excepted, and shall surrender all keys for the
Premises to Landlord at the place then fixed for the payment of rent and shall
inform Landlord of all combinations on locks, safes and vaults, if any, in the
Premises. Tenant, prior to the last day of such Term, shall remove all its trade
fixtures, trade equipment, and all other personal property of Tenant not in the
nature of a leasehold improvement, before surrendering the Premises as aforesaid
and shall repair any damage to the Premises caused by such removal. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of the Lease Term.
ARTICLE X
ALTERATIONS; LIENS; SIGNS
-------------------------
Section 10.1. Alterations.
Other than in connection with Tenant's Work, Tenant shall not make any
structural alterations in any portion of the Premises, nor make any alterations
in the storefront or the exterior of the Premises, without Landlord's prior
written consent, which consent may be withheld by Landlord in its sole
discretion. Tenant shall not make any interior alterations affecting the common
utility or common mechanical systems of the Project (including, without
limitation electrical, plumbing or heating, ventilating and air conditioning
systems), without first obtaining the written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, Landlord agrees that Tenant may make interior, non-structural
alterations which do not affect the common utility or mechanical systems of the
Project without Landlord's consent, provided that all such alterations comply
with applicable codes and provided Tenant gives Landlord prior written notice of
said proposed alterations. All alterations, additions and improvements provided
for herein shall become, upon completion, the property of Landlord subject to
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the terms of this Lease. At the expiration of the Lease or earlier termination
of this Lease, unless non-removal by Tenant was agreed to by Landlord in
connection with the Landlord's initial approval, Tenant shall promptly remove
all alterations, additions and improvements and any other property placed in the
Premises by Tenant and Tenant shall repair any damage caused by such removal.
Tenant shall not be required to remove any alterations, additions and
improvements unless, within thirty days prior to the expiration of the Term,
Landlord advises Tenant that it desires for Tenant to remove such alterations,
additions or improvements and Tenant shall not in any event be required to
remove any structural improvements.
Section 10.2. Tenant Shall Discharge All Liens.
Tenant shall not suffer liens of any kind to be placed upon the Premises
or the Project. Subject to Tenant's right to contest any lien, as provided in
the next paragraph, if any lien is placed upon the Premises or the Project as a
result of any work done, or materials furnished, on behalf of Tenant, or as a
result of any goods or services sold or rendered to Tenant, then Tenant shall,
within ten (10) days of Tenant's receipt of actual notice of the imposition of
the lien, cause said lien to be released of record, at Tenant's sole expense.
Tenant shall indemnify, defend and forever save harmless Landlord, its
agents and employees from and against any and all liabilities, liens, claims,
demands, damages, reasonable expenses, reasonable attorneys' fees, reasonable
costs, suits, proceedings, actions and causes of action of any and every kind
and nature arising or growing out of, or in any way connected with, lien claims
for any work done for, or materials or services furnished to, or on behalf of,
Tenant, whether in the Premises or with respect to the Project (provided,
however, that the foregoing indemnity and agreement by Tenant shall not extend
to any lien claims resulting from Landlord's failure to pay any amounts due and
payable by Landlord pursuant hereto). In case Landlord shall be made a party to
any litigation commenced against Tenant regarding the matters described in the
immediately preceding sentence, then Tenant shall protect and forever hold
Landlord, its agents and employees harmless and shall pay all reasonable costs,
expenses and attorneys fees incurred or paid by Landlord in connection with such
litigation. Notwithstanding the foregoing, Tenant shall have the right to
contest any mechanic's or materialman's lien as to which a valid dispute exists
provided prompt notice of such intent to contest is given to Landlord and
security which is satisfactory to Landlord, in its sole discretion (which for
purposes of this Section 10.2 may be a bond in the amount of 150% of the amount
of the lien), is deposited with Landlord within ten (10) days after written
demand therefor and provided in no event shall Landlord be required to permit
Tenant to contest such mechanic's/materialman's lien if the same would: (a)
cause Landlord to be in default of any mortgage or other financing instrument
encumbering the Retail Area; (b) jeopardize any pending sale or refinancing of
all or any portion of the Retail Area; or (c) jeopardize Landlord's title to the
Retail Area. Tenant shall, upon reasonable notice and request in writing from
Landlord, also defend Landlord, at Tenant's sole cost and expense, in any
action, suit, or proceeding which may be brought on or for the enforcement of
any mechanic's/materialman's lien which is contested pursuant to this Section
10.2, and shall pay any damages and satisfy and discharge any judgements entered
in such action, suit, or proceeding and shall save harmless Landlord from any
liability, claim, or damages resulting therefrom (provided, however, that the
foregoing indemnity and agreement by Tenant shall not extend to any lien claims
resulting from Landlord's failure to pay any amounts due and payable by Landlord
pursuant hereto). In the event of a default by Tenant in procuring the discharge
of any such mechanic's/materialman's lien or providing adequate security or bond
while any such lien is contested, as provided above, Landlord may, after the
expiration of the aforesaid ten (10) day notice and demand period, without
further notice, procure the discharge thereof by bonding or payment or
otherwise, and all costs and expenses which Landlord may reasonably incur in
obtaining such discharge shall be paid by Tenant as Additional Rent within ten
(10) days of any demand therefor.
Section 10.3. Signs, Awnings and Canopies.
Tenant will not, without Landlord's prior written consent (WHICH CONSENT
SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED) place or permit on any exterior
door or window or any wall of the Premises visible from the exterior of the
Premises or otherwise, any sign, awning, canopy, advertising matter, decoration,
lettering or other thing of any kind which does not comply with the Tenant's
Sign Criteria, as set forth at Exhibit C hereof. In the event Tenant installs
any signage in violation of either the provisions of this Section 10.3 or the
Tenant's Sign Criteria, the Landlord shall have the right to remove the same
after the giving of five (5) days' prior written notice to Tenant.
Notwithstanding the foregoing, any signage not visible from the exterior of the
Premises shall not be subject to Landlord's approval or the Tenant Sign
Criteria.
It is agreed that to the extent that Landlord shall erect and maintain in
place at any time during the Term of this Lease a monument or pylon sign or
signs at the Project, which sign or signs contain identification of more than
one tenant or occupant of the Project, then at least one of said monument or
pylon signs (to be mutually and reasonable agreed upon by Landlord and Tenant)
shall contain sufficient space on its supporting structure for one sign panel
for Tenant (which sign panel shall be double-faced if sign panels for other
tenants or occupants of the Project set forth on such pylon or monument sign are
double-faced) and which sign panel identifying Tenant shall (a) be at a position
and of a size which is equal, on a pro-rata basis, or to better than that of
sign panels maintained thereon for other tenants or occupants of the Project who
occupy an amount of space similar to that of Tenant, and (b) be of such design,
content
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and other sign specifications as are reasonably selected by Tenant; provided
further, that if the Landlord's sign currently situated on the State Street side
of the Project remains a multi-tenant sign, then that sign shall be the sign
upon which Tenant shall be entitled to maintain the aforesaid sign panel
identifying Tenant. Throughout the Term of this Lease, Landlord shall be
responsible, at Landlord's expense, for (i) obtaining and maintaining all
necessary permits and approvals required, both under applicable governmental
requirements and otherwise, with respect to the erection and maintenance of said
monument or pylon sign, (ii) keeping and maintaining said pylon or monument sign
in good condition and repair, (iii) keeping all lighting and other equipment in
connection with said monument or pylon sign in good working order and condition,
and (iv) keeping said monument or pylon sign illuminated each day from at least
30 minutes before dusk until at least 30 minutes after the close of Tenant's
business upon the Premises.
ARTICLE XI
INSURANCE
---------
Section 11.1. By Landlord.
Landlord as part of Landlord's Common Area Costs shall carry public
liability insurance (with contractual liability endorsements), and naming the
tenants of the Project as additional insureds, on the Common Areas providing
coverage for each such area of not less than $2,000,000.00 against liability for
bodily injury including death and personal injury for any one occurrence and
$1,000,000.00 property damage insurance, or a combined single limit insurance in
the amount of $2,000,000.00. If it becomes customary, as reasonably determined
by Landlord, during the Term of this Lease for buildings and projects of
comparable size and nature as the building in which the Premises is located to
carry and maintain insurance policies with higher limits or different coverages
than is required of Landlord under the provisions hereof, then, Landlord will
provide Tenant with evidence of Landlord's acquisition of insurance policies and
coverage whose limits or coverage are not less than the then customary limits
and type. The comprehensive general public liability policy shall in no way
limit or diminish Landlord's liability under Section 11.6 hereof.
Landlord, as part of Landlord's Common Area Costs, shall also carry "all
risk" insurance, including fire and extended coverage, vandalism, malicious
mischief and such other endorsements and/or coverages considered reasonable and
customary for similar properties in the downtown Chicago area, insuring all
improvements owned by Landlord in the Project including the Common Areas and the
Premises, and all leasehold improvements constructed or installed by Landlord
(excluding Tenant's merchandise, trade fixtures, furnishings, equipment,
personal property and excluding plate glass) for the full insurable value
thereof, with such deductibles as Landlord deems reasonably advisable.
Landlord agrees that, within twenty (20) days following request of Tenant
therefor, Landlord will provide Tenant with evidence of the existence of the
insurance described in this Section 11.1. Landlord's insurance will include
contractual liability coverage recognizing this Lease and shall provide that
Landlord and Tenant shall be given a minimum of thirty (30) days' written notice
by the insurance company prior to cancellation, termination or change in such
insurance.
Section 11.2. By Tenant.
Tenant agrees to carry public liability insurance on the Premises during
the Term hereof, covering the Tenant and naming the Landlord, Landlord's
mortgagee, Landlord's agents and beneficiaries and such other parties as may be
reasonably requested by Landlord as additional named insureds with terms and
companies reasonably satisfactory to Landlord for limits of not less than
$2,000,000 for bodily injury, including death, and personal injury for any one
occurrence, $1,000,000 property damage insurance or combined single limit of
$2,000,000. Tenant's insurance will include contractual liability coverage
recognizing this Lease, products and/or completed operations liability,
sprinkler damage insurance and shall provide that Landlord and Tenant shall be
given a minimum of thirty (30) days' written notice by the insurance company
prior to cancellation, termination or change in such insurance. Tenant also
agrees to carry insurance against fire and such other risks as are from time to
time included in standard fire and extended coverage insurance for the full
insurable value, covering Tenant's leasehold improvements constructed or
installed by Tenant, all of Tenant's merchandise, trade fixtures, furnishings,
wall coverings, plate glass, floor coverings, carpeting, drapes and window
coverings, equipment and all items of personal property of Tenant located on or
within the Premises. At the Commencement Date, Tenant shall provide Landlord
with copies of the policies or certificates evidencing that such insurance is in
full force and effect and stating the terms thereof. The minimum limits of the
comprehensive general liability policy of insurance shall in no way limit or
diminish Tenant's liability under Section 11.6 hereof and Tenant's insurance
obligation shall be subject to additional and/or different types of insurance at
any time, and from time to time, during the Term hereof if Landlord, in the
exercise of its reasonable judgment, shall deem same necessary for adequate
protection hereunder. Within twenty (20) days after Tenant's receipt of written
demand therefor by Landlord, Tenant shall furnish Landlord with evidence that
such demand has been complied with and further provided that such additional
and/or different types of insurance shall be reasonable and customary for
restaurant uses in mixed use developments in the geographic area in which the
Project is located. Tenant shall have the right to maintain any coverage
required pursuant to this Section 11.2 under any of its blanket insurance
policies, so long as such blanket policies provide for the coverages, in the
amounts, required herein, and so long as such policies list the Premises
specifically.
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Section 11.2.A. Liquor Liability Insurance.
If alcoholic beverages are sold, used, delivered or stored on or from the
Premises, Tenant shall further maintain throughout the term of this lease (in
addition to the insurance to be provided elsewhere herein), at its expense,
insurance covering any claims arising under applicable law relating to the
manufacture, storage, sale, use or giving away of any fermented, alcoholic or
other intoxicating liquor or beverage, which claims could be asserted against
Landlord, Tenant or the Premises. Such insurance shall be in an amount of no
less than $2,000,000.00 but in no event shall such coverage be less than that
customarily carried by prudent operators of similar establishments in the area
of the Premises or as required by law. Anything in this Lease to the contrary
notwithstanding, at any and all times that such policy or policies, duly
approved by Landlord, (which approval shall not be unreasonably withheld,
conditioned or delayed), are not in full force and effect, and without regard to
the cause thereof, Tenant shall not make or permit any sale of, or give away,
any alcoholic liquor on the Premises, and any such sale or gift at any such time
or times of non-coverage shall constitute a default under this lease entitling
Landlord to exercise all of the remedies in ARTICLE XVIII hereof and to recover
from Tenant as damages, all sums of money which Landlord, and its employees,
agents and servants or any of them may become legally liable to pay to any
person or persons for bodily injury, fatal or non-fatal, for injury to means of
support, or for injury to property as a result of such non-coverage. The term
"sale" and "alcoholic liquor" as used in this Article have the same meaning as
defined in Section 2 of Article I of the Illinois Liquor Control Law approved
January 31, 1934 as amended or as said statute may be hereafter amended.
Notwithstanding anything to the contrary contained or inferred within or from
this lease, Tenant shall not serve or sell alcoholic liquor in the Premises and
shall not permit any alcoholic beverage to be brought into the Premises until
the above described insurance has been issued and a certificate thereof
delivered to Landlord. Such prohibition shall not toll the start of the time
rent becomes due or diminish the amount of rent payable. Should such insurance
expire or be canceled then alcoholic liquors shall again be prohibited from
service by Tenant and all such sales or service of alcoholic liquors shall
immediately cease and all alcoholic beverages shall be removed from the Premises
and sale shall not resume until the approval of Landlord has been obtained on a
new policy of insurance to replace that no longer in effect.
It is understood by Tenant that under present practice of insurance
companies issuing dram shop insurance, coverage may be denied by the insurer if
the Tenant assigns or licenses to others the ownership or operation of the
restaurant or the alcoholic beverage serving facilities. It is further
understood by Tenant that the action of Tenant in making such assignment,
transfer or sale of the facility or its operations or alcoholic beverage serving
business in all or part of the Premises or the doing of any equivalent act or
other act which would serve to cause the termination or cancellation of the dram
shop insurance protecting Landlord shall never be done secretly or without
advance written approval of Landlord and that such act shall never be done or
become effective until substitute insurance of like kind has been obtained to
cover such new, assigned, altered, or transferred operation of the restaurant or
alcoholic beverage sale business except where Tenant has voluntarily previously
ceased the sale of alcohol in the Premises as part of the normal course of
operating its business in the Premises. This clause shall in no way be
interpreted as a waiver by Landlord of the provisions of ARTICLE XI of this
lease.
If Tenant breaches the provisions of this paragraph, Landlord may take the
following actions in addition to any or all other remedies it may have under
this lease or at law or in equity: (i) obtain an injunction or restraining order
directed against Tenant, its officers, agents, employees, and all other persons
confederating with any of them or in possession under any agreement with any of
them restraining or enjoining Tenant or any of the aforesaid persons or entities
from having on the Premises any alcoholic beverages or serving or selling the
same or permitting the use thereof by patrons until dram shop insurance of like
kind is provided by Tenant; (ii) demand the removal of all alcoholic beverages
from the Premises, and the cessation of all sale or service of alcoholic
beverages as an aid to the effective enforcement of such demand until such
insurance coverage is obtained and approved by Landlord; and/or (iii) maintain
an action at law for damages and, if justified by the facts, for damages
intentionally or maliciously inflicted if Tenant evades or breaches the above
prohibition of assignment, transfer, sale or any proposed transfer of interest
which leads to the cancellation of dram shop insurance coverage protecting
Landlord or which has the effect of invalidating or which could invalidate dram
shop coverage.
Section 11.3. Mutual Waiver of Subrogation Rights.
Whenever any loss, cost, damage or expense resulting from fire, explosion
or any other casualty or occurrence (including negligence) is incurred by either
of the parties to this Lease in connection with the Premises or the Project, and
such loss, cost, damage or expense is covered by the insurance required to be
carried pursuant to this Lease (or which would have been covered had the party
claiming the loss obtained the insurance required to be carried hereunder), then
the party so damaged hereby releases the other party from any liability it may
have on account of such loss, cost, damage or expense and waives any right of
subrogation on behalf of itself and its insurance carrier which might otherwise
exist in or accrue to that party on account thereof. Landlord and Tenant shall,
each deliver to the other party hereto, at or before the Commencement Date
hereunder (and, thereafter, from time to time upon receipt of reasonably request
therefor) a waiver of subrogation in the form and content as reasonably required
by the requesting party's insurance carrier.
Section 11.4. Intentionally Omitted.
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Section 11.5. Increase in Fire Insurance Premium.
Tenant agrees that it will not keep, use, sell or offer for sale in or
upon the Premises any article which may be prohibited by the standard form of
fire insurance policy ordinarily maintained for restaurants in the Chicago
Metropolitan area unless Tenant has obtained Landlord's prior written consent
and has agreed to pay any portion of the increase in fire insurance policies
resulting from such change. Tenant agrees to pay any increase in premiums for
fire and extended coverage or other insurance that may be charged during the
Lease Term on the amount of such insurance which may be carried by Landlord on
the Premises or the Project resulting from the type of merchandise sold by
Tenant in the Premises, whether or not Landlord has consented to the same,
provided that such merchandise is of a type or nature different from that
customarily sold in restaurants of the type contemplated under this Lease to be
operated by Tenant at the Premises. In determining whether increased premiums
are the result of Tenant's use of the Premises, a schedule, issued by the
organization making the insurance rate on the Premises showing the various
components of such rate, shall be conclusive evidence of the several items and
charges which make up the fire insurance rate on the Premises.
In the event Tenant's particular manner of use or operation of the
Premises is different from customary and ordinary white tablecloth restaurant
operations or use and such extraordinary manner causes any increase of premium
for the public liability, fire and other peril insurance rates on the Premises
or Project or any part thereof above the rate for the least hazardous type of
occupancy legally permitted in the Premises, the Tenant shall pay the additional
premium on such insurance policies by reason thereof. Bills for such additional
premiums shall be rendered by Landlord to Tenant at such times as Landlord may
reasonably elect, and shall be due from Tenant within ten (10) days after the
date rendered, and the amount thereof shall be deemed to be, and be paid as,
Additional Rent. Landlord represents that Tenant's intended use of the Premises
as a restaurant shall not, in and of itself, cause an increase in Landlord's
insurance premiums.
Section 11.6. Mutual Indemnification.
A. Tenant shall indemnify and forever save harmless Landlord, its agents
and employees, except for the negligence or willful misconduct of Landlord, its
agents and employees, from and against any and all third party personal injury
and third party personal property liabilities, liens, claims, demands, damages,
expenses, attorneys' fees, costs, suits, proceedings, actions and causes of
action of any and every kind and nature arising or growing out of, or in any way
connected with, Tenant's use, occupancy, management or control of the Premises
or Tenant's operations, conduct or activities in the Project or Common Area or
any part thereof, or occasioned wholly or in part by any act or omission of
Tenant, its agents, contractors, employees or servants.
B. Landlord shall indemnify and forever save harmless Tenant, its agents
and employees, except for the negligence or willful misconduct of Tenant, its
agents and employees, from and against any and all third party personal injury
and third party personal property liabilities, liens, claims, demands, damages,
expenses, attorneys' fees, costs, suits, proceedings, actions and causes of
action of any and every kind and nature arising or growing out of, or in any way
connected with, Landlord's management, operations, control, conduct or
activities in the Premises, Project or Common Area or any part thereof, or
occasioned wholly or in part by any act or omission of Landlord, its agents,
contractors, employees or servants.
C. The indemnities provided in this Section 11.6 shall survive the
expiration or sooner termination of the Lease. Each party hereto shall promptly
notify the other party hereto of any claim asserted by such party with respect
to which such party is indemnified under this Lease against loss by the other
party hereto, and the party giving such notice shall promptly deliver to the
other party hereto the original or a true copy of any summons or other process,
pleading or notice issued or served in any suit or other proceeding to assert or
enforce any such claim. The terms and provisions of this Article XI shall
survive the termination or expiration of this Lease.
ARTICLE XII
ESTOPPEL, ATTORNMENT, SUBORDINATION
-----------------------------------
Section 12.1. Estoppel Certificate.
Within twenty (20) days after Landlord's or Tenant's request, or in the
event that upon any sale, assignment or hypothecation of the Premises and/or the
land thereunder by Landlord, an Estoppel Certificate shall be required from
either party to this Lease, the non-requesting party shall deliver, executed in
recordable form, a declaration to any person designated by the requesting party:
(a) ratifying this Lease; (b) stating the Commencement and Expiration Dates; and
(c) certifying: (i) that this Lease is in full force and effect and has not been
assigned, modified, supplemented or amended (except by such writings as shall be
described therein); (ii) that all conditions under this Lease to be performed by
the requesting party have been satisfied (stating exceptions, if any); (iii)
that no defenses or offsets against the enforcement of this Lease by the
requesting party exist (or stating those claimed); (iv) advance rent, if any,
paid by Tenant; (v) the date to which rent has been paid; (vi) the amount of
security deposited with Landlord; and (vii) such other information as the
requesting party (or Landlord's mortgagees) may reasonably require. Persons
receiving such statement shall be entitled to rely upon it.
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Section 12.2. Attornment.
Tenant shall, in the event of a sale or assignment of Landlord's interest
in the Retail Area, the Premises, or the Project or this Lease, or if the Retail
Area, the Premises and/or the Project comes into the hands of a mortgagee,
ground lessor or any other person whether because of a mortgage foreclosure,
exercise of a power of sale under a mortgage, termination of the ground lease,
or otherwise, attorn to the purchaser or such mortgagee or other person and
recognize the same as Landlord hereunder provided that such mortgagee, ground
lesser or other person first agrees in writing (the "Non-Disturbance
Agreement"), in form and content reasonably and mutually acceptable to Tenant
and such mortgagee, ground lessor, or other person, with Tenant to recognize
this Lease, and not disturb Tenant's possession, so long as Tenant is not in
default of this Lease beyond any applicable cure period set forth herein, and
agrees to such other matters as may be requested and mutually and reasonably
agreed to by such parties. Subject to the limitations set forth in the
immediately preceding sentence, Tenant shall execute, at Landlord's request, any
attornment agreement reasonably requested by any mortgagee, ground lessor or
other such person to be executed, containing such provisions as such mortgagee,
ground lessor or other person may reasonably request.
Section 12.3. Subordination.
A. Mortgage. This Lease and Tenant's rights under this Lease are subject
and subordinate to the liens of any mortgages or any lien resulting from any
method of financing or refinancing, together with any renewals, extensions,
modifications, consolidations and replacements of them (hereinafter collectively
referred to as "Mortgage"), which now or at any subsequent time encumber the
Retail Area, the Premises, or the Project or any interest of Landlord in the
Retail Area, the Premises or the Project or Landlord's interest in this Lease
and the estate created by this Lease (except to the extent that any such
instrument expressly provides that this Lease is superior to it), provided each
and every such mortgagee or security holder first agrees in writing, in form and
content mutually and reasonably acceptable to Tenant and such mortgagee, ground
lessor, or other person, that if Landlord defaults under the Mortgage, such
mortgagee or security holder shall recognize this Lease and not disturb Tenant's
possession of the Premises while Tenant in not in default of this Lease beyond
any applicable cure period hereunder and agrees to such other matters as may be
reasonably acceptable to Tenant and such Mortgagee or security holder. Landlord
agrees to use all reasonable efforts to obtain a Non-Disturbance Agreement for
Tenant from the existing lender of the Retail Area, in the form and content of
that attached hereto as Exhibit J and made a part hereof (any modifications of
which shall be reasonably approved by Tenant and said lender), simultaneously
with Landlord's execution and delivery of this Lease to Tenant. In the event
Landlord is unable to obtain a Non-Disturbance Agreement from each and every
then existing mortgagee of Landlord's interest in the Project, on or before the
execution of this Lease by both Landlord and Tenant, then either party hereto
shall have the right to terminate this Lease upon ten (10) days prior written
notice to the other at any time prior to obtaining such Non-Disturbance
Agreement. Subject to the provisions of this paragraph, Tenant will execute,
acknowledge and deliver to Landlord at any time and from time to time, upon
demand by Landlord, such documents as may be reasonably requested by Landlord or
any mortgagee, or any holder of a deed of trust or other instrument described in
this paragraph, to confirm or effect any such subordination, in a form of
agreement reasonably acceptable to Tenant and Landlord's mortgagee, ground
lessor or other security holder.
B. Operation and Reciprocal Easement Agreement. This Lease shall be
automatically subject and subordinate to one or more present operation and
easement or similar agreements (hereinafter referred to as "Operating
Agreements") including but not limited to that certain Reciprocal Development,
Operating and Easement Agreement dated as of January 29, 1996, by and between
HOB Marina City Partners, L.P., HOB Chicago, Inc., and Niki Development Corp.,
as the same may be joined by American National Bank and Trust Company of
Chicago, as Trustee under Trust Agreement dated October 11, 1994 and known as
Trust No. 118880-05, as amended by joinder in and amendment to said Agreement
dated August 20, 1996, as further amended by Second Amendment thereto dated
January 16, 1997 and as the same may be amended or modified from time to time,
and the current Easement and Operating Agreement, between Landlord and the
owners of the Residential Area, or other owners or lessees of real estate within
or near the Project and to any and all easements and easement agreements which
may be or have been entered into with or granted to any persons heretofore or
hereafter, whether such persons are located on the Retail Area, the Residential
Area or otherwise and Tenant shall execute such instruments (in form and content
reasonably acceptable to Tenant) as Landlord reasonably requests to evidence
such subordination.
C. Declaration of Condominium. This Lease shall be further subject and
subordinate to the Declaration of Condominium Ownership for the Marina Towers
Condominium Association recorded December 15, 1977 as document number 24238692
(herein referred to as "Declaration of Condominium") and to any and all
easements contained therein granted to the owner(s) of any parcels of land
and/or air rights and Tenant shall execute such instruments as Landlord
reasonably requests to evidence such subordination.
D. Landlord's Representation. Landlord represents that nothing contained
in the existing Operating Agreements and Declaration of Condominium Ownership
does or shall prohibit, or impose a material interference with, Tenant's initial
use of the Premises (as set forth in Section I of the Basic Lease Provisions).
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ARTICLE XIII
ASSIGNMENT, SUBLETTING AND CONCESSIONS
--------------------------------------
Section 13.1. Assignment, Subletting and Ownership.
A. Tenant acknowledges that Tenant's agreement to operate its business in
the Premises for the use permitted in Section I of the Basic Lease Provisions
for the Term hereof, was a primary inducement and precondition to Landlord's
agreement to lease the Premises to Tenant. Accordingly, Tenant shall not
transfer, assign, sublet, enter into license, franchise or concession
agreements, change ownership or hypothecate this Lease or the Tenant's interest
in and to the Premises in whole or in part, or otherwise permit occupancy of all
or any part thereof by anyone (other than Tenant's servants, employees,
customers and invitees) with, under or through Tenant (the foregoing are herein
collectively referred to as "Transfer" or "Transfers") or under it without first
procuring the written consent of Landlord, which consent (subject to Landlord's
right to terminate this Lease provided below) shall not be unreasonably
withheld, conditioned or delayed. Any such attempt to so Transfer, without the
Landlord's written consent, shall be void and confer no rights upon any third
person. The prohibitions of this Article XIII shall be construed to refer to any
acts or events referred to whether they occur by operation of law, legal
process, receivership, bankruptcy or otherwise.
Notwithstanding anything to the contrary herein contained, Landlord agrees
that:
(i) Tenant may assign this Lease to any parent, subsidiary or affiliate of
Tenant without obtaining the prior written consent of Landlord, provided that
the following conditions are met:
(a) That such assignment or subletting shall in no manner relieve Tenant
(except in the case of such assignment which results in a
liquidation of the assets of Tenant) or Guarantor of any of the
obligations undertaken by it under this Lease;
(b) That such permitted assignee or subtenant of Tenant to which this
Lease may be assigned or the Premises sublet agrees by a written
instrument reasonably satisfactory to Landlord to be bound by all
the conditions, obligations and agreements contained in this Lease
accruing from and after the effective date of such Transfer;
(c) That a fully executed copy of such assignment or sublease be
delivered to Landlord within thirty (30) days of the effective date
of such assignment or sublease; and
(d) That any assignee or sublessee in possession of the Premises shall
(except in the case of such an assignment which results in a
liquidation of the assets of Tenant) during such possession for the
term of the Lease or any extension thereof, remain the parent,
subsidiary or affiliate of Tenant.
Further notwithstanding anything to the contrary set forth herein, Landlord
hereby agrees that the transfer of more than fifty percent (50%) of the
ownership interest(s) of Tenant or the transfer of more than fifty percent (50%)
of the assets of Tenant, in either instance in one or a series of transactions,
or the conversion of Tenant into another form of entity, which transfers or
conversions shall be made in connection with or as part of a public offering of
Guarantor's equity securities, shall not require the consent of Landlord and
shall not constitute a breach or default of this Lease.
The term affiliate, as used herein, shall mean any corporation, partnership or
other business entity, directly or indirectly through one (1) or more
intermediaries controlling, controlled by or under common control with Tenant
and/or Guarantor. The term control, as used herein, shall mean the power to
direct the management and operations and/or the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to
the shares or other equity interests of the controlled corporation, partnership
or other business entity.
(ii) Subject to satisfying the conditions hereinafter set forth, Tenant may
assign this Lease to any corporation, partnership or other business entity owned
or controlled by Guarantor or an affiliate of Guarantor, with which Tenant may
merge or consolidate or to any person or entities, owned or controlled by
Guarantor or an affiliate of Guarantor, who acquire substantially all of
Tenant's assets or capital stock; or Tenant may assign this Lease TO AN
UNAFFILIATED ENTITY, in connection with the assignment of other leases and the
concurrent sale of other restaurants which Tenant, Guarantor or their respective
affiliates operate, provided, however, such assignments and sales to such entity
shall consist of at least 75% of all restaurants then being operated UNDER THE
SAME TRADE NAME THEN BEING USED BY TENANT AT THE PREMISES. The foregoing
described assignments or sales may be made without the necessity of obtaining
Landlord's prior consent thereto, provided, however:
(a) that Tenant shall not then be in default under this Lease (which
default is continuing beyond the expiration of any applicable grace
or notice and cure periods);
(b) the Premises shall continue to be operated under the trade name of
Tenant and solely for the use specified in the Use Section of this
Lease;
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(c) no such assignment (other than a merger or consolidation which
results in a liquidation of the assets of Tenant) shall relieve
Tenant from any of its obligations hereunder, and no such assignment
shall relieve Guarantor from any of its obligations under its
guaranty agreement;
(d) that Tenant provides Landlord with thirty (30) days written notice
prior to the making of any such assignment, which notice shall
specify the name, net worth and retail experience of the proposed
assignee;
(e) that the net worth of the assignee immediately following such
transfer is not less than the net worth of Tenant at the time of
such assignment or subletting;
(f) the assignee is experienced in the operation of a restaurant
business;
(g) a fully executed copy of such assignment is delivered to Landlord
within fifteen (15) days of the effective date thereof; and
(h) That such permitted assignee or subtenant of Tenant to which this
Lease may be assigned or the Premises sublet agrees by a written
instrument reasonably satisfactory to Landlord to be bound by all
the conditions, obligations and agreements contained in this Lease
accruing from and after the effective date of such Transfer;
In the event Tenant proposes to Transfer this Lease, and Landlord's
consent is required hereunder, Tenant shall first give written notice to
Landlord of its intention to do so, which notice shall contain: (I) the name of
the proposed assignee, sub-tenant or occupant (collectively "Transferee"); (2)
the nature of the proposed Transferee's business to be carried on in the
Premises; (3) the terms and provisions of the proposed Transfer; and (4) the
most recent financial statement or other equivalent financial information
concerning the proposed Transferee. Subject to Tenant's right to rescind a
request for consent in the event Tenant receives notice of Landlord's intent to
terminate this Lease, as hereinafter set forth, once given, any such notice of
proposed transfer shall be irrevocable for such period of time as is permitted
under this Section for Landlord to make an election and for such election to be
final.
Landlord agrees, within thirty (30) days after receipt of such notice requesting
Landlord's consent, to either:
1. Not unreasonably withhold or delay its consent; or
2. Reasonably withhold its consent; or
3. Terminate this Lease in which event this Lease shall terminate on
the ninetieth (90th) day after the Landlord's receipt of Tenant's
proposal in accordance with the provisions of this Lease relating to
the surrender of the Premises at the expiration of the Term.
If Landlord so terminates this Lease, Landlord may, if it elects, enter into a
new lease covering the Premises with the intended assignee or sublessee on such
terms as Landlord and such person may agree or enter into a new lease covering
the Premises with any other person; in such event, Tenant shall not be entitled
to any portion of the profit, if any, which Landlord may realize on account of
such termination and reletting.
It is hereby agreed that in addition to other reasonable grounds, the
withholding of the consent described above will be deemed reasonable if:
(a) In the reasonable judgment of Landlord, the proposed
Transferee:
(1) is of a character or engaged in a business or proposes to
use the Premises in a manner which (i) would reduce the amount
of Percentage Rent previously paid by Tenant to Landlord
hereunder; or (ii) is not in keeping with the standards of
Landlord for the Project;
(2) has an unfavorable reputation;
(3) has a credit standing which, in the reasonable opinion of
Landlord, is inferior to other tenants of the Retail Area; or
(4) does not have substantial experience in owning and
operating the type of retail business to be conducted on the
Premises;
(b) An event of default has occurred and has not then been cured;
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(c) The proposed Transfer does not obligate the proposed
Transferee to comply with all of the terms of this Lease which
imposes obligations or responsibilities upon Tenant accruing
from and after the effective date of such Transfer.
Notwithstanding the foregoing, if Landlord elects to terminate this Lease,
upon Landlord's receipt of a request for consent in accordance with the
provisions of this Article XIII, pursuant to Landlord's right to do so as
contemplated in this Section 13.1, Tenant may, within fifteen (15) days of
receipt of notice of Landlord's election to terminate, rescind its request for
Landlord's approval of such Transfer and in such event, this Lease shall
continue in full force and effect as if such request was never made.
C. The consent by Landlord to any Transfer shall not constitute a waiver
of the necessity for such consent to any subsequent attempted Transfer. Receipt
by Landlord of Base Rent due hereunder from any party other than Tenant shall
not be deemed to be a consent to any such Transfer, nor relieve Tenant of its
obligation to pay Base Rent or Additional Rent for the full Term of this Lease.
Any permitted transferee shall remain fully liable to Landlord for the
obligations of Tenant hereunder arising from and after the effective date of
such Transfer, including, without limitation, the obligations of Tenant to
comply with the provisions of Section 4.5 and pay Percentage Rent to Landlord.
Tenant shall have no claim, and hereby waives the right to any claim, against
Landlord for damages by reason of any refusal, withholding or delaying by
Landlord of any consent, (where such refusal, withholding or delaying was in
accordance with the provisions of this Article XIII) and, in such event,
Tenant's only remedies therefor shall be an action for specific performance or
injunction to enforce any such requirement of consent.
D. Each such Transfer to which there has been consent shall be by
instrument in writing, in form reasonably satisfactory to Landlord, and shall be
executed by the Transferor and the Transferee who shall agree in writing for the
benefit of the Landlord to assume, be bound by and perform the terms, covenants
and conditions of this Lease to be done, kept and performed by Tenant arising
from and after the effective date of such Transfer. One executed copy of such
written instrument shall be delivered to Landlord. Failure to first obtain in
writing Landlord's consent or failure to comply with the provisions of this
Article XIII shall operate to prevent any such Transfer requiring such consent
from becoming effective. Notwithstanding any such Transfer, Tenant shall (except
in the event of a merger or consolidation which results in a liquidation of the
assets of Tenant) remain fully liable on this Lease and shall not be released
from performing any of the terms, covenants and conditions of this Lease,
provided, however, if this Lease is terminated, the Transferor shall be relieved
of any liability accruing after the effective date of such termination.
E. If the base rent, percentage rent or any additional rental and/or
charges required to be paid arising from any Transfer described herein exceeds
the Base Rent, Percentage Rent or any Additional Rental and/or charges reserved
hereunder, then Tenant shall pay to Landlord, on demand, one half (1/2) of the
amount of such excess (after first deducting from the amount of such excess the
amount of any actual and reasonable expenses incurred by Tenant in connection
with such Transfer), which shall be deemed Additional Rental.
ARTICLE XIV
ADVERTISING AND PROMOTIONAL SERVICE
-----------------------------------
Section 14.1. Provisions Relating to Advertising and Promotional Service.
Tenant will use reasonable and good faith efforts to promote the Premises
through the issuance of complementary food and beverages to Landlord, at
Landlord's request (but allocated to the various promotions proposed by Landlord
in Tenant's discretion), in conjunction with Landlord's promotion of the
Project, in an amount up to but not to exceed the sum of Ten Thousand and 00/100
Dollars ($10,000.00) per calendar year of the Term. Said sum shall be determined
on a non-cumulative basis, and prorated for partial calendar years of the Term.
In addition to the foregoing, Tenant agrees that not less than One Hundred
Fifty Thousand ($150,000.00) in pre-opening and opening promotional and
advertising expenses will be spent in connection with the Premises.
("Pre-opening" and "opening" shall be deemed to end as of the twelfth (12th)
full month of the Lease Term.) Tenant agrees to mention the name of the Premises
and "Marina City" in all local advertising relating to the Premises. Tenant
shall substantiate such expenditures to Landlord's reasonable satisfaction on
Landlord's written request.
ARTICLE XV
LANDLORD'S SECURITY INTEREST
----------------------------
Section 15.1. Landlord's Security Interest.
Upon Tenant's written request, Landlord agrees to subordinate its
statutory lien in Tenant's trade fixtures, trade equipment and inventory to the
lien of the entity providing financing to Tenant for Tenant's trade fixtures,
equipment and inventory at the Premises, subject to the parties entering into a
subordination agreement in form and substance reasonably satisfactory to
Landlord.
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ARTICLE XVI
DESTRUCTION OF LEASED PREMISES
------------------------------
Section 16.1. Fire, Explosion or Other Casualty.
In the event the Premises or means of access or the supply of essential
utilities or other service systems to the Premises within the Project are
damaged by fire, explosion or any other casualty, the damage, except as is
otherwise provided in this Article XVI, shall promptly be repaired by Landlord
at Landlord's expense, provided that Landlord shall not be obligated to expend
for such repair an amount in excess of the insurance proceeds recovered as a
result of such damage and that in no event shall Landlord be required to repair
or replace merchandise, trade fixtures, furnishings, equipment, personal
property, wall and floor coverings and drapes and window coverings or plate
glass. If the casualty, repairing or rebuilding shall render the Premises
untenantable (whether as a result of damage within the Premises or deprivation
of reasonable access or the supply of essential utilities or other service
systems to the Premises), in whole or in part, a proportionate abatement of Base
Rent and all Additional Rent shall be allowed from the date when the damage
occurred until the date which is the earlier to occur of (i) Tenant's opening
for business or (ii) the date which is one hundred twenty (120) days after the
date Landlord completes its work, pursuant to this Article XVI, said proportion
to be computed on the basis of the relation which the gross square foot area of
the space rendered untenantable bears to the square footage of the Premises.
Nothing in the immediately preceding sentence shall be construed to permit the
abatement in whole or in part of the Percentage Rent, however, the computation
of Percentage Rent shall be based upon the revised Base Rent as the same may be
abated pursuant to this Section 16.1. In the event the rebuilding or repair of
the Premises, the Retail Area of the Project, and the Common Areas or access or
the supply of essential utilities or other service systems thereto have not been
substantially completed to their condition prior to such damage within a two
hundred forty (240) day period from the date of the occurrence of such damage,
Tenant may elect to terminate this Lease upon sixty (60) days prior written
notice to Landlord, said notice to be served within thirty (30) days of the
expiration of the two hundred forty (240) day period described above.
Notwithstanding the obligations of Landlord to repair as contemplated in
this Section 16.1 to the contrary, it is agreed that in the event any such
damage, fire, explosion, or other casualty shall occur during the last two Lease
Years and as a result thereof, Tenant is unable to conduct its business from the
Premises, then, and in such event, either party shall have the right to
terminate this Lease by notifying the other party, in writing, of its intention
to do so, no later than the 90th day after the occurrence of such damage, fire,
explosion or other casualty. In the event Landlord has elected to terminate this
Lease pursuant to the preceding sentence, and either Option 1 or Option 2 has
not, as of such time been exercised, Tenant shall have the right by written
Notice to Landlord, within 30 days after receipt of Landlord's termination
notice, to reinstate this Lease by exercising the applicable option, in which
event the Lease shall be reinstated.
Section 16.2. Repair of Landlord's and Tenant's Work.
The provisions of this Article XVI with respect to repair by Landlord
shall be limited to such repair as is necessary to place the Premises in the
condition that existed on the Possession Date, and when placed in such
condition, the Premises shall be deemed restored and rendered tenantable.
Subject to Tenant's receipt of sufficient proceeds therefor from Tenant's
insurance carrier, and further subject to Tenant having sufficient access to the
Premises for the conduct of the work described below, within one hundred twenty
(120) days after delivery to Tenant of the Premises in the aforesaid condition,
Tenant, at Tenant's expense, shall complete Tenant's Work, replace its stock in
trade, fixtures, furniture, furnishings, floor coverings, equipment and plate
glass, and, if Tenant has closed, Tenant shall reopen for business within such
one hundred twenty (120) day period.
Section 16.3 Determination of Damage.
If all or any part of the Premises, Retail Area or Common Area is
destroyed or damaged, an architect mutually acceptable to Landlord and Tenant
shall determine the extent of the destruction or damage and provide Landlord
with a certificate attesting to the condition of the Premises, Common Area or
Retail Area, as the case may be. Said certificate shall bind the parties as to:
(a) the percentage of area of the Retail Area, Premises or Common Area
damaged or destroyed; and
(b) the estimated replacement cost for any damaged or destroyed areas.
ARTICLE XVII
EMINENT DOMAIN
--------------
Section 17.1. Condemnation of Premises.
If the whole of the Premises or reasonable access or the supply of
essential utilities or other service systems thereto shall be taken or acquired
by any public or quasi-public authority under the power or threat of eminent
domain, the Term shall cease as of the day possession of the Premises shall be
taken by such
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public authority, and Tenant shall pay rent up to that date with an appropriate
refund by Landlord of such rent as may have been paid in advance for any period
subsequent to the date possession is taken. If less than all of the Premises
shall be so taken, the Term shall cease only on the parts so taken as of the day
possession shall be taken by such authority, and Tenant shall pay rent up to
that day with appropriate refund by Landlord of such rent as may have been paid
in advance for any period subsequent to the date that possession is taken, and
thereafter the Base Rent and Tenant's Proportionate Share shall be equitably
adjusted. Landlord shall, at its expense, make all necessary repairs and
alterations to the basic building and exterior work so as to constitute the
remaining Premises a complete architectural unit, provided that Landlord shall
not be obligated to undertake any such repairs and alterations to the extent the
cost thereof exceeds the award received by Landlord. Tenant, at Tenant's
expense, shall, upon receipt, and to the extent, of Tenant's award, make repairs
and restorations to the remaining Premises of the nature required as Tenant's
Work and shall also repair or replace its stock in trade, fixtures, furniture,
furnishings, floor coverings, plate glass and equipment, and, if Tenant has
closed, shall promptly reopen for business.
If the part of the Premises so taken leaves space no longer suitable for
the conduct of Tenant's business as contemplated hereunder (whether as a result
of a direct taking of the Premises or deprivation of reasonable access to the
Premises), then at Tenant's option, to be exercised within thirty (30) days of
taking, the Term shall cease and Tenant shall pay rent up to the day possession
is taken with an appropriate refund by Landlord of such rent as may have been
paid in advance for any period subsequent to the date of the taking of
possession. If, in the determination of Landlord's lender, as specified in
Landlord's mortgage, any significant portion of the Retail Area or the floor
area of the building in which the Premises are located shall be taken by the
exercise, or under the threat of the exercise of, the power of eminent domain
and such taking has a permanent, material and adverse effect upon the operation
of Tenant's business at the Premises as reasonably determined by Landlord's
lender, Landlord may, by notice in writing to Tenant delivered on or before the
day of surrendering possession to the public authority, terminate this Lease,
and rent shall be paid or refunded, as appropriate, as of the date of
termination. The Landlord shall only be entitled to exercise the termination
rights described in the preceding sentence if it is determined by Landlord's
lender that reasonable access or the supply of essential utilities or other
service systems to the Premises cannot be restored.
Section 17.2. Condemnation Award.
All compensation awarded or paid for any taking or acquiring under the
power or threat of eminent domain, whether for the whole or a part of the
Premises or Retail Area, shall be the property of Landlord, whether such damages
shall be awarded as compensation for diminution in the value of the leasehold or
to the fee of the Premises or otherwise, and Tenant hereby assigns to Landlord
all of Tenant's right, title and interest in and to any and all of such
compensation; provided, however, that Landlord shall not be entitled to any
award specifically made to Tenant for moving expenses, the taking of Tenant's
trade fixtures, furniture or leasehold improvements to the extent of the cost to
Tenant of said improvements (exclusive of Landlord's contribution, if any), less
depreciation. In the event the condemning authority awards only one lump sum to
Landlord with respect to any taking or acquiring under the power or threat of
eminent domain, Tenant shall be entitled to a reasonable portion of such sum as
may be attributed by such condemning authority to Tenant's aforesaid moving
expenses, the taking of Tenant's trade fixtures, furniture or leasehold
improvements, or the cost of any of Tenant's improvements to the Premises
(exclusive of Landlord's contribution, if any).
ARTICLE XVIII
DEFAULT BY TENANT
-----------------
Section 18.1. Right to Reenter and Remedies.
In the event of (a) any failure of Tenant to pay any Base Rent, Additional
Rent or any other amount due hereunder for more than ten (10) days after written
notice of such default shall have been given to Tenant, or (b) any failure to
perform any other of the terms, conditions or covenants of this Lease to be
observed or performed by Tenant for more than thirty (30) days after written
notice of such default shall have been given to Tenant (or such longer period as
may be reasonably required to correct such default, provided Tenant commences to
cure within said thirty (30) day period and thereafter proceeds to completion of
such cure with due diligence, but in no event, however, shall such time period
for cure exceed 120 days in total), or (c) if Tenant or an authorized agent of
Tenant shall intentionally falsify any report required to be furnished to
Landlord pursuant to the terms of this Lease, or (d) if Tenant or any guarantor
of this Lease shall become insolvent, or file any debtor proceedings or take or
have taken against Tenant or any guarantor of this Lease in any court pursuant
to any statute of any state a petition for reorganization or for the appointment
of a receiver or trustee of all or a portion of Tenant's or any such guarantor's
property, (and in the case of involuntary proceedings, if such proceedings are
not dismissed within ninety (90) days of the filing thereof); or (e) if Tenant
or any such guarantor makes a general assignment for the benefit of all or
substantially all of Tenant's major creditors, or (f) if Tenant shall abandon
the Premises, or suffer this Lease to be taken under any writ of execution, or
does not do business in the Premises for a period of ten (10) consecutive days
in violation of the terms of this Lease, except as may be otherwise provided
herein, and if Tenant fails to re-commence its occupancy of the Premises and its
business at the Premises within ten (10) days following Tenant's receipt of
written notice of such default, or (g) if Tenant during the Term hereof shall
have been in default in the payment of Base Rent, Additional Rent or other
amount due hereunder more than three (3) times in any twelve (12) month
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period and because of such defaults Landlord shall have served upon Tenant,
during such consecutive twelve (12) month period, three or more ten (10) day
notices (in which event a default of this provision shall be deemed
non-curable), then Landlord, in addition to any other rights or remedies it may
have, shall have the immediate right to terminate Tenant's right to possession
of the Premises and to re-enter and may remove all persons and property from the
Premises. Tenant's property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of, Tenant, all without service of
notice (except as provided herein), with resort to legal process, and without
being deemed guilty of trespass or becoming liable for any loss or damage which
may be occasioned thereby.
Section 18.2. Right to Relet.
Should Tenant be in default as provided in Section 18.1 above and Landlord
elects to reenter the Premises, as herein provided, or should it take possession
of the Premises pursuant to legal proceedings or pursuant to any notice provided
for by law, or should Tenant fail to cure a default (after expiration of the
applicable notice period) it may either terminate this Lease or may, from time
to time without terminating this Lease, make such alterations and repairs as may
be necessary in order to relet the Premises, and relet the Premises or any part
thereof for such term or terms (which may be for a term extending beyond the
Lease Term) and at such rental or rentals and upon such other terms and
conditions as Landlord, in its sole discretion may deem advisable. Upon each
such reletting, all rentals, and other consideration, received by Landlord
therefrom shall be applied: first, to any indebtedness other than Base Rent due
hereunder from Tenant to Landlord; second, to pay any actual and reasonable
costs and expenses of reletting, including Additional Rent, concessions, or
abatements, actual and reasonable brokers' fees and attorneys' fees, and costs
of such alterations and repairs (Tenant shall not be liable for any such cost or
expense if caused by Landlord) provided that the cost of such alterations, for
purposes of this section, shall not exceed the cost of restoring the Premises to
so called "Vanilla Shell" condition (hereinafter defined); third, to the payment
of Base Rent due and unpaid hereunder; and the residue, if any, shall be held by
Landlord and applied in payment of future Base Rent as the same may become due
and payable hereunder. "Vanilla Shell", as used in the preceding sentence, shall
mean the usual and customary interior improvements made available to new tenants
by landlords for similar space in the Retail Area of the Project including
customary demising walls, covered with drywall ready for paint, a floor slab
ready for tenant's floor covering, a t-bar hung ceiling, and excluding the cost
of improvements normally paid or incurred by a new tenant. If such rentals and
other consideration received from such reletting during any month shall be less
than that to be paid during that month by Tenant hereunder, Tenant shall pay any
such deficiency to Landlord. Such deficiency shall be calculated and paid
monthly.
No such reentry or taking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a written
notice of such intention shall be given to Tenant or unless the termination
thereof shall be decreed by a court of competent jurisdiction. Landlord shall be
entitled to recover from Tenant any Base Rent which would otherwise have been
payable under the terms of this Lease but for concessions or abatements
previously granted by Landlord to Tenant, provided that such recovery shall be
subject to reduction based on the rents or other considerations received by
Landlord from any replacement tenant. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous default. Should Landlord at any time terminate this Lease for
any default, in addition to any other remedies it may have, it may recover from
Tenant all damages it may incur by reason of such default, including the actual
and reasonable cost of recovering the Premises, reasonable attorneys' fees, and
including the worth at the time of such termination of the excess, if any, of
the amount of Base Rent reserved in this Lease for the remainder of the Lease
Term over the then reasonable rental value of the Premises for the remainder of
the Lease Term, all of which amounts shall be discounted to present value at the
rate of six percent (6%), immediately due and payable from Tenant to Landlord.
If Tenant has previously paid Percentage Rent to Landlord, then in determining
the Base Rent which would be payable by Tenant hereunder subsequent to default
the Base Rent for each year of the unexpired Term shall be equal to the average
annual Base and Percentage Rents payable by Tenant from the commencement of the
Lease Term to the time of default, or during the preceding three (3) full
calendar years, whichever period is shorter.
Landlord agrees to use commercially reasonable efforts to relet the
Premises and otherwise mitigate its damages, giving due consideration to market
conditions, the tenant mix and vacancy levels at the Project.
Nothing contained herein shall prevent the enforcement of any claim
Landlord may have against Tenant for anticipatory breach of the unexpired term
of this Lease. In the event of a breach or anticipatory breach by Tenant of any
of the covenants or provisions hereof, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not provided for herein.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy in law or in equity.
In no event shall Landlord be entitled to receive consequential or
punitive damages arising out of a Tenant's default.
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Section 18.3. Legal Expenses.
If suits shall be brought for recovery of possession of the Premises, for
the recovery of Base Rent, Additional Rent or any other amount due under the
provisions of this Lease, or because of the breach of any term, covenants or
condition herein contained on the part of Tenant or Landlord to be kept or
performed, and a breach shall be established, the non-prevailing party in such
proceedings shall pay to the prevailing party all expenses incurred therefor,
including reasonable attorneys' fees.
Section 18.4. Waiver of Jury Trial and Counterclaim.
The parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises and/or any claim for injury or damage under this
Lease.
ARTICLE XIX
DEFAULT BY LANDLORD
-------------------
Section 19.1. Default Defined, Notice.
Landlord shall in no event be charged with default in the performance of
any of its obligations hereunder unless and until Landlord shall have failed to
perform such obligations within thirty (30) days (or such additional time as is
reasonably required to correct any such default provided Landlord has commenced
such cure within said thirty (30) day period and prosecutes such cure to
completion with due diligence, but in no event, however, shall such time period
for cure exceed 120 days in total), after written notice is received by Landlord
from Tenant specifically describing such failure. Tenant agrees to use all
commercially reasonable efforts to mitigate its damages in the event of a
default by Landlord. In the event of a default by Landlord under this Lease and
the expiration of all applicable cure periods with respect thereto, as set forth
in the preceding portions of this Section 19.1, Tenant shall be entitled to
pursue any legal or equitable rights or remedies which Tenant may have under
this Lease or otherwise at law or in equity by virtue of such default by
Landlord; provided, that Tenant shall in any such event additionally have the
option (at Tenant's sole discretion) of remedying such default by Landlord and,
in connection therewith, incurring reasonable expenses for the account of
Landlord, and any and all such sums expended or obligations incurred by Tenant
in connection therewith shall be paid by Landlord to Tenant upon demand.
In the event Tenant has exercised its right of self-help under those
circumstances contemplated at Section 9.1 of this Lease, Landlord has not
reimbursed the Tenant for the costs incurred by Tenant in connection with the
exercise of said self-help, Tenant may, thereafter, offset the reasonable
expenses incurred by it subsequent to the time as Landlord's default has been
adjudicated by a court of competent jurisdiction and all appeal rights
thereunder have expired.
Section 19.2. Notice to First Mortgagee.
If the holder of a fee mortgage covering the Premises shall have given
written notice to Tenant of the address to which notices to such holder are to
be sent, Tenant shall give such holder written notice simultaneously with any
notice given to Landlord of any default of Landlord, and if Landlord fails to
cure any default asserted in said notice within the time provided above, said
holder shall have the right, but not the obligation, within thirty (30) days
after receipt of such notice, to cure such default before Tenant may take any
action by reason of such default (except in the event of an emergency).
ARTICLE XX
TENANT'S PROPERTY
-----------------
Section 20.1. Taxes on Leasehold.
Tenant shall be responsible for and shall pay before becoming delinquent,
all municipal, county, federal or state taxes coming due during or after the
Term of this Lease against Tenant's interest in this Lease or against personal
property of any kind owned or placed in, upon or about the Premises by Tenant.
ARTICLE XXI
ACCESS BY LANDLORD
------------------
Section 21.1. Right of Entry.
Landlord, its agents and employees, shall have the right to enter the
Premises from time to time at reasonable times following reasonable advance
notice to Tenant (except in situations where emergency repairs are necessary, in
which event no notice shall be required, provided that Landlord shall reasonably
endeavor to provide Tenant with telephonic notice of the occurrence or necessity
of any such emergency repairs as soon as reasonably possible before or after
same are undertaken) to examine the same, show them to prospective purchasers
and other persons, and make such repairs, alterations, improvements or additions
as Landlord deems reasonably desirable. Base Rent shall not abate while any such
repairs, alterations, improvements or additions are being made, provided that
improvements or additions shall be
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located in a manner which does not materially interfere with Tenant's use of the
Premises as contemplated hereunder. During the last six (6) months of the Lease
Term, provided Tenant has not delivered notice of its intent to exercise a
renewal option and Tenant is not in default of this Lease beyond any applicable
cure period, Landlord may exhibit the Premises to prospective tenants and
maintain upon the Premises such notices reasonably deemed advisable by Landlord.
In addition, during any apparent emergency, Landlord or its agents may enter the
Premises forcibly without liability therefor and without in any manner affecting
Tenant's obligations under this Lease. Nothing herein contained, however, shall
be deemed to impose upon Landlord any obligations, responsibility or liability
whatsoever, for any care, maintenance or repair except as otherwise herein
expressly provided.
Landlord agrees to exercise its rights hereunder so as to cause as little
interruption with Tenant's business as is reasonably possible under the
circumstances. If any such entry and/or activity (i) was not necessitated by
Tenant's act or omission, and (ii) shall continue for more than forty-eight (48)
hours, and (iii) shall preclude Tenant from conducting its business within the
Premises, then the Base Rent (and all Additional Rent and other charges
hereunder) shall be proportionately abated commencing after 48 consecutive hours
of such interruption.
ARTICLE XXII
HOLDING OVER, SUCCESSORS, SALE BY LANDLORD
------------------------------------------
Section 22.1. Holding Over.
If Tenant holds over or occupies the Premises beyond the Lease Term (it
being agreed there shall be no such holding over or occupancy without Landlord's
written consent), Tenant shall pay Landlord for each day of such holding over a
sum equal to one and one half (1/2) times the Base Rent prorated for the number
of days of such holding over, plus a pro rata portion of all other amounts which
Tenant would have been required to pay hereunder had this Lease been in effect.
In addition thereto, if Landlord shall provide notice to Tenant 30 days prior to
the expiration of the Lease Term that Landlord requires timely possession of the
Premises for delivery to any successor tenant or occupant, then Tenant shall be
liable to Landlord for any and all damages which Landlord shall suffer by reason
of such holding over, and Tenant will indemnify Landlord against all claims and
demands made by any succeeding Tenants against Landlord, founded upon delay by
Landlord in delivering possession of the Premises to such succeeding Tenant. If
Tenant holds over the Premises with or without Landlord's written consent,
Tenant shall occupy the Premises on a tenancy from month to month and all other
terms and provisions of this Lease shall be applicable to such period.
Section 22.2. Successors.
All rights and liabilities herein given to or imposed upon the respective
parties hereto shall bind and inure to the benefit of respective heirs,
successors, administrators, executors and assigns of the parties hereto, except
that no rights shall inure to the benefit of any Transferee of Tenant (as such
term is defined in Article XIII hereof) unless the Transfer was approved by
Landlord in writing as provided in Section 13.1 hereof (or such Transfer does
not require Landlord's approval).
Section 22.3. Sale by Landlord.
In the event of any sale or exchange of all of the Landlord's interest in
the Project or any part thereof which includes the Premises, in whole or in
part, by Landlord and an assignment by Landlord of this Lease, Landlord shall
be, and hereby is, entirely relieved of all liability for any and all of its
covenants and obligations contained herein or derived from this Lease arising
out of any act, occurrence or omission relating to the Premises or this Lease
occurring after the consummation of such sale or exchange and assignment,
provided that any successor to Landlord hereunder shall assume (or is deemed to
have assumed) Landlord's obligations arising from and after the effective date
of consummation of such Transfer (and Tenant shall not be obligated to pay rent
or other charges or sums payable by Tenant hereunder to any such transferee
until Tenant shall have been furnished with evidence of such transfer and
assumption).
ARTICLE XXIII
QUIET ENJOYMENT
---------------
Section 23.1. Landlord's Covenant.
If Tenant pays the rents and other amounts herein provided, and observes
and performs all the covenants, terms and conditions hereof, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Lease Term without
interruption by Landlord or any person or persons claiming by, through or under
Landlord, subject, nevertheless, to the terms and conditions of this Lease.
ARTICLE XXIV
MISCELLANEOUS
-------------
Section 24.1. Intentionally Omitted.
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Section 24.2. Waiver.
No waiver by Landlord or Tenant of any breach of any term, covenant or
condition hereof shall be deemed a waiver of the same or any subsequent breach
of the same or any other covenant or condition. The acceptance of rent by
Landlord shall not be deemed a waiver of any earlier breach by Tenant of any
term, covenant or condition hereof, regardless of Landlord's knowledge of such
breach when such rent is accepted. No covenant, term or condition of this Lease
shall be deemed waived by Landlord or Tenant unless waived in writing.
Section 24.3. Accord and Satisfaction.
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and apply
the same to any obligation of Tenant (and if there is more than one outstanding
obligation, the allocation and method of application of such payment among any
one or more of said obligations shall be determined in Landlord's discretion)
and the same shall not constitute payment of any amount owed except that to
which Landlord has applied the same.
No endorsement or statement on any check or letter of Tenant shall be
deemed an accord and satisfaction or otherwise recognized for any purpose
whatsoever except to the extent same is applied pursuant to the immediately
preceding paragraph (and subject to any right Landlord may have to refuse the
payment). The acceptance of any such check or payment shall be without prejudice
to Landlord's right to recover any and all amounts owed by Tenant hereunder and
Landlord's right to pursue any other available remedy.
Section 24.4. Entire Agreement.
There are no representations, covenants, warranties, promises, agreements,
conditions or undertakings, oral or written, between Landlord and Tenant other
than herein set forth. Except as herein otherwise provided, no subsequent
alteration, amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant unless in writing and signed by them.
It is understood and agreed by Tenant that Landlord and Landlord's
employees and agents have made no representations or promises with respect to
the Premises or the making or entry into this Lease, except as is in this Lease
expressly set forth, and/or except in any other written agreement executed by
and between Landlord and Tenant concurrently with this Lease or in connection
with this Lease and that no claim or liability, or cause for termination, shall
be asserted by Tenant against Landlord for, and Landlord shall not be liable by
reason of, the breach of any representations or promises not expressly stated in
this Lease or in a written modification to this Lease signed by Landlord and
Tenant, and/or except in any other written agreement executed by and between
Landlord and Tenant concurrently with this Lease or in connection with this
Lease.
This Lease has been the subject of extensive negotiations between the
parties and the interpretation thereof shall not be based upon any party being
the draftsman thereof.
Section 24.5. No Partnership.
Landlord does not, in any way or for any purpose, by virtue of this Lease,
become a partner, employer, principal, master, agent or joint venturer of or
with Tenant. Similarly, Tenant does not, in any way or for any purpose, by
virtue of this Lease, become a partner, employer, principal, master, agent, or
joint venturer of or with Landlord.
Section 24.6. Force Majeure.
If either party hereto shall be delayed or hindered in or prevented from
the performance of any act required hereunder by reason of strikes, lockouts,
labor troubles, inability to procure material, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war or other reason of a
like nature not the fault of the party delayed in performing work, or doing acts
required under this Lease, the period provided or required hereunder for the
performance of any such act shall be extended for a period equivalent to the
period of such delay. Notwithstanding the foregoing, the provisions of this
Section 24.6 shall at no time operate to excuse Tenant from any obligations for
payment of Base Rent, Percentage Rent, Additional Rent or any other payments
required by the terms of this Lease when the same are due (nor shall they excuse
Landlord from any obligations for payments due from Landlord to Tenant), and all
such amounts shall be paid when due.
In the event the Tenant is delayed in obtaining the approvals and/or
assurances described at either Section 2.3.A, 2.5.A. or Section 3.3.A by reasons
of force majeure or by reasons of the act or omission of Landlord, the time for
compliance by Tenant (including, as applicable, the Commencement Date) shall be
extended for a period equivalent to the period of such delay.
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Section 24.7. Submission of Lease.
The submission of this Lease for examination does not constitute a
reservation of or option for the Premises and this Lease becomes effective as a
lease only upon execution and delivery thereof by Landlord and Tenant.
Section 24.8. Intentionally Omitted.
Section 24.9. Notices.
Whenever under this Lease provision is made for any demand, notice or
declaration of any kind, or where it is deemed desirable or necessary by either
party to give or serve any such notice, demand or declaration to the other
party, it shall be in writing and sent either by (i) certified mail, return
receipt requested, postage prepaid, (ii) personal delivery by an independent
service (including messenger service), which shall provide written confirmation
of delivery or inability to deliver due to refusal, etc., or (iii) via an
overnight carrier delivery (such as Federal Express or Airborne Express
requiring signature on delivery to the addressee) which shall provide written
confirmation of delivery or inability to deliver due to refusal, etc., and which
is in any such event sent to the address of such addressee set forth in Section
N of the Basic Lease Provisions, or to such other address as may be given by a
party to the other by proper notice hereunder. The (i) third day after the
certified mail is deposited with the United States Postal Service, (ii) the day
personal delivery is attained, or (ii) the date the notice is delivered by the
overnight carrier shall be the date on which any notice hereunder shall be
deemed given.
Section 24.10. Captions and Section Numbers.
This Lease shall be construed without reference to titles of Articles and
Sections, which are inserted only for convenience of reference.
Section 24.11. Number and Gender.
The use herein of a singular term shall include the plural, and vice
versa, and use of the masculine, feminine or neuter genders shall include all
others.
Section 24.12. Intentionally Omitted.
Section 24.13. Intentionally Omitted.
Section 24.14. Broker's Commission.
Tenant and Landlord warrant each to the other that it has had no dealings
with any broker or agent in connection with this Lease except as designated in
Section Q of the Basic Lease Provisions, and each party covenants to pay, hold
harmless and indemnify the other from and against any and all costs expense or
liability for any compensation, commissions and charges claimed by any broker
other than as listed in Section Q of the Basic Lease Provisions, or agent with
respect to this Lease or the negotiation thereof by virtue of the acts or
commitments of such indemnifying party. Landlord shall pay the commissions of
the parties listed in Section Q of the Basic Lease Provisions. Equis Corporation
shall receive a commission of One Hundred Twenty Thousand Seven Hundred
Twenty-Five and 00/100 Dollars ($120,725.00) earned upon the mutual execution of
this Lease, but payable as follows: $60,362.50 payable upon mutual execution and
delivery of this Lease, and $60,362.50 payable upon the earlier to occur of (i)
the Tenant's opening for business at the Premises; or (ii) the date Base Rent
first becomes due and payable under the terms of this Lease. The commission
payable to Equis shall be a specific "line item" of Landlord's construction
loan.
Section 24.15. Partial Invalidity.
If any provision of this Lease or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby and each provision of this Lease shall be valid and enforceable
to the fullest extent permitted by law.
Section 24.16. Recording.
The parties agree not to place this Lease of record, but each party shall,
at the request of the other, execute a Memorandum of Lease specifying the date
of commencement and termination of the Lease Term provided, that said Memorandum
of Lease shall provide that it shall be automatically extinguished in the event
this Lease, or Tenant's right to possession of the Premises, is terminated.
Landlord and Tenant agree to execute a Memorandum of Lease in the form and
content of that attached hereto as Exhibit I, simultaneously with their
execution and delivery of this Lease. All recording costs with respect to such
Memorandum of Lease shall be paid by Tenant.
39
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Section 24.17. Applicable Law.
This Lease shall be governed by and construed in accordance with the laws
of the State of Illinois.
Section 24.18. Corporate Tenant.
If Tenant is or will be a corporation, Tenant hereby covenants, represents
and warrants that Tenant is a duly incorporated and duly qualified (if foreign)
corporation and is or will be authorized to do business in Illinois (a copy or
evidence thereof to be supplied to Landlord upon request); and that the person
executing this Lease on behalf of Tenant is an officer of such Tenant, and is
duly authorized to sign and execute this Lease.
Section 24.19. Intentionally Omitted.
ARTICLE XXV
ENVIRONMENTAL MATTERS
---------------------
Tenant shall not use the Premises or any portion of the Project for any
activities involving, directly or indirectly, the use, generation, treatment,
storage, or disposal of any hazardous or toxic chemical, material, substance or
waste, in concentrations which would violate applicable environmental laws,
including without limitation: (1) asbestos in any form; (2) urea formaldehyde
foam insulation; (3) transformers or other equipment which contain dielectric
fluid containing polychlorinated byphenyls; (4) any other hazardous or toxic
chemical, material, substance or waste, exposure to which is prohibited, limited
or regulated by any Federal, State, County, Regional or Local authority (all of
the foregoing being hereinafter referred to collectively as "Hazardous
Substances").
During the term of this Lease Landlord shall have the option (provided
Landlord reasonably has cause to suspect that the following condition may exist)
to retain a consultant who will conduct an investigation of the Project to
verify that no portion of the Project (including the Premises) is being used for
any activities involving, directly or indirectly, the use, generation,
treatment, storage or disposal of any Hazardous Substance. Such consultant shall
be retained at Landlord's expense (unless it is ultimately established that
Tenant has breached the provisions of this Article XXV, in which event the
consultant's fees shall be at Tenant's expense). Tenant hereby grants to
Landlord, its agents, employees, consultants and contractors, upon reasonable
advance notice (except in emergency situations, where no notice shall be
required), the right to enter upon the Premises and to perform such tests on the
Premises as are reasonably necessary to conduct any such investigation.
In the event of Landlord's entry in the Premises without prior written
notice due to an emergency situation, Landlord agrees to deliver telephonic
notice to Tenant of such emergency entry as soon as possible after such
emergency entry occurs.
Tenant covenants to Landlord that the Premises shall not at any time prior
or subsequent to the Commencement Date, be used by Tenant, any subtenant of
Tenant, or any other person or entity claiming by, through or under Tenant, for
any activities involving, directly or indirectly, the use, generation,
treatment, storage or disposal of any Hazardous Substance in concentrations
which would violate applicable environmental laws.
Tenant agrees to indemnify, defend, and forever hold Landlord harmless
from and against any claims, losses, damages, actions, liabilities, causes of
action, suits, investigations and judgments of any nature whatsoever, including,
without limitation, reasonable attorneys' fees and costs of litigation, incurred
by Landlord in connection with any breach by Tenant of the provisions contained
in this Article XXV. The foregoing indemnity shall survive the expiration or
earlier termination of this Lease.
Landlord represents that upon delivery of possession of the Premises to
Tenant, to Landlord's best knowledge the Premises shall be free of any known
Hazardous Substance in concentrations which would violate applicable
environmental laws.
Landlord agrees to indemnify, defend and forever hold Tenant harmless from
and against any claims, losses, damages, actions, liabilities, causes of action,
suits, investigations and judgments of any nature whatsoever, including, without
limitation, reasonable attorneys' fees and costs of litigation incurred by
Tenant in connection with the aforesaid representation being untrue or in
connection with any breach by Landlord of any of Landlord's covenants and
agreements contained in this Article XXV. The foregoing indemnity shall survive
the expiration or earlier termination of this Lease. Additionally, if any
removal or remediation of any Hazardous Substance in the Premises preexisting at
the time of delivery of possession of the Premises to Tenant takes longer than
one hundred eighty (180) days from the date of the initial discovery thereof,
then Tenant shall have the right to terminate this Lease. Tenant's right to
terminate shall be exercised, if at all, by Tenant's delivery of ten (10) days
prior written notice to Landlord of its election to so terminate, which notice
shall be delivered within ten (10) days of the expiration of the 180 day period
described above. Tenant's failure to timely deliver the termination notice shall
be deemed a waiver of the right to terminate. Landlord shall comply with all
applicable environmental laws, including any amendments thereto and any other
environmental laws and regulations relating to Landlord's (but not any unrelated
third party's) use, storage, treatment or disposal of any Hazardous Substances
within the Project.
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ARTICLE XXVI
DEFENSE OF CLAIMS
-----------------
Section 26.1. Defense of Claims.
Notwithstanding anything to the contrary contained in this Lease, if any
claim, action or proceeding is brought against a party for a matter covered by
an indemnification by the other party which is contained in this Lease, then:
(a) the indemnifying party shall defend such claim, action or proceeding by
counsel selected by such indemnifying party and reasonably satisfactory to the
indemnified party (counsel for the insurance company of such indemnifying party
being deemed to be satisfactory), (b) the indemnified party shall be obligated
to cooperate in the defense of such claim, action or proceeding, and (c) the
indemnifying party shall not settle any such claim, action or proceeding without
the approval of the indemnified party (such approval not to be unreasonably
withheld or delayed).
Notwithstanding any provision of this Lease to the contrary, in no event
shall any mortgagee, or any purchaser of Landlord's interests in the Premises at
a foreclosure of any applicable mortgage (a "Transferee"), have any obligations
or liabilities (financial or otherwise) on account of any representation,
warranty, or indemnification obligation of Landlord with respect to Hazardous
Substances, asbestos, or other environmental laws, claims or liabilities,
whether expressly stated as such or subsumed within general obligations to
comply with laws or preserve the benefits of Tenant's use and enjoyment of the
Premises (collectively, "Environmental Obligations"); provided, that upon any
Transferee succeeding to the interests of the Landlord in the Premises, such
Transferee shall be subject to the Environmental Obligations then applicable
under the terms of the Lease to the extent (and only to the extent) that the
same arise from substances or conditions on the Premises caused to be introduced
or created by such Transferee during the period in which such Transferee shall
hold the Landlord's interests in the Premises. Nothing in the preceding sentence
shall be construed to limit Tenant's right to assert claims or obtain remedies
against the Landlord having originally failed to perform Environmental
Obligations, if Tenant would otherwise be entitled to do so pursuant to the
Lease and if such claims or remedies do not involve termination of this Lease,
or offsets against rent payable to, or the assertion of claims against, any
Mortgagee or Transferee.
ARTICLE XXVII
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 27.1.A. Representations and Warranties of Landlord.
Landlord hereby represents, warrants and covenants that:
(a) Landlord has full right and lawful authority to enter into and
perform Landlord's obligations under this Lease for the full Term of
the Lease;
(b) Landlord owns and has good and marketable title to the Land in fee
simple, and no title matters affecting or encumbering said Land
restrict or impede the improvement of the Premises and/or the use
and occupancy of the Premises as contemplated by this Lease;
(c) The RETAIL AREA is zoned in conformity with applicable laws in a
manner permitting the improvement of the Premises and the use and
occupancy of the Premises for the permitted uses and other retail
and related purposes as provided and/or contemplated hereunder;
(d) Landlord has not received any notice of a pending or threatened
actions or legal proceedings (including, without limitation,
condemnation proceedings) affecting the Land or Landlord's interests
therein;
(e) All public rights-of-way shown on Exhibit "B" and "C" attached
hereto as being adjacent to the Land abut the Land, as shown, and
permit unrestricted ingress and egress between the Land and all such
rights-of-way;
(f) All utilities necessary for the full use and operation (each as
contemplated hereunder) of the Premises by Tenant are available for
tie-in at the perimeter of the Premises; and
(g) The Premises and the building in which such Premises are situated,
as of the Commencement Date, will be in compliance with all
applicable laws, ordinances, rules and regulations and, to the best
of Landlord's knowledge, as of the date hereof, the Premises and the
building in which the Premises are situated contain no latent
defects or conditions which have not been heretofore expressly
disclosed in writing by Landlord to Tenant.
(h) Landlord has obtained all approvals which are necessary or requisite
to execute this Lease, and to permit the lease and use of the
Premises as contemplated hereunder and to bind the Landlord.
Section 27.1.B. Representations and Warranties of Tenant.
Tenant hereby represents, warrants and covenants that:
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(a) Tenant has full right and lawful authority to enter into and perform
Tenant's obligations under this Lease for the full Term of the
Lease, including specifically, and not limited thereto, that
sufficient funds will be available to Tenant to pay, on a timely
basis for Tenant's Fraction and for the cost of Tenant's furniture,
fixtures and equipment proposed to be installed by Tenant at the
Premises;
(b) Tenant has obtained all approvals which are necessary or requisite
to execute this Lease, and to bind the Tenant.
Section 27.2. Survival of Obligations.
All of Landlord's and Tenant's obligations under this Lease which by their
nature might not be fully performed or capable of performance before the
expiration or earlier termination of this Lease (including, without limitation,
each indemnity agreement and hold harmless agreement of Landlord and Tenant
contained herein) shall survive the expiration or earlier termination of this
Lease.
Section 27.3. Lighting.
Landlord agrees to provide adequate lighting of those portions of the
Common Areas servicing the Premises (including, without limitation, the valet
parking area) and Landlord agrees to provide adequate lighting of those portions
of the Common Areas located on or immediately adjacent to the Premises, which
lighting in both instances shall continue to operate from thirty (30) minutes
before dusk until sixty (60) minutes following the close of Tenant's business
each evening.
Section 27.4. Limitation of Liability
Anything to the contrary herein contained notwithstanding, but subject
however to the next paragraph of this Section 27.4, there shall be absolutely no
personal liability on persons, firms or entities who constitute Landlord, and
excepting cases of fraud, that no personal liability or personal responsibility
is assumed by or shall at any time be asserted or enforceable against Landlord
on account of this Lease or on account of any representations, covenants,
undertakings, warranties or agreements of Landlord in this Lease contained,
either express or implied, all such personal liability, if any, being expressly
waived and released, and Tenant shall, subject to the rights of any mortgagee,
look solely to the interest of Landlord, its successors and assigns in the
Retail Area (including insurance proceeds [subject to the rights of Landlord's
lender as to application of such proceeds], rents, and proceeds of sales) for
the satisfaction of each and every remedy of Tenant in the event of default by
Landlord hereunder; such exculpation of personal liability is absolute and
without any exception whatsoever (except as otherwise provided herein).
Notwithstanding anything to the contrary set forth in this Lease, it is
acknowledged and agreed that the provisions of this Section 27.4 shall not be
deemed to deny to Tenant, or to limit Tenant's right to obtain, injunctive
relief or specific performance of Landlord's covenants under this Lease nor to
deny or limit Tenant's right to avail itself of any other right or remedy which
may be accorded Tenant under the terms of this Lease (including, without
limitation, Section 3.6 and Section 19.1 hereof) or which may be accorded to
Tenant by law or at equity and which do not involve personal liability of
Landlord, by reason of Landlord's failure to perform its obligations hereunder.
Further notwithstanding anything to the contrary set forth in this Lease, it is
agreed that the exculpatory provisions of this Section 27.4 shall not apply to,
and the provisions of this Section 27.4 shall accordingly not be deemed to limit
or prejudice the rights of Tenant to proceed against any assets of Landlord
whatsoever, or in the Retail Area and such assets shall be and remain fully
available to Tenant (and any judgment obtained by Tenant against Landlord may be
satisfied from any such assets) in connection with, any and all liabilities,
claims, demands, damages, expenses, costs, losses, suits, proceedings, actions
and causes of action of any and every kind and nature arising or growing out of,
or which is materially connected with, fraud on the part of Landlord in
connection with this Lease and/or Landlord's exercise of its duties and
obligations hereunder.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day
and year first above written.
LANDLORD:
MARINA CITY HOTEL ENTERPRISES, L.L.C.,
an Illinois limited liability company
By: /s/ David Murdoch
--------------------------------------
Name: David Murdoch
Title: Manager
TENANT:
S & W CHICAGO, L.L.C.
a Delaware limited liability company
By: The New York Restaurant Group,
L.L.C., a Delaware limited
liability company, its Majority
Member
By: La Cite, Inc. a Delaware
corporation, its Manager
By: /s/ James M. Dunn
---------------------
James M. Dunn
Its Authorized
Representative
43
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Exhibit 10.6
LEASE WITH AN OPTION TO PURCHASE
This Lease with an Option to Purchase (hereafter "Lease") is made and
entered into on this 9th day of February, 1998, between
The Somphone Limited Partnership, a Nevada Limited Partnership, ("Lessor")
and
S & W of Las Vegas, L.L.C., a Delaware Limited Liability Company,
("Lessee")
at Las Vegas, Nevada, and shall have a Lease Commencement Date of
February 12, 1998.
Whereas, effective February 14, 1997, Lessor and Lessee entered into an
Option Agreement (the "Agreement") relating to the real property described
below; and
Whereas, Lessee may construct on the real property described below certain
improvements, alterations and repairs (the "Improvements").
Now, therefore, in consideration of the mutual promises of the parties
hereto, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed as follows:
1. Lessor does hereby lease to Lessee the real property, described below,
together with any air and development rights and all easements and other
appurtenances relating thereto, for the term, and upon the conditions
hereinafter set forth.
2. Premises:
The real property the subject of this Lease is situated in the County of
Clark, State of Nevada, and is that parcel of land containing approximately 1.82
acres, measuring approximately 130 ft. along the west property line and 601 feet
along the south property line; commonly known as 3767 Las Vegas Boulevard South
and Assessor's Parcel No. 162-21-301-014; the legal description is attached
hereto as Exhibit "A" (the "Land"). The Land, together with any air and
development rights, easements and other appurtenances relating thereto, together
with any existing improvements shall collectively be referred to as the "Lease
Property", and the Lease Property, the Improvements, and any other improvements
on the Land shall be collectively referred to as the "Premises".
Jd / P.S.
---------------------
initials / initials
1
<PAGE>
3. Term and Options to Renew:
The original term of the Lease the "Lease Term") shall be twenty (20)
years from the "Lease Commencement Date" as set forth above.
Lessee shall have options to renew for two (2) additional twenty (20) year
periods; provided, however, that the Lease may only be renewed at any one time
for twenty (20) additional years. The rent during any renewal term shall
continue to be adjusted in the manner provided in Paragraph 7. Each of these
options to renew may be exercised by Lessee's giving written notice of the
exercise thereof not later than ninety (90) days prior to the expiration of the
Lease Term or the then current term. Lessee's renewal notice must be given in
the manner provided in Paragraph 30 below.
The Lease will not be effective until the Lease Commencement Date, whether
or not it is signed prior to the Lease Commencement Date, and the Lease shall be
signed by Lessor and Lessee on or before the Lease Commencement Date. When the
Lease Commencement Date has been ascertained, the parties shall insert such date
in the preamble to this Lease and confirm that date by initialing such insertion
in the margin; however, failure to do so shall not affect the enforceability of
the Lease. In the event there is a Leasehold Mortgagee (which is defined as any
mortgagee, secured creditor, or holder of a beneficial interest under a deed of
trust of which Lessor has received notice), then so long as the Leasehold
Mortgagee's mortgage, security interest or deed of trust (the "Leasehold
Mortgage") remains as a lien against any portion of the Improvements, or against
the Lessee's leasehold interest, the Lessor shall not sooner than sixty (60)
days prior to the end of the Lease Term or any renewal term, give Leasehold
Mortgagee written notice of any non-renewal of the expiration of the term, and
such term shall not expire until at least thirty (30) days after receipt by the
Leasehold Mortgagee of such notice. The of a Leasehold Mortgage shall have the
right to exercise the renewal options on behalf of Lessee.
4. Signage:
Lessee, at its sole discretion, shall have the irrevocable right to
utilize any portion of the Premises to erect and maintain signage, subject to
any aviation rights or easements that any governmental entity may have or
require for signage or any purpose.
Jd / P.S.
---------------------
initials / initials
2
<PAGE>
5. Existing Improvements:
The parties acknowledge that the Lease Property is currently being used by
Lessor as a motel. Lessee agrees that Lessee shall take possession of the
Premises in its "As Is" condition and subject to all applicable laws,
regulations and ordinances, and Lessee acknowledges that Lessor is making no
representations or warranties whatsoever, express or implied, including, but
without limitation, with respect to the condition of the Premises, its
compliance with applicable laws, regulations and ordinances, or its suitability
for Lessee's intended use or fitness for a particular purpose, the structural
integrity of the Improvements, the conformity of the Premises to past, current
or future applicable zoning or building code requirements, the existence of soil
instability, past soil repairs, soil additions or conditions of soil fill,
susceptibility of landslides, sufficiency of undershoring, sufficiency of
drainage, whether the property is located wholly or partially in a flood plain
or a flood hazard boundary or similar area, the presence of any regulated,
hazardous or toxic substance upon the Premises, or any other matters affecting
the stability, integrity, suitability, use or occupancy of the land or any
buildings or improvements situated on any part of the Premises. Lessee is not
relying upon any representations or warranties of Lessor, or any entity or agent
affiliated with Lessor, but Lessee shall rely solely on Lessee's own
investigation of all aspects of the Premises, such as soil tests, drainage
studies, feasibility studies, or environmental site assessments. Lessor shall
not be obligated to make any improvement, alteration or repair whatsoever with
respect to the Premises, before, at, or after the Lease Commencement Date,
except for any damage caused after the Lease Commencement Date by Lessor's or
its agents' or employees' acts or omissions occurring after the Lease
Commencement Date. The provisions of this paragraph are material and constitute
a material portion of the consideration given Lessor by Lessee in exchange for
Lessor's performance hereunder. Lessee acknowledges that the rent and the
purchase price agreed upon in Paragraph 24 take into consideration that Lessee
has agreed to the provisions of this paragraph.
Lessee shall pay and be wholly responsible for all expenses to tear down,
remove or otherwise dispose of any buildings, personal property, furnishings,
fixtures or equipment which remain on the Premises when Lessee takes possession.
6. Use:
During the Lease Term, and any renewal or extension thereof, the Lease
Property may be used by Lessee for any lawful use, so long as Lessee complies
with all laws incident to such use.
Jd / P.S.
---------------------
initials / initials
3
<PAGE>
7. Rent:
As compensation for the use of the Lease Property, Lessee shall pay rent
to Lessor at such address as Lessor shall designate in Paragraph 30, as follows:
(a) Rent amount. Lessee shall pay to Lessor as monthly rent
(sometimes referred to as the "Fixed Rent") commencing on the Lease Commencement
Date and thereafter on the first day of each and every successive month
one-twelfth (1/12) of the following Annual Rent:
YEAR ANNUAL RENT
1 $1,000,000.00
2 $1,230,000.00
3 $1,265,000.00
4 $1,438,000.00
5 $1,581,000.00
6 $1,628,000.00
7 $1,675,000.00
8 $1,725,000.00
9 $1,777,000.00
10 $1,830,000.00
11-20 $1,830,000.00 as adjusted per Paragraph 7(b)
provided, however, that a credit of $50,000.00 is to be applied to the first
month's rent as per Paragraph 7 of the Agreement. In the event the Lease
Commencement Date or the expiration of the Lease Term, or any renewal or
extension thereof, is not the first day of a calendar month, then rent for such
partial calendar month shall be prorated on the basis of the number of days in
such month. Rent is payable without abatement or set off for any reason. Any
rent not paid on or before five (5) days after the date due shall be subject to
a 3% late fee.
(b) Rent Adjustments. The monthly rent shall be subject to
adjustments on each and every annual anniversary of the first day of the first
calendar month occurring ten (10) years after the calendar month in which the
Lease Commencement Date occurs (the "Rent Adjustment Date") in the following
manner:
The monthly rent shall be adjusted upward (and never downward) on each
Rent Adjustment Date in the same proportion as the percentage increase in the
Consumer Price Index, U. S. City Average-All Urban Consumers for All Items
(1982-1984=100) published by the United States Department of Labor, Bureau of
Labor Statistics for the month immediately prior to the Rent Adjustment Date
over the Index published for such month in the immediately preceding year, but
no more than 3%.
Jd / P.S.
---------------------
initials / initials
4
<PAGE>
8. Rent to Be Net:
It is the underlying intent of this Lease that during the Lease Term, and
any renewal or extension thereof, the Lease shall for all purposes be treated as
the lease of the vacant unimproved land, and that Lessor shall receive the rent
as hereinabove provided absolutely net, without any liability, obligation or
responsibility for any charges of any nature whatsoever with respect to the
Premises, and that all costs, expenses and obligations relating to the Premises
shall be performed and paid for by Lessee. Accordingly, consistent with the
underlying intent, and for and during the Lease Term and any renewal or
extension thereof:
(a) Beginning with the Lease Commencement Date and thereafter
throughout the Lease Term, and any renewal or extension thereof, Lessee shall
pay all real and personal property taxes, general and special assessments,
(including Clark County Improvement District #97A (Las Vegas Boulevard Median
Landscape)) and other charges of every description levied on or assessed against
the Land, or Improvements located on the Land, personal property, if any,
located on Premises, the leasehold estate, or any subleasehold estate. Lessee
shall make all such payments directly to the appropriate taxing authority in
installments as authorized by law, on or before the due date. Any taxes or
special assessments assessed and paid prior to the Lease Commencement Date, or
assessed prior to but payable after the Lease Commencement Date, and all taxes
assessed during the Lease Term or any renewal or extension thereof, but payable
after the Lease Term, or any renewal or extension thereof, shall be adjusted and
prorated so that Lessor pays its prorated share for the period prior to and
after the Lease Term and any renewal or extension thereof. Nothing herein
contained shall require Lessee to pay any municipal, state or federal net
income, gift, estate, inheritance or excess profits taxes assessed against
Lessor.
(b) Lessee may, should it so elect, contest the legal validity or
amount of any taxes, assessments, or charges for which Lessee is responsible
under this Lease, any may institute such proceedings as Lessee considers
necessary. If Lessee contests any such tax, assessment or charge, Lessee may
withhold or defer payment or pay under protest but shall protect Lessor and the
Premises from any tax sale or lien foreclosure by adequate surety bond or other
appropriate security.
(c) Lessor appoints Lessee as Lessor's attorney-in-fact for the
purpose of contesting any taxes, assessments or charges, and Lessor will not
take any action with respect thereto and Lessor will cooperate with Lessee in
any contest if required for Lessee to pursue such contest.
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(d) Lessee shall assume and pay all expenses to maintain and operate
the Premises, and all costs, expenses and obligations relating to the Premises
shall be performed and paid for by Lessee.
(e) Lessee shall assume and pay all premiums for insurance carried
by Lessee as required herein, and for all liability insurance and property
insurance carried by Lessee with respect to the Premises.
(f) Lessee shall assume and pay all expenses for utilities. Utility
expenses shall also be prorated to the Lease Commencement Date.
(g) Lessor shall not be called upon to make any improvements to,
restoration or repairs of the Premises, of any nature whatsoever.
(h) Lessee shall annually furnish to Lessor or Lessor's designated
agent, proof of compliance of payment of the foregoing.
9. Agreements Affecting Use:
Lessee may plan for or enter into agreements restricting or affecting use
over or affecting the Premises or may undertake to or effectuate the obtaining
of zoning changes or use permits (permanent or conditional) ; provided, however,
that no easements (other than easements for utility services) shall be granted
without the written approval of Lessor (which approval will not be unreasonably
withheld). Lessor shall respond to a written request for such approval within
fifteen (15) days of receipt of a request therefor, and the failure to respond
within such fifteen (15) day period shall be deemed to constitute Lessor's
approval of the easement requested and any easement granted without such
approval shall be void. Lessor shall, upon Lessee's notice or request, join with
Lessee in applications and proceedings to accomplish the foregoing, but without
cost or expense to Lessor. Lessee hereby indemnifies and hold Lessor harmless
from and against any and all costs, expenses, claims, liabilities and
obligations arising out of or in connection with Lessee's planning for and
achievement of land use entitlement, zoning changes, or use permits affecting
the Premises. Lessor shall not grant any easements or encumbrances other than a
fee mortgage or deed of trust, and any fee mortgage or deed of trust or other
encumbrances created by the Lessor shall be subordinate to the Lease.
10. Improvements - Construction, Alterations, Demolition:
Lessee shall be obligated to make Improvements with respect to the
Premises, with a cost not less than FOUR MILLION DOLLARS ($4,000,000.00). Prior
to the Lease Commencement Date, Lessee shall not construct any Improvements on
the Lease Property. After
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the Lease Commencement Date, Lessee shall construct the Improvements on the
Premises on the following terms and conditions:
(a) In the course of making these Improvements, Lessee may remove,
replace, alter, relocate, reconstruct, add to existing improvements, modify or
change the contour or grade of the Lease Property, including subsurface
excavations and improvements.
(b) Lessee shall notify Lessor of the commencement date of
construction in sufficient time to allow Lessor to record a Notice of
Non-Responsibility pursuant to Chapter 108 of the Nevada Revised Statutes, and
Lessor may record a Notice of Non-Responsibility whenever Lessor deems it
appropriate.
(c) Lessor makes no covenant or warranty respecting the condition of
the soil or subsoil or respecting the condition of the Premises.
(d) Lessee will not use or allow the Premises to be used to any
illegal purpose resulting in hazard to Lessor or in condemnation or liability in
consequence thereof, and any alleged illegal use of said Premises of a material
nature shall be cured by Lessee within a reasonable time after Lessee receives
notice thereof. Lessee will at all times observe and abide by all statutes,
ordinances, rules and regulations of or promulgated by any lawful authority,
relating to or regulating the use and occupation of said Premises and the
business of Lessee. If Lessee contends in good faith that such use is not
illegal, or that it does not otherwise have to comply with a particular statute,
ordinance, rule or regulation, then Lessee may in appropriate procedures contest
the same.
(e) During the Lease Term, and any extension or renewal thereof,
Lessee shall have the right from time to time to make such alterations,
additions, modifications, repairs, renovations and changes (collectively
"Changes") to the Premises and the Improvements located thereon as Lessee may
elect.
(f) Lessee hereby indemnifies and holds Lessor harmless from any and
all loss, cost, damage, claim, liability, obligation, or expense, including but
not limited to Lessor's reasonable attorney's fees, arising out of or resulting
from the construction of Improvements on the Premises.
11. Liens and Encumbrances:
Lessee shall keep the Premises free and clear from any lien, claim or
encumbrance throughout the term of any construction of the Improvements, and
throughout the Lease Term, and Lessee does hereby indemnify Lessor against any
and all such liens, claims or encumbrances, and against any cost and expenses
including but not
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limited to reasonable attorney's fees which may accrue, grow out of or be
incurred by reason of any lien, claim or encumbrance; however, Lessee can grant
Leasehold Mortgages. In the event of the filing of any mechanics' or
materialmans' lien, Lessee shall, within sixty (60) days after notice of the
filing thereof, cause the same to be discharged of record by payment, deposit,
bond, order of a court of competent jurisdiction or other appropriate action to
prevent the enforcement of such lien. Lessee shall have the right to contest any
mechanic's or materialman's lien by appropriate legal proceedings; provided,
however, that no such contest shall relieve Lessee of its obligation to
discharge any such lien within the sixty (60) day period provided in the
preceding sentence.
12. Bonds:
Unless otherwise provided below, Lessee shall, prior to the commencement
of any demolition of any existing improvements which are presently on the
Premises and prior to the commencement of any construction of any Improvements,
and continuing until completion of the Improvements have in place a Completion
and Performance Bond and a Labor and Material Payment Bond (collectively the
"Bonds") from an insurance or surety company which guarantees that at least $4
million of Lessee's Improvements will be completed, that all contractors and
subcontractors, materialmen and others providing any work or labor regarding the
Improvements will be paid, and that the Land and the Improvements made to the
Land by Lessee will be free and clear of any lien resulting from construction of
the Improvements. These Bonds, including the form and content thereof, and the
insurer or surety (which shall be a reputable company) are subject to Lessor's
review and approval. Lessor's approval of the Bonds and the insurer or surety
shall not be unreasonably withheld. The Bonds will be in a sum of at least FOUR
MILLION DOLLARS ($4,000,000.00). The Completion and Performance Bond shall
include a provision that guarantees payment of rent under the Lease until the
Improvements are completed. However, this guaranty of rent provision shall not
be required if, prior to the Lease Commencement Date, the Lessee shall have paid
to Lessor the additional sum of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) as
and for a security deposit for the payment of rent or any other sum required to
be paid by Lessee under this Lease, and which security deposit may without
notice be applied by Lessor to the payment of any rent or other sum which is not
timely paid under this Lease beyond any applicable notice and grace period, and
which deposit shall remain in effect until substantial completion of the
Improvements (which shall be deemed to occur when Lessee commences the conduct
of business in the Premises) , at which point it shall immediately be returned
to Lessee, including any interest earned thereon. Any portion of the deposit
which is applied by Lessor shall be reimbursed by Lessee within ten (10) days
after demand by Lessor. Lessee shall have the right to deliver to Lessor an
irrevocable
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clean letter of credit in lieu of the $300,000.00 cash deposit, in firm and
substance reasonably satisfactory to Lessor, which shall be held and applied in
the same manner as the cash deposit.
13. Right to Enter:
The Lessor, or his agent or nominee, at all reasonable times, and upon
advance notice of at least twenty-four (24) hours, shall have free access to the
Premises for the purpose of examining or inspecting the condition thereof, to
exhibit the Lease Property to prospective purchasers, and to determine if the
Lessee is performing the covenants and agreements of this Lease, and to post
such reasonable notices as the Lessor may desire to protect the rights of the
Lessor, provided, however, that Lessor shall not interfere with Lessee's conduct
of business in exercising its rights under this Paragraph 13.
14. Indemnity:
Lessor shall not be liable to Lessee or any other person for or on account
of any injury or damage occurring after the Lease Commencement Date occasioned
in or about or in connection with the Premises to persons or property of any
nature or sort whatsoever or wheresoever or howsoever arising except to the
extent caused after the Lease Commencement Date by acts of Lessor, or Lessor's
agents or employees occurring after the Lease Commencement Date, and Lessee
hereby indemnifies and keeps and holds Lessor harmless against and from any and
all loss, cost, damage, claim, liability, obligation, or expense, including but
not limited to, reasonable attorney's fees arising out of or resulting from any
injury or claim of injury of any nature or sort whatsoever to any person or
property whomsoever or whatsoever suffered or received in or about the Premises
at any time during the term hereof, or arising from any accident or other
occurrence causing any injury to any person or property whomsoever or whatsoever
or due directly or indirectly to the conditions of the Premises or any part
thereof during the term hereof or due to the action or failure to act of any
person.
15. Insurance:
(a) Throughout the Lease Term, at Lessee's sole cost and expense,
Lessee shall keep or cause to be kept insured all buildings, equipment and
improvements, including all alterations, replacements, changes and additions,
located on or appurtenant to the Premises, against loss or damage by fire and
such other risks as are now or hereafter included in an extended coverage
endorsement in common use for commercial structures, including without
limitation, vandalism, malicious mischief, lightning, earthquake, windstorm,
explosion, riot, riot attending a strike, civil commotion, damage from aircraft
and vehicles and smoke damage. The amount of the insurance shall be
sufficient to prevent
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either Lessor or Lessee from becoming a coinsurer under the provisions of the
policies, but in no event shall the amount be less than 90 percent of the then
actual replacement cost, excluding costs of replacing excavations and
foundations but without deduction for depreciation (herein called Full Insurable
Value). Lessor shall, at Lessee's sole cost and expense, cooperate fully with
Lessee to obtain the largest possible recovery, and all policies of fire and
extended coverage insurance required hereunder shall provide that the proceeds
shall be paid to Leasehold Mortgagee for application pursuant to the Leasehold
Mortgage (as herein defined), or, if none, to the Depositary (as herein
defined), to be held for the purpose of repairing, restoring, maintaining and
reconstructing the Improvements as required by this Lease; provided, however,
that proceeds less than the greater of (i) $500,000 (as adjusted annually in the
same manner as rent adjustments under Paragraph 7(b) above, but beginning on the
first anniversary of the Lease Commencement Date, but no more than 3% annually
in the aggregate shall be paid directly to Lessee and applied by Lessee for any
such repair, maintenance, reconstruction or restoration required by this Lease
or for such other disbursement as is authorized hereunder. Any insurance
proceeds remaining after complying with the provisions of this Lease relating to
maintenance, repair, and reconstruction of improvements shall be the Lessee's
sole property. Each Leasehold Mortgage shall be named as a loss payee in any
policy required by this Paragraph (a). "Depositary" shall mean any bank or trust
company designated by Lessee which is a corporation organized and doing business
under the banking laws of the United States or the State of Nevada, having a
place of business in Las Vegas, Nevada and a combined capital and surplus of at
least $100,000,000 and which shall act as depositary hereunder to receive and
disburse insurance proceeds hereunder without compensation unless required.
(b) Before commencement of any demolition or construction, Lessee
shall procure, and shall maintain in force until completion and acceptance of
the work, "all risks" builder's risk insurance including vandalism and malicious
mischief, in form and with a company reasonably acceptable to Lessor, covering
improvements in place and all material equipment at the job site furnished under
contract, but excluding contractor's, subcontractor's, and construction
manager's tools and equipment and property owned by contractor's or
subcontractor's employees, with limits of at least ONE MILLION DOLLARS
($1,000,000.00) per loss for all work at the job site.
(c) Throughout the Lease Term, at Lessee's sole cost and expense,
Lessee shall keep or cause to be kept in force, for the mutual benefit of Lessor
and Lessee, comprehensive broad form general public liability insurance against
claims and liability for personal and bodily injury, death, or property damage
arising from the use, occupancy, disuse, or condition of the Premises,
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improvements, or adjoining areas or ways, providing protection of at least
ONE MILLION DOLLARS ($1,000,000.00) for personal or bodily injury or death to
any one person, at least TWO MILLION DOLLARS ($2,000,000.00) for any one
accident or occurrence, and at least ONE MILLION DOLLARS ($1,000,000.00) for
property damage, together with FIVE MILLION DOLLARS ($5,000,000.00) of excess
liability coverage.
(d) Lessee shall procure and keep in force in form and coverage
reasonably satisfactory to Lessor:
(i) Boiler and machinery insurance if at any time or from time
to time such equipment is located on the premises.
(ii) Other insurance, in amounts from time to time reasonably
required by Lessor, against other insurable risks, if at the time they are
commonly insured against for premises similarly situated and containing
comparable improvements.
(e) All insurance required by express provisions of this Lease shall
be carried only in reputable insurance companies licensed to do business in
Nevada (and which shall have a financial rating of at least an A + 3A status as
rated in the most recent edition of Best's Rating Guide), and any liability
insurance shall designate Lessor and any Leasehold Mortgagee (as herein defined)
as an additional insured. All such policies shall be nonassessable and shall
contain language, to the extent obtainable, to the effect that (1) any loss
shall be payable notwithstanding any act or negligence of Lessor that might
otherwise result in a forfeiture of the insurance, (2) the insurer waives the
right of subrogation against Lessor and against Lessor's agents and
representatives, (3) the policies are primary and noncontributing with any
insurance that may be carried by Lessor, and (4) they cannot be canceled or
materially changed except after 10 days' notice by registered or certified mail
by the insurer to Lessor or Lessor's designated representative. Any insurer
acceptable to Leasehold Mortgagee is deemed acceptable to Lessor. Lessee shall
furnish Lessor with copies of all such policies promptly on receipt of them, or
with certificates evidencing the insurance. Before the Lease Commencement Date,
Lessee shall furnish Lessor with binders representing all insurance required by
this Lease. Lessee shall have the right to carry insurance under blanket
policies covering properties in addition to the Lease Property.
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16. Lessee's Right of Hypothecation of Lessee's Leasehold Interest in
this Lease:
Lessee (including without limitation its assigns and successors,
sublessees, their successors and assigns) shall have the absolute and
unrestricted right at any time or from time to time to mortgage, give one or
more deeds of trust or security interests in, or hypothecate Lessee's leasehold
interest, or any of Lessee's rights in the Improvements, for and during the
Lease Term, or any renewal or extension thereof, so long as Lessor's fee title
is not encumbered or subject thereto in any manner.
17. No Subordination:
Lessee acknowledges that Lessor will record a Memorandum of Lease,
in the form attached hereto as Exhibit B, which will become a matter of public
record affecting the condition of the title and that Lessor will not subordinate
the fee title to the Lease in any manner. If Lessor does not record the
Memorandum of Lease, Lessee shall have the right to do so. Neither party shall
record this Lease.
18. Destruction:
(a) If all or any Improvements on the Premises shall be totally or
partially destroyed or damaged by fire or other casualty, the Lessee shall be
obligated to rebuild or repair the same only if (i) the rules, regulations, laws
or ordinances of any governmental authority having jurisdiction do not prohibit
such repair or rebuilding, (ii) the proceeds of any insurance policy payable
with respect to the fire or other casualty are made reasonably available to
Lessee by the Leasehold Mortgagee or the Depositary, as the case may be, and
(iii) the cost of such repair or rebuilding is less than 35% of the then
replacement value of the Improvements as a whole. If any of (i), (ii) or (iii)
above shall not be the case, then Lessee may at its option, exercisable by
notice to Lessor, terminate this Lease, effective as of the date of said notice;
provided, however that anything to the contrary notwithstanding, no termination
shall be effective or occur prior to the end of twelve (12) years after the
Lease Commencement Date and unless Lessee, if requested by Lessor, demolishes
the Improvements and levels the Land at Lessee's expense.
(b) Upon any fire or other casualty occurring during the last 3
years of the initial Lease Term or during any renewal or extension of the Lease
Term, the Lessee shall have the option, exercisable by notice to Lessor, to
terminate this Lease, in which event (i) this Lease shall be canceled effective
as of the date of said notice and (ii) any insurance proceeds shall be disbursed
in accordance with sub-paragraph (c) below.
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(c) Except as otherwise provided in Paragraph 18(a) above, in the
event of any termination of this Lease pursuant to this Paragraph 18, Lessee
shall not be obligated to replace, rebuild or alter the damaged or destroyed
Premises or part thereof, and the insurance proceeds paid or payable with
respect to the casualty resulting in such termination (the "Insurance Proceeds")
shall be disbursed (by the Leasehold Mortgagee, the Depositary or Lessee, as the
case may be) in the following order of priority:
(i) the holder of any Leasehold Mortgage shall first be
entitled to receive, to the extent available, such portion of the Insurance
Proceeds as shall equal the unpaid principal balance and accrued interest on any
such Leasehold Mortgage, or if the holder of any Leasehold Mortgage has acquired
this Lease and the Premises through foreclosure or by assignment of this Lease
in lieu of foreclosure and is in possession thereof, such holder shall be
entitled to receive, to the extent available, such portion of the Insurance
Proceeds as shall equal (A) the unpaid principal balance and accrued interest on
any such Leasehold Mortgage as of the date of acquisition of this Lease and the
Premises, plus (B) the amount, if any, equal to the excess of the amount of
interest at the annual rate provided in the Leasehold Mortgage that would have
accrued on the unpaid principal balance of the Leasehold Mortgage during the
period that the Leasehold Mortgagee has held title to this Lease over the amount
of net cash flow retained by the Leasehold Mortgagee during such period;
(ii) Lessor shall be entitled to the cost, as reasonably
estimated by Lessor's architect or engineer, of demolishing the Improvements and
leveling the Land;
(iii) Lessee shall be entitled to an amount equal to Tenant's
cash capital investment in the cost of constructing the Improvements; and
(iv) Lessor shall be entitled to the balance, if any.
(d) In the event that the Depositary is holding the Insurance
Proceeds and Lessee either elects or is obligated to rebuild and/or repair the
Improvements or any portion thereof after a fire or other casualty, then the
Depositary shall disburse such Insurance Proceeds either to reimburse Lessee for
expenditures made in connection with the rebuilding or repair of the
Improvements or to pay contractors, subcontractors, materialmen, engineers,
architects or other persons who have rendered services or furnished materials
for such rebuilding or repair, and shall make such disbursements from time to
time as such rebuilding or repair progresses, upon the written request of Lessee
in such manner and subject to such requirements as the Depositary shall
reasonably impose. Upon receipt by the Depositary of evidence satisfactory to
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it that such rebuilding or repair has been completed and paid for in full and
that there are no mechanics' or other liens against the Premises except for
those contested in good faith by Lessee in accordance with Paragraph 11 hereof,
the Depositary shall pay to Lessee any remaining balance of the Insurance
Proceeds.
19. Condemnation:
(a) Except as otherwise provided in Paragraph 19(e) below, if title
to all of the Premises is taken for any public or quasi-public use under any
statute, or if all or a material portion of the parking facilities located on
the Premises are taken, or if there is no longer substantially the same access
to the Premises from a public street, or by right of eminent domain, or if title
to so much of the Premises is so taken that a reasonable amount of
reconstruction of the Premises will not result in the Premises being a practical
improvement reasonably suitable for Lessee's continued use and occupancy in
substantially the same manner, then, in either event, at Lessee's option, this
Lease shall terminate on the date that possession of the Premises, or such part
of the Premises, is taken. Any taking which results in the termination of this
Lease under this Paragraph 19 (a) is hereinafter sometimes called a "Total
Taking."
(b) Except as otherwise provided in Paragraph 19(e) below, if any
part of the Premises shall be so taken and, the Lease is not terminated as
provided in Paragraph 19(a) above (a "Partial Taking") , then this Lease shall,
as to the part so taken, terminate as of the date that possession of such part
is taken, and the rent shall be equitably reduced based on the loss in value to
Lessee's Interest (as defined below) as determined per subparagraph (i) below.
(c) In the event of any Total Taking, the rights and interests of
Lessor and Lessee in and to the entire award or aggregate of any separate awards
to Lessor and Lessee for such Total Taking less the cost of the determination of
the amount thereof (the "Condemnation Proceeds") shall be paid and distributed
to Lessor and Lessee pro rata in accordance with the ratio of Lessor's Interest
to Lessee's Interest, determined in accordance with subparagraph (i) below as of
the date of taking as if there were no taking and this Lease were in full force
and effect. "Lessor's Interest" shall be the value of Lessor's interest in the
Premises, subject to this Lease. "Lessee's Interest" shall be the value of
Lessee's leasehold interest pursuant to this Lease.
(d) In the event of a Partial Taking, the Condemnation Proceeds
shall be paid and distributed in the following order of priority:
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(i) to Lessee for any restoration or modification of the Lease
Property required as a result of such Partial Taking; and
(ii) to Lessor and Lessee pro rata in accordance with the
ratio of Lessor's Interest to Lessee's Interest.
(e) In the event of a taking of the whole or any part of the
Premises or of Lessee's interest in this Lease for a temporary use or occupancy,
the Lease Term shall not be reduced or affected in any way.
In the event of any such temporary taking, Lessee shall be entitled
to receive the entire amount of the proceeds with respect to such temporary
taking whether such award is paid by way of damages, rent or otherwise, unless
such period of temporary use or occupancy shall extend beyond the expiration
date of the Lease Term, or any extension or renewal thereof, in which case such
award, if paid in a lump sum, shall be apportioned between Lessee and Lessor as
of such date of expiration in the same ratio that the part of the entire period
for which such compensation is made falling before the date of expiration and
the part falling after, bear to such entire period, and if such award is paid in
installments, Lessee shall be entitled to those installments covering any period
prior to the expiration of the Lease Term, or any extension or renewal thereof,
and Lessor shall be entitled to the remaining installments (any installment
covering a period both before and after the expiration of the Lease Term, or any
extension or renewal thereof, shall be apportioned as above set forth).
(f) Those who are entitled to share in any proceeds pursuant to this
Paragraph 19 shall be entitled to any interest paid on the award or awards
received by them or applied for their account.
(g) Lessor, Lessee and the holders of any Leasehold Mortgage or fee
mortgage shall each have the right, at their own expense, to appear in any
condemnation proceeding and to participate in any and all hearings, trials and
appeals therein. Neither Lessor nor Lessee shall make any settlement with the
condemning authority or convey any portion of the Premises in lieu of
Condemnation or consent to any taking without the prior written consent (not to
be unreasonably withheld) of the other and any Leasehold Mortgagee.
(h) In the event Lessor or Lessee shall receive notice of any
proposed or pending taking or temporary taking affecting the Premises, the party
receiving such notice shall promptly notify the other party of the receipt and
contents thereof.
(i) If Lessor and Lessee are not able to agree on
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Lessor's Interest and Lessee's Interest (which agreement shall be subject to the
approval of any Leasehold Mortgagee) within ninety (90) days after the
applicable taking, the determination, shall be made by a member of the American
Institute of Real Estate Appraisers who shall be an appraiser of a nationally
recognized firm and have at least five (5) years' experience appraising
properties used for the same purposes as the Premises. The appraiser shall be
selected, and shall make his determination, in accordance with the rules of the
American Arbitration Association, provided that he shall be instructed that he
cannot modify any of the terms of this Lease in making his determination. The
appraiser's determination shall be final and binding on the parties.
20. Right to Assign and Inurement:
The covenants and conditions herein contained shall apply to, be for
the benefit of and bind the heirs, legatees, devisees, successors, executors,
administrators and assigns of all of the parties hereto, and all persons holding
under or through them or any of them. All of Lessor's and Lessee's covenants
herein are continuing and shall run with the land, binding without exception all
who take or acquire any interest hereunder. Every person taking any interest
hereunder (whether Lessor or Lessee) shall by virtue of the taking be deemed to
accept such interest and without further act be deemed to become bound
hereunder. Lessor and Lessee shall have the right to assign their rights,
interests, and obligations under this Lease and/or to sublease all or any
portion of the Premises without the other party's consent; provided, however,
that Lessee shall not be released of any liability and obligation under this
Lease upon any assignment of the Lease or upon any sublease. All of Lessor's
right, title and interest in this Lease shall automatically be assigned to the
acquiror of Lessor's fee interest in the Land, and such purchaser shall be
deemed to have assumed such obligations, whereupon Lessor shall be released of
same. Any sale of Lessor's interest in the Premises or assignment of Lessor's
rights, interests and obligations under this Lease shall be subject to all of
the terms and provisions of this Lease including but not limited to Lessee's
rights under the terms of Paragraph 24 of this Lease.
This Lease shall be superior to all encumbrances hereafter created
and affecting fee title to the Land and to all fee mortgages. Any hypothecation
or other encumbrance of Lessor's fee interest in the Premises, including any fee
mortgage shall be subordinate to the Lease.
At Lessee's request, Lessor shall enter into a non-disturbance
agreement with each subtenant of Lessee in form and substance reasonably
satisfactory to Lessor and the subtenant, providing that, among other matters
customarily set forth in a non-
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disturbance agreement, so long as such tenant and/or subtenant is not in default
beyond any applicable notice and grace period under its sublease, its use and
occupancy of the subleased premises will not be disturbed.
21. Default by Lessee:
(a) In the event the Lessee shall at any time default in (i) the
payment of any Fixed Rent or any other single rental payment of $50,000 or more,
and such default continues for fifteen (15) days after notice from Lessor to
Lessee or (ii) the performance of any of the Lessee's covenants, agreements or
obligations hereunder, which default continues for forty-five (45) days after
receipt of written notice thereof from Lessor by Lessee, or if such default is
not reasonably susceptible of being cured by Lessee within such 45-day period,
then if Lessee fails to commence with reasonable diligence and continuity to
cure such default or breach and complete said cure within a reasonable time, or
should the Lessee make a general assignment for the benefit of creditors or file
or have filed against it a bankruptcy petition under the United States
Bankruptcy Code, or if a receiver is appointed to take possession of a
substantial portion of Lessee's assets or of any portion of the Premises or the
Improvements or of Lessee's leasehold interest, and such bankruptcy or
receivership proceeding is not dismissed or permanently stayed within sixty (60)
days after the filing of such proceeding, or should the Lessee abandon the
Premises, then the Lessor may, with or without notice or demand:
(i) Terminate this Lease and declare the term of this Lease
ended and in any manner permitted by law re-enter the Premises or any part
thereof, and take possession thereof, and expel and remove therefrom the Lessee
or any or all parties occupying the same, using such force as may be necessary
to do so, and repossess and enjoy the same without prejudice to any remedies
that might be otherwise used for arrears of rent or other breach hereof; and
Lessor may recover the value at the time of such termination of the excess, if
any, of the amount of rent reserved in this Lease for the remainder of the term
over the then reasonable rental value of the Land for the remainder of the term;
or
(ii) Without terminating this Lease and without declaring this
Lease ended, re-enter the Premises and take possession thereof, and re-let the
whole or any part thereof for the account of Lessee, and collect said rent and
apply it on the amount due from Lessee hereunder after deducting any expense of
such reletting, the cost of removal of Lessee, reasonable attorney's fees, and
cost of reasonable remodeling, and then or at any time or from time to time
recover from Lessee the balance then due (which in the event of a re-letting
shall be due from time to time as rent is due).
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(b) Lessor's remedies provided in this Lease shall be in addition to
all other rights and remedies provided by law or equity, to which Lessor may
resort cumulatively or in the alternative.
(c) No re-entering or taking possession of the Premises by Lessor
shall be construed as an election on Lessor's part to terminate this Lease
unless written notice of such election is given to Lessee or unless a
termination is accomplished by operation of law or is declared by a court of
competent jurisdiction.
22. Improvements to Become Property of Lessor:
At the expiration of the term of this Lease or upon sooner
termination of this Lease (or upon the Lessor's retaking possession of the Land
pursuant to Paragraph 21 whether or not the Lease is terminated), all of
Lessee's rights in all improvements on the Premises (including but not limited
to the Improvements, but at Lessee's option, excluding fixtures and equipment)
shall terminate and all such improvements shall thereupon be surrendered to the
Lessor and become the Lessor's property, free and clear of all liens and
encumbrances, without compensation to Lessee, and all personal property
(including fixtures and equipment, if Lessee so elects) shall be the property of
Lessee. Upon termination of the Lease, or upon Lessor's retaking possession,
Lessee shall be under no obligation to demolish or remove the Improvements, any
fixtures, equipment or personalty.
23. Subleases and Assignment of Subrents:
Lessee assigns to Lessor all subrents and other sums falling due
from lessees, licensees, and concessionaires (herein called sublessees) during
any period of a default by Lessee that continues beyond any applicable notice
and grace period in which Lessor has the right under this Lease, whether
exercised or not, to reenter the Premises (the "Assignment Period") , and Lessee
shall not have any right to such sums during the Assignment Period. This
assignment is subject and subordinate to any and all assignments of the same
subrents and other sums made to a mortgagee, secured creditor, or holder of a
beneficial interest under a deed of trust under any mortgage, security interest
or deed of trust. During the Assignment Period, Lessor may at Lessor's election
reenter the Premises and the Improvements in any manner permitted by law,
without terminating this Lease, and either or both collect these sums or bring
action for the recovery of the sums directly from such obligors. All rents
collected prior to the termination of the Lease for rent payable during the
Lease Term shall be applied to amounts due under this Lease, including taxes.
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Subject to the rights of a Leasehold Mortgagee, as set forth above,
all subleases shall contain provisions providing that:
(a) Upon receipt by sublessee of notification from Lessor that the
Lease has been terminated by reason of Lessee's default, or that Lessor has
re-entered the Premises as a result of Lessee's default beyond any applicable
notice and grace period, or upon expiration or sooner termination of the Lease,
the sublessee will:
(i) at the election of the Lessor, attorn and pay the rent and
any other sum required to be paid by sublessee to the Lessor, and Lessor may
elect to have the sublease continue as a direct lease between the sublessee and
the Lessor; or
(ii) subject to any non-disturbance agreement with the
subtenant, if Lessor elects to treat the sublease as terminated, the sublessee
will immediately vacate and surrender the premises to the Lessor.
(b) Advance payment of rent or of any other sum made by the
sublessee to the Lessee more than one (1) month in advance of the due date shall
not be good against the Lessor;
(c) Any offsets or defenses the sublessee might have against the
Lessee are not good against the Lessor; and
(d) In no event shall the Lessor succeed to any existing liabilities
of the Lessee to the sublessee.
Acceptance by Lessor from a sublessee of rent or any other sum
required to be paid by a sublessee under a sublease, or of any rent or other sum
from Lessee, shall not be deemed to be a waiver of any of Lessor's rights under
paragraphs 21 or 22 above, or of any other right of Lessor provided in this
Lease or otherwise provided by law.
24. Option to Purchase:
So long as this Lease has not been terminated, Lessee shall have the
exclusive right and option (the "Option"), as of any date from and after five
(5) years after the Lease Commencement Date to purchase the Lease Property
"AS-IS" at any time during the remaining Lease Term, or any extension or renewal
thereof, on the following terms and conditions:
(a) The purchase price for the Lease Property initially shall be TEN
MILLION DOLLARS ($10,000,000.00) cash on closing. The purchase price shall be
changed each year, beginning on the sixth anniversary of the Lease Commencement
Date and thereafter on each succeeding anniversary of the Lease Commencement
Date, in
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accordance with the following schedule:
Anniversary of Lease
Commencement Date Purchase Price
----------------- --------------
6 $9,200,000.00
7 $8,400,000.00
8 $7,600,000.00
9 $6,800,000.00
10 $6,000,000.00
The purchase price shall be increased (and never decreased) each year, beginning
on the eleventh anniversary of the Lease Commencement Date and thereafter on
each succeeding anniversary of the Lease Commencement Date (each, an "Option
Adjustment Date") in the same proportion as the percentage increase in the
Consumer Price Index, U. S. City Average - All Urban Consumers for All Items
(1982-1984=100) published by the United States Department of Labor, Bureau of
Labor Statistics for the month immediately prior to the Option Adjustment Date
over the Index published for such month in the immediately preceding year, but
no more than 3%. No monies paid as rent under this Lease shall be applied toward
the purchase price, except that rents which have been prepaid to Lessor for a
time past the Option Closing (as defined below) shall be prorated to midnight of
the day preceding the Option Closing
(b) Lessee may exercise the Option by giving at least thirty 30
days' written notice to Lessor notifying Lessor of its exercise.
(c) The closing of the purchase of the Lease Property shall occur on
a date selected by Lessee in its notice exercising the Option (the "Option
Closing"), which Option Closing shall be at least six (6) months after the date
that notice thereof is given.
(d) At the Option Closing, title to the Lease Property shall be
conveyed to Lessee by Grant, Bargain and Sale Deed free and clear of all
exceptions except current real property taxes and assessments, which are not yet
due and payable, and Permitted Exceptions which are defined as (i) any title
exceptions or matters permitted to remain against the Premises pursuant to the
provisions of Paragraph 25; (ii) the Amended Mechanic's Lien recorded by JMA
Architects & Engineers, Inc. ("JMA") and the civil action filed by JMA in Case
No. A352880, to the extent Lessee is responsible therefor under the Option
Agreement; (iii) any claims against Lessor or Monie Marie Incorporated or Pat
Somphone (or his family including Shao-Ying Somphone and Chan-Op-Somphone), and
the children of them, by Regent Capital Partners, Ltd. ("Regent") under that
certain Agreement and Option dated June 10, 1994, or by any of Regent's
successors or assigns, or by Melvin B. Miller, or any of his various investor
limited partners for which Lessee is required
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to indemnify them under the Option Agreement; and (iv) any title exceptions or
matters caused, approved or accepted in writing by Lessee.
(e) Lessor, at no additional cost and expense, shall provide Lessee
at the Option Closing with an ALTA extended coverage owner's or lender's policy
of title insurance from such title insurer acceptable to Lessee in the amount of
the purchase price insuring that Lessee is the owner of the Lease Property
subject only to current real property taxes and assessments which are not yet
due and payable and the Permitted Exceptions; provided, however, that Lessee
shall obtain and pay for any additional ALTA surveys or updates necessary to
obtain such title insurance and for any cost of such title insurance in excess
of National Title Company's standard cost for a CLTA owner's policy in the
amount of the purchase price. Lessor shall pay the transfer taxes necessary to
record the deed.
(f) In the event Lessee does not exercise the Option prior to the
end of the Lease Term, and all renewals or extensions thereof, Lessee shall have
the right to purchase the Lease Property at the end of the Lease Term, or any
renewal or extension thereof, for its then fair market value determined by
appraisal. Such right to purchase the Lease Property shall only be exercisable
upon the expiration of the Lease Term and all renewals or extensions thereof and
shall be of no force or effect in the event that the Lease terminates for any
reason whatsoever prior to the end of the Lease Term and all renewals or
extensions thereof.
At Lessor's option, in any sale of the Lease Property or of Lessor's
interest in this Lease, Lessee shall cooperate with Lessor in accommodating the
requirements of a tax-free exchange, at no cost or liability to Lessee.
Similarly, at Lessee's request, Lessor will cooperate with Lessee in
accommodating a tax-free exchange by Lessee, at no cost or liability to Lessor.
(g) The Lessee may assign its rights and delegate its duties under
this Paragraph 24 to any Leasehold Mortgagee.
25. Title Report at Option Closing.
(a) Title Report. Within 10 days of the notice of exercise of the
Option, Lessee shall obtain a preliminary title report covering the Lease
Property from a title company acceptable to Lessee (the "Title Report"), and
obtain a survey (the "Survey") if Lessee elects to order a survey. The Title
Report shall set forth the status of the title of the Lease Property and show
all liens, claims, encumbrances, easements, rights-of-way, encroachments,
reservations, restrictions, and any other matters affecting the Lease Property.
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(b) Review of Title Report. Lessee shall have 60 days from receipt
of the Title Report and the Survey in which to examine the Title Report and the
Survey and to specify to Lessor those items reflected thereupon which Lessee
will accept as permitted exceptions to title and those items which Lessee finds
objectionable ("Title Objections") ; provided, however, that Lessee shall have
no right to object to any title exceptions that are "Permitted Exceptions" as
defined above. Lessor, at Lessor's sole cost and expense, shall use all
reasonable efforts to correct or remove all Title Objections, give Lessee
written notice thereof and deliver at or prior to Option Closing an amended
title report reflecting the correction or deletion of such matters. If Lessee
does not deliver to Lessor a written notice specifying those items which are
Title Objections within the stated time period, then all of the items reflected
on the Title Report shall be considered to be Permitted Exceptions. Any liens
affecting the Lease Property, other than current taxes and assessments which are
not yet due and payable and Permitted Exceptions, shall be Title Objections, and
Lessor shall cause such liens to be released at or prior to Option Closing,
failing which Lessee may credit the cost of curing same against the purchase
price (without limiting its other rights).
26. Lessor's Put.
At anytime beginning ten (10) years after the Lease Commencement
Date, Lessor shall have the right to require Lessee to purchase the Lease
Property for SIX MILLION DOLLARS ($6,000,000.00) (as adjusted in the manner
provided in paragraph 24(a) above) (the "Lessor's Put") payable in cash at
closing by giving Lessee written notice of the Lessor's exercise of the Lessor's
Put. Lessee shall then have 6 months from the date of such notice to close the
purchase of the Lease Property; and title to the Lease Property shall be
conveyed to Lessee and title insurance for the Lease Property shall be provided
in accordance with the terms and provisions of Paragraphs 24 (d) and 24 (e)
27. Estoppel Certificate:
Lessor and Lessee shall, without charge, at any time and from time
to time hereafter, within fifteen (15) days after written request of the other
party to do so, certify by written instrument duly executed and acknowledged to
any Leasehold Mortgagee or proposed Leasehold Mortgagee, to Lessee or any
potential assignee of the Lease or purchaser of Lessee's assets or equity, or to
any other person reasonably requested by Lessor or Lessee (i) whether this Lease
has been supplemented or amended, (ii) the validity of this Lease, (iii) the
existence of any defaults hereunder, (iv) the existence of any offsets,
counterclaims or defenses hereto on the part of Lessee, (v) the commencement and
expiration dates of the term of this Lease, and (vi) any other matters as may be
reasonably requested by such person.
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28. Attorney's Fees:
In the event of any litigation, including all bankruptcy
proceedings, between the parties arising out of this Lease or alleged breach
thereof, or the tenancy created hereby, or in the event summary eviction or
unlawful detainer proceedings are brought by the Lessor, then the prevailing
party shall be awarded its costs and reasonable attorney's fees, including those
incurred on appeal.
29. Implementation:
Each of the parties shall at all times on demand execute such
documents and do such acts as may be reasonably necessary or appropriate to
implement and effectuate this Lease, its purposes and intent.
30. Notices:
Notices, consents, approvals and demands as contemplated hereby must
be in writing to be effective and shall be given or served personally or by any
recognized overnight courier providing receipt of delivery, or by certified or
registered mail, return receipt requested, upon Optionor or Optionee, as the
case may be, at the address hereinafter set forth:
To Lessor:
The Somphone Limited Partnership, a Nevada Limited
Partnership
c/o Monie Marie Incorporated, a Nevada Corp.,
General Partner
c/o Pat P. Somphone, President
2304 LaSolana Way
Las Vegas, Nevada 89102
With a Copy to:
James H. Walton, Esquire
Nitz, Walton & Heaton
514 South Third Street
Las Vegas, Nevada 89101
To Lessee:
S & W of Las Vegas, L.L.C, a
Delaware Limited Liability Co.,
1114 First Avenue
New York, New York 10021
Attn: James Dunn, Executive Director
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With a Copy to:
Joe Porcelli, Esquire
Maloney & Porcelli
225 Broadway
New York, New York 10007
All notices and demands shall be effective upon the earlier of
receipt or three (3) business days after being deposited in the United States
mail. However, the time period in which a response to any such notice or demand
must be given shall commence to run from the date of receipt on the return
receipt of the notice or demand by the addressee thereof. Rejection or other
refusal to accept or the inability to deliver because of changed address or
which no notice was given as provided below shall be deemed to be receipt of the
notice of demand sent.
By giving to the other party ten (10) days' written notice thereof
in the manner provided above, the parties hereto and their respective permitted
successors and assigns shall have the right from time to time during the term of
this Agreement to change their respective addresses for notices and any other
address within the United States of America.
31. No Partnership:
Nothing contained in the Lease shall be deemed or construed by any
person to create the relationship of principal and agent, or of partnership, or
of joint venture, or of any association between Lessor and Lessee. Neither the
method of computation of rent or any other provisions contained in such
documentation, nor any acts of the parties, shall be deemed to create any
relationship between Lessor and Lessee other than the relationship of landlord
and tenant, or of the relationship of independent parties agreeing to perform
the covenants contained in the Lease.
32. Time is of the Essence:
Time shall be of the essence in each and every part of this Lease.
33. Lessee is Not in Bankruptcy:
Lessee represents and warrants that Lessee and the guarantor of this
Lease are not in bankruptcy, and that there is no bankruptcy, insolvency,
receivership or similar action or proceeding, whether voluntary or involuntary,
pending against contemplated by, or threatened against Lessee or the guarantor
of this Lease, or any officer, director, shareholder, or member of Lessee or of
the guarantor to this Lease.
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Also, Lessor represents and warrants that Lessor is not in
bankruptcy, and that there is no bankruptcy, insolvency, receivership or similar
action or proceeding, whether voluntary or involuntary, pending against,
contemplated by, or threatened against Lessor, or the general partner of Lessor.
34. Authority to Execute:
Lessor and Lessee each represent and warrant that each has full
authority to execute this Lease.
35. Non-waiver:
The waiver by either party of any of the covenants contained herein
shall not be deemed a waiver of such party's rights to enforce the same or any
other covenant contained herein.
36. Nevada Law:
The Lease shall be construed and enforced in accordance with Nevada
law.
37. Integration and Merger:
This Lease, the Agreement, and any Exhibits attached to any of the
foregoing contain the entire agreement between the parties hereto, and no
promise, inducement, or representation other than herein set forth has been
made, offered or agreed upon, and all prior or contemporaneous agreements,
representations and understandings concerning the subject matter hereof are
merged herein. No amendment or, addition to, or modification of this Lease shall
be effective unless the same is in writing and signed by all the parties.
38. Approval:
Whenever in this Lease the approval or consent of Lessor Lessee is
required or desired, unless otherwise expressly provided, such party shall not
withhold or delay its approval or consent unreasonably, and unless a different
time limit is provided in a paragraph of this Lease, such approval or
disapproval shall be given within twenty (20) days following receipt of a
request for such approval or consent. Any disapproval shall specify with
reasonable particularity the reasons therefor.
39. Title to Improvements:
Subject to the rights of Lessor under Paragraph 22 above, any
Improvements of any nature including but not limited to fixtures, equipment and
other materials or items that may be placed upon, installed in or attached to
the Premises by Lessee shall, for
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all purposes, be the property of and assets of Lessee. Lessee shall be solely
entitled to any rights or benefits associated with its ownership of any
buildings or Improvements including but not limited to any depreciation, tax
credits or other tax benefits.
40. Brokerage Commission:
Lessee represents that Equis Corporation, McCaffery Group and
McCaffery Interests are the only companies and/or real estate brokers who have
represented the Lessee in negotiations leading up to this Lease. Lessee agrees
to pay all commissions and/or fees owing to any of the foregoing entities in
conjunction with this transaction, and with any purchase under Paragraphs 24 or
26, and hereby indemnifies and holds Lessor harmless from the payment thereof.
Lessor and Lessee each indemnify and hold harmless the other from any claim by
any other person for a commission or other compensation claiming to have dealt
with the indemnifying party, with respect to this transaction.
41. Leasehold Mortgagee Provisions:
(a) Lessor, upon serving Lessee with any notice of default, or any
other notice under the provisions of or with respect to this Lease, shall also
serve a copy of such notice upon any Leasehold Mortgagee provided Lessor has
received prior written notice of the name and address of any such Leasehold
Mortgagee, and no notice by Lessor to Lessee hereunder shall be deemed to have
been duly given unless and until a copy thereof has been so served.
(b) Should Lessee be in default hereunder, the Leasehold Mortgagee
shall, within the permitted time period, and otherwise as herein provided, have
the right (but not the obligation) to remedy such default, or cause the same to
be remedied, and Lessor shall accept such performance by or at the instance of
such holder as if the same had been made by Lessee; and if such default is so
remedied, Lessor's notice of default shall be deemed void.
(c) Notwithstanding anything contained herein to the contrary, upon
the occurrence of a default, Lessor shall not terminate this Lease without first
giving to any Leasehold Mortgagee written notice and a reasonable time not to
exceed six (6) months thereafter within which either (i) to obtain possession of
the mortgaged property (including possession by a receiver) or (ii) to
diligently institute, prosecute and complete foreclosure proceedings or
otherwise acquire Lessee's interest under this Lease, provided that such
Leasehold Mortgagee shall agree that during the period of its possession or that
of a receiver appointed upon its application, such Leasehold Mortgagee shall
promptly cure and pay or cause to be paid all rent due hereunder and comply with
such of the terms, conditions and covenants of this Lease as are reasonably
susceptible of being complied with by such Leasehold
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Mortgagee or receiver and that promptly after the acquisition of Lessee's
interest hereunder by such Leasehold Mortgagee, such Leasehold Mortgagee shall
perform all other covenants and agreements Lessee shall have previously failed
to perform prior to the date of delivery of possession provided that under the
laws of the State of Nevada amounts expended in performance of such covenants
and agreements can be added to the debt and secured by such Leasehold
Mortgagee's Leasehold Mortgage. It is understood and agreed that any Leasehold
Mortgagee or its nominee or any purchaser in foreclosure proceedings may become
the legal owner and holder of this Lease through such foreclosure proceedings or
by an assignment of this Lease in lieu of foreclosure.
(d) In the event of the termination of this Lease prior to the
expiration of the Lease Term, due to a default by Lessee, Lessor shall serve
upon any Leasehold Mortgagee a notice that this Lease has been terminated
together with a list of any sums which would at that time be due under this
Lease but for such termination, and of all other defaults, if any, under this
Lease. Such Leasehold Mortgagee (or its designee) shall thereupon have the
option, to be exercised in writing within sixty (60) days after such notice from
Lessor, to obtain a new lease in accordance with the following terms and
conditions:
(i) Such new lease shall be effective as of the date of the
termination of this Lease, and shall be for the remainder of the Lease Term of
this Lease and at the rent and upon all the agreements, terms, covenants and
conditions hereof, including, without limitation, any rights of renewal.
(ii) Such new lease shall require the tenant thereunder to
promptly perform any unfulfilled obligations of Lessee under this Lease which
are reasonably susceptible of being performed by such tenant.
(iii) Upon the execution of such new lease, the tenant
thereunder shall promptly pay all sums which would then be due under this Lease
but for termination to the extent such sums exceed the net income derived by
Lessor from the Premises during the period from the date of termination of this
Lease to the date of execution of such new lease.
(e) Effective upon the commencement of term of any new lease
executed pursuant to paragraph (d) above, all subleases and sublease security
deposits and all other monies which Lessee would have been entitled to use but
for the termination or expiration of this Lease shall be assigned by Lessor to
the tenant under the new lease, which security deposits and monies may be used
by the tenant thereunder for the purposes of and in accordance with the
provisions of any such sublease and such new lease.
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(f) If at any time there shall be more than one Leasehold Mortgage,
the Leasehold Mortgage prior in lien shall be vested with the rights granted a
Leasehold Mortgagee under this Lease to the exclusion of any junior Leasehold
Mortgagee; provided, however, that if a Leasehold Mortgagee prior in lien to any
other Leasehold Mortgagee shall fail or refuse to exercise any such right, each
Leasehold Mortgagee in the order of priority of their respective liens shall
have the right to exercise such rights; and provided further, however, that with
respect to the right of a Leasehold Mortgagee under paragraph (d) above to
request a new lease, such right may, notwithstanding the limitation of time set
forth therein, be exercised by any junior Leasehold Mortgagee within 75 days
after giving of the notice to such Leasehold Mortgagee by Lessor of the
termination of this Lease provided a prior Leasehold Mortgagee shall not have
exercised such right within the period of time set forth in paragraph (d) above.
(g) Lessor and Lessee shall not enter into any agreement modifying,
canceling or surrendering this Lease without the prior written consent of any
Leasehold Mortgagee.
(h) Each Leasehold Mortgagee may request Lessor to deliver, within
10 days after request, to such Leasehold Mortgagee an estoppel certificate as
prescribed in Paragraph 27 of this Lease.
(i) The term "Leasehold Mortgage" shall include whatever security
instruments are required in connection with a "sale leaseback" or similar
transaction.
42. Quiet Enjoyment:
Upon payment by the Lessee of the rents and charges herein provided, and
upon the observance and performance of all the covenants, terms and conditions
on Lessee's part to be observed and performed, Lessee shall peaceably and
quietly hold and enjoy the Lease Property for the Lease Term and any renewal or
extension thereof without hindrance or interruption by Lessor or any other
person or persons lawfully or equitably claiming by, through or under the
Lessor, subject, nevertheless, to the terms and conditions of this Lease.
43. Counterparts:
This Lease may be executed in counterparts.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first written above.
Lessee: S & W of Las Vegas, L.L.C., a Delaware Limited
Liability Company
By: The New York Restaurant Group, Inc.,
a Delaware Corporation, Majority Member
By: /s/ James Dunn
------------------------------------------
Name Printed: James Dunn
Its: Authorized Officer
Dated: 2/9/98
---------------------------------------
Lessor: The Somphone Limited Partnership, a Nevada Limited
Partnership
By: Monie Marie Incorporated, a Nevada
Corporation, its General Partner
By: /s/ Pat P. Somphone
------------------------------------------
Name Printed: Pat P. Somphone
Its: President
Dated: 2/11/98
---------------------------------------
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GUARANTY
GUARANTY OF "LEASE WITH AN OPTION TO PURCHASE" dated Feb 9, 1998
(hereafter "Lease") by and between The Somphone Limited Partnership, a Nevada
Limited Partnership, as "Lessor" and S & W of Las Vegas, L.L.C., a Delaware
Limited Liability Company, as "Lessee".
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
undersigned Guarantor hereby unconditionally and irrevocably guarantees the full
and faithful performance by Lessee of all the terms, covenants and conditions of
the above-referenced Lease, including, but not limited to, the payment of all
rent when and as the same shall become due. This Guaranty shall remain in full
force and effect regardless of any amendment, modification, extension,
compromise, or release of any term, covenant or condition of the Lease or of any
party thereto, as the case may be. The undersigned hereby indemnifies Lessor
against any and all liability, loss, costs, charges, penalties, obligations,
expenses, attorneys' fees, litigation, judgment, damages, claims and demands of
any kind whatsoever in connection with, arising out of or by reason of the
assertion by Lessee of any defense to its obligations under the Lease or the
assertion by Guarantor of any defense to its obligations hereunder based on any
action or inaction of Lessee, which assertion is determined by an unappealable
final judgment to be incorrect. Guarantor waives any right or claim of right to
cause a marshalling of Lessee's assets or to proceed against Guarantor in any
particular order, and Guarantor agrees that any payments or performance required
to be made hereunder shall become due upon demand in accordance with the terms
hereof immediately upon the happening of a default under the Lease, (which shall
not be deemed to have occurred until any notice required by the Lease to be
given to Lessee has been given and until any grace period given to the Lessee
pursuant to the Lease has expired) and, except as set forth above, Guarantor
hereby expressly waives and relinquishes all rights and remedies accorded by
applicable law to guarantors, including, but not limited to, notice of demand,
notice of default, any failure to pursue Lessee or its property, any defense
arising out of the absence, impairment or loss of any right of reimbursement or
subrogation and any defense arising by any defense of Lessee or by reason of the
cessation of the liability of Lessee by reason of the bankruptcy or
reorganization of Lessee or for any other reason, or any defense by reason of
the assertion by Lessor against Lessee of any of the rights or remedies reserved
to Lessor pursuant to the provisions of the said Lease, or by reason of summary
or other proceedings against Lessee, excluding in all cases the defense of prior
payment or performance. This Guaranty is for the express benefit of Lessor and
its successors and assigns who may become the Lessor under the Lease, and this
Guaranty may be enforced by them. The obligations of the Guarantor hereunder are
Jd / P.S.
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independent of the obligations of Lessee, and a separate action or actions may
be brought and prosecuted against the Guarantor whether or not action is brought
against Lessee. Guarantor hereby agrees to pay reasonable attorneys' fees and
all other costs and expenses which may be incurred by Lessor in the enforcement
of any of the obligations or liabilities of the Lessee under the Lease or of the
Guarantor under this Guaranty. This Guaranty shall be deemed made in the State
of Nevada and each and every of the provisions of this Guaranty shall be
construed and interpreted in accordance with the laws of such state. This
Guaranty shall be binding upon the successors and assigns of the Guarantor. This
Guaranty has been executed on the same date of the execution of this Lease
referred to above.
The New York Restaurant Group, Inc.,
a Delaware Corporation
By: /s/ James Dunn
---------------------------------
Name Printed: James Dunn
Its: Authorized Officer
Dated: 2/9/98
------------------------------
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EXHIBIT A
All that real property situate in the County of Clark, State of Nevada,
generally known as 3767 Las Vegas Boulevard South, Las Vegas, Nevada 89109, also
known as Tax Assessor Parcel No. 162-21-301-014, and more particularly bounded
and described as follows:
The South 120 Feet of the West One Half (W 1/2) of the Northwest Quarter (NW
1/4) of the Southwest Quarter (SW 1/4) and the North 10 Feet of the West One
Half (W 1/2) of the Southwest Quarter (SW 1/4) of the Southwest Quarter (SW 1/4)
of Section 21, Township 21 South, Range 61 East, M.D.B.&M.
Excepting therefrom all State and County roads and highways.
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EXHIBIT B
MEMORANDUM OF LEASE WITH AN OPTION TO PURCHASE
This Memorandum dated for identification purposes only, dated Feb. 9,
1998, is entered into by THE SOMPHONE LIMITED PARTNERSHIP, a Nevada limited
partnership ("Lessor") and S & W of Las Vegas, L.L.C., a Nevada Limited
Liability Company, ("Lessee") for the purpose of evidencing the existence of
that certain Lease with an Option to Purchase as herein described.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows:
1. Grant of Lease. Lessor has leased, by virtue of that certain Lease with
an Option to Purchase between Lessor and Lessee dated February 9, 1998, (the
"Lease") to Lessee, and Lessee has leased from Lessor that certain parcel of
land containing approximately 1.82 acres, measuring approximately 130 feet along
the west property line and 601 feet along the south property line, commonly
known as 3767 Las Vegas Boulevard South (Assessor's Parcel No. 162-21-301-014)
and legally described on Exhibit A attached hereto and incorporated herein by
this reference, subject to the terms, conditions, provisions and covenants of
the Lease. All of the terms, provisions and covenants of the Lease are
incorporated in this Memorandum by reference and the Lease and this Memorandum
shall be deemed to constitute a single document.
2. Term. The Lease Term is twenty (20) years from the Lease Commencement
Date, and Lessee has two (2) twenty (20) year renewal options.
3. Use. During the Lease Term, the Premises may be used by Lessee for
restaurants or as a retail shopping center or any other lawful use, including
gaming.
4. Option to Purchase. Beginning five (5) years after the Lease
Commencement Date, Lessee has the option to purchase the Lessor's property upon
the terms and conditions set forth in the Lease. In addition, beginning ten (10)
years after the Lease Commencement Date, Lessor has a put to require Lessee to
purchase the Lease Property upon the terms and conditions set forth in the
Lease.
5. Use of Terms. All terms used herein which are defined in the Lease
shall have the same meaning as such terms when used in the Lease.
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6. Purpose of Memorandum. This memorandum is prepared for recordation
purposes only, and in no way modifies the terms, conditions, provisions and
covenants of the Lease. In the event of any inconsistency between the terms,
conditions, provisions and covenants of this Memorandum and the Lease, the
terms, conditions, provisions and covenants of the Lease shall prevail.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Memorandum of
Lease as of the date hereinabove first set forth.
"LESSOR"
The Somphone Limited Partnership, a
Nevada Limited Partnership
By: Monie Marie Incorporated, a Nevada
Corporation, its General Partner
By: /s/ Pat Somphone
----------------------------
Pat Somphone
Its: President
Dated: 2/11/98
-------------------------
STATE OF NEVADA )
) ss.
COUNTY OF CLARK ))
This instrument was acknowledged before me on ___________, 199__ by
_______________ as President of Monie Marie Incorporated.
________________________________________
By:_____________________________________
Subscribed and sworn to before me this ______ day of __________________,
199____.
_____________________________
NOTARY PUBLIC in and for said
County and State
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<PAGE>
"LESSEE"
S & W of Las Vegas, L.L.C., a Delaware
Limited Liability Company
By: The New York Restaurant Group,
Inc., a Delaware Corporation,
Majority Member
By: /s/ James Dunn
------------------------------
James Dunn
Its: Authorized Officer
Dated: 2/11/98
---------------------------
STATE OF NEW YORK )
) ss.
COUNTY OF __________))
This instrument was acknowledged before me on _____________, 199___ by
____________________ as Authorized Officer of The New York Restaurant Group,
Inc.
________________________________________
By:_____________________________________
Subscribed and sworn to before me this ______ day of __________________,
199____.
_____________________________
NOTARY PUBLIC in and for said
County and State
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<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement is made at Las Vegas, Nevada and
entered into this 8th day of May, 1998, between The Somphone Limited Partnership
(hereinafter "Lessor") , and S & W of Las Vegas, L.L.C., a Delaware limited
liability company (hereinafter "Lessee").
WHEREAS, Lessor and Lessee entered into a certain Lease Agreement
(hereinafter the "Lease") on the 9th day of February, 1998, with respect to
premises described in paragraph 2 of the Lease Agreement; and
WHEREAS, such Lease is in full force and effect; and
WHEREAS, the parties wish to in certain respects amend the said Lease;
NOW, THEREFORE, in consideration of One ($1.00) Dollar and the mutual
promises of the parties hereto, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, it is mutually
agreed as follows:
1. Except as specifically herein set forth, the Lease shall remain in full
force and effect, and shall be amended only as specifically herein set forth.
2. Paragraph 12 of the Lease, entitled "Bonds" shall be amended by
deleting the requirement of a completion bond. In lieu thereof, Lessee shall,
prior to the commencement of any demolition of any existing Improvements (as
defined in the Lease) which are presently on the premises, and prior to the
commencement of any
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construction of any Improvements, deliver to the Lessor an irrevocable clean
Letter of Credit (issued by a New York Clearing House Bank) , in the amount of
$2 million to ensure, to the extent set forth herein, the completion of the
Improvements. The Lessor may draw upon such Letter of Credit in the following
amounts, and in the following manner:
The construction contractor of Lessee shall, each month,
beginning with the commencement of demolition and continuing
until completion of construction of the Improvements (the
"Construction Period") , provide to Lessor the following:
A. A copy of the Lessee's contractor's billing for
the prior month;
B. A copy of the Lessee's check which pays that
billing; and
C. A lien release and waiver in the form attached
hereto for all labor, materials, services and/or
equipment furnished by, to or on behalf of, or at
the request of Lessee's contractor (whether or not
billed) up through the 25th day of the prior
month.
If, by the 20th day of any month during the Construction
Period, starting with June 20,
P.S. / Jd
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1998, such lien release and waiver, and copies of such billing
and check have not been received by Lessor, then Lessor may
draw upon the Letter of Credit in the total amount billed or,
at the option of Lessor, in an amount to be determined by
Lessor, up to the total amount of the Letter of Credit, and
hold such sum (the "Letter of Credit Proceeds") as security
for completion of the Improvements. So long as Lessor is
holding the Letter of Credit Proceeds, Lessor may, but shall
not be obligated to, use any portion thereof to pay for the
bill in question or to pay for any portion of the Improvements
as Lessor shall see fit. Lessor may continue to draw down on
the Letter of Credit, up to the total amount thereof, so long
as Lessee has not in a timely manner provided to Lessor all
lien releases and waivers, and copies of all billings and
checks required by this Lease Amendment. If the Improvements
have been substantially completed (which for purposes of this
Lease Amendment only shall mean when the Improvements are
sufficiently complete so that Lessee can occupy or utilize the
Premises for their intended use and when Lessee has
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<PAGE>
obtained a Certificate of Occupancy) by March 15, 1999, Lessor
shall return the remaining balance of the Letter of Credit
Proceeds to Lessee, including any interest earned thereon;
otherwise, Lessor shall keep and retain the remaining balance
of the Letter of Credit Proceeds as consideration for the
execution of this Lease Amendment. So long as Lessee is not in
default in the payment of rent or any other sum due to Lessor
under the Lease, Lessor agrees, but only for Force Majeure (as
defined below), to provide Lessee with reasonable time
extensions to the substantial completion date of March 15,
1999, upon written notice by Lessee providing reasonable
explanation for such time extensions for Force Majeure, which
is defined as any delay in the construction of the
Improvements by Lessee under this Agreement caused by acts of
God or the public enemy, or by casualty or by strike, or by
governmental restrictions on the availability or use of labor
or materials necessary to perform such construction or any
other cause not within Lessee's reasonable control.
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<PAGE>
3. Lessee agrees to pay Lessor's reasonable attorneys' fees in connection
with the negotiation and review of this Lease Amendment.
4. Time is of the essence of each and every part of this Lease Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Lease the day and year first above written.
S & W OF LAS VEGAS, L.L.C.,
a Delaware Limited Liability Company
By: The New York Restaurant Group, Inc.,
a Delaware Corporation, Majority
Member
By: /s/ James Dunn
-------------------------------------
Name Printed: James Dunn
Its: Authorized Officer
THE SOMPHONE LIMITED PARTNERSHIP,
a Nevada Limited Partnership
By: Monie Marie Incorporated, a Nevada
Corporation, its General Partner
By: /s/ Pat P. Somphone
-------------------------------------
Name Printed: Pat P. Somphone
Its: President
Guarantor's Consent:
The foregoing First Amendment to Lease Agreement ("First Amendment") is
consented to by The New York Restaurant Group, Inc., and the February 9, 1998
Guaranty of "Lease With an Option to Purchase" ("Lease") executed by The New
York Restaurant Group, Inc.
P.S. / Jd
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shall remain in full force and effect with respect to the Lease, as amended by
the First Amendment.
The New York Restaurant Group, Inc.,
a Delaware Corporation
By: /s/ James Dunn
-------------------------------------
Name Printed: James Dunn
Its: Authorized Officer
Dated: 5/12/98
----------------------------------
P.S. / Jd
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<PAGE>
Executed
OPTION AGREEMENT
This Option Agreement (hereinafter "Agreement") is made at Las Vegas,
Nevada and entered into on this 14th day of February, 1997, between
THE SOMPHONE LIMITED PARTNERSHIP, a Nevada Limited Partnership,
(hereinafter "Optionor")
and
S & W of Las Vegas, L.L.C., a Delaware Limited Liability Company,
(hereinafter "Optionee").
Whereas, Optionee desires to obtain an option for a ground lease of the
real property described below for the purpose of constructing certain
improvements thereon, with a cost not less than $4,000,000.00 and Optionor
desires to grant such option.
Now, therefore, in consideration of the mutual promises of the parties
hereto, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed as follows:
1. Premises:
The real property the subject of this Agreement is situated in the
County of Clark, State of Nevada, and is that parcel of land containing
approximately 1.82 acres, measuring approximately 130 ft. along the west
property line and 601 feet along the south property line; commonly known at 3767
Las Vegas Boulevard South and Assessor's Parcel No. 162-21-301-014; the legal
description is attached hereto as Exhibit "1" (the "Land") . The Land together
with any existing improvements, the Improvements (as defined in the Lease
referred to in Paragraph 2 below) , and any other improvements on the Land shall
be collectively referred to as the "Premises".
2. Option to Lease:
Optionor hereby grants to Optionee an Option to Lease the Land
(hereinafter "Option to Lease") , which Option to Lease shall be exercisable by
Optionee for a period of nine (9) months after the execution of this Agreement
(the "Lease Option Period") (i.e., the last date of the Lease Option Period will
be November 13, 1997). The form of the Lease ("the Lease") which is to be the
subject of the Option to Lease is attached hereto as Exhibit "2".
The Lease Commencement Date shall not be later than the day
following the end of the Lease Option Period, or any extension thereof. The
Lease will not be effective until the Lease
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<PAGE>
Commencement Date, whether or not it is signed prior to the Lease Commencement
Date, and the Lease shall be signed by Optionor (as Lessor) and Optionee (as
Lessee) on or before the Lease Commencement Date.
3. Due Diligence:
During the Lease Option Period and any extension thereof, Optionee
shall have the right to conduct an investigation of the Land to determine if the
Land is suitable for Optionee's proposed use of the Land. Optionee's right shall
include but not be limited to the right to (A) review and approve the condition
of title to the Land, and (B) conduct studies and ascertain that permits for
Optionee's intended use are available, and (C) physically inspect the Land, and
(D) investigate the environmental condition of the Land, and (E) investigate the
availability of utilities.
Optionee's investigation shall be done in a manner so as not to
unreasonably interrupt Optionor's business being conducted on the Land (taking
into account the nature of the investigation, e.g. environmental inspection
testing). Optionee shall hold Optionor harmless from any claims or damages as a
result of Optionee's activities during the Lease Option Period and any extension
thereof.
During the Lease Option Period and any extension thereof, Optionee
agrees to provide Optionor with a copy of Optionee's plans and specifications
and all applications for zoning and building permits. The improvements described
in these plans and specifications and in any subsequent modifications thereto
shall be hereinafter referred to as the "Improvements".
4. No Right to Extend Lease Action Period:
Optionee shall have no right to extend the Lease Option Period
without the express written permission of Optionor, which permission may be
withheld for any reason, except that Optionee may extend the Lease Option Period
one time for an additional three (3) months by paying to Optionor an additional
$100,000.00 prior to the end of the original Lease Option Period.
In the event the Option to Lease has not been exercised in the
manner and within the time set forth below, then the Option to Lease shall
expire and the Lease shall never take effect, and all of Optionee's rights
hereunder, legal or equitable, shall cease, and all sums which have been paid to
Optionor shall remain non-refundable, and shall be retained by Optionor, and
Optionee shall hold Optionor harmless from any claims or damages (including
attorney's fees and costs) as a result of any activities regarding the Premises
on the part of the Optionee.
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<PAGE>
5. Exercise of Option to Lease:
At any time during the Lease Option Period, or any extension
thereof, Optionee shall have the right to exercise the Option to Lease by (a)
providing to the Optionor or Optionor's designee written notification of
Optionee's exercise of the Option to Lease, which Notice shall set forth the
Lease Commencement Date, as selected by Optionee within the parameters set forth
in Paragraph 3 above; and (b) making the first month's rent payment as provided
in Paragraph 7 below; and (c) fulfilling Optionee's obligations under Paragraph
7(b) (i).
6. Existing Improvements:
The parties acknowledge that the Premises are currently being used
by Optionor as a motel.
7. Payments:
(a) At the time the parties execute this Agreement, the Optionee is
paying Optionor the sum of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) as
consideration for the Option to Lease. This sum shall be non-refundable and
shall remain non-refundable whether or not the Optionee exercises the Option to
Lease and shall not apply to payment of Rent, except that if the Option to Lease
is exercised then Optionee shall receive a FIFTY THOUSAND DOLLARS ($50,000.00)
credit towards the first month's rent under the Lease.
(b) As additional consideration for the Option to Lease, Optionee
agrees:
(i) to and hereby does indemnify and to immediately, upon
demand reimburse or pay Optionor, Monie Marie Incorporated (or Monie Marie,
Inc.) and Pat Somphone (collectively "the Somphone Defendants") for the amount
of any monies which the Somphone Defendants may be required to pay to JMA
Architects and Engineers, Inc., or to JMA Architects, Inc. (collectively "JMA")
or to any affiliate of JMA in order to obtain a release of the Amended
Mechanic's Lien recorded against the Premises by JMA and to obtain a dismissal
or a Stipulated Judgment in Case No. A352880 (in which JMA claims damages of
$182,762.96 plus interest, attorney's fees and costs; interest claimed is
estimated to be $24,985.95 through February 7, 1997, and JMA's costs and
attorney's fees are estimated to be $40,000.00 for a total estimated claim of
$247,748.91 through February 7, 1997) and the Somphone Defendants' attorney's
fees and costs related to defending against the claims of JMA including those
asserted in Case No. A352880 (the "Somphone Defendants' Attorney's Fees"), which
Optionee shall pay to the firm of Nitz, Walton & Heaton, Ltd. within thirty (30)
days of the execution of this Agreement and which through February 7, 1997 are
claimed by Optionor to be $40,986.64 (the total reimbursement or payment under
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<PAGE>
this subparagraph (i) shall be referred to as the "Reimbursement"); provided,
however, that (w) the total amount of the Reimbursement shall not exceed the
amounts alleged to be due in Case No. A352880 including interest, costs, and
attorney's fees, together with the Somphone Defendants' Attorney's Fees and
Optionee hereby assumes and agrees to pay or settle any liability or claim of
liability of the Somphone Defendants in Case No. A352880, including interest,
costs, and attorney's fees, together with the Somphone Defendants' Attorney's
Fees up to the amounts alleged as estimated in this subparagraph (i); and from
which liability and claim of liability Optionee shall and hereby does indemnify
Optionor, Monie Marie Incorporated and Pat Somphone; (x) Optionee shall control
all proceedings and settlements relating to the JMA claims and defend the claim
with counsel of its choice; (y) Optionor and the other indemnified parties shall
take no action relating thereto without Optionee's consent and shall cooperate
with Optionee in the defense and settlement of the JMA claim; and (z) Optionee
will advise Optionor of all actions and proceedings in Case No. A352880, and
will provide Optionor and the firm of Nitz, Walton & Heaton, Ltd. with a copy of
all papers filed or received in said case, and of all correspondence between the
parties in that case. The obligations of Optionee under this subparagraph (i)
shall survive expiration of the Option. Optionor agrees to immediately send to
Optionee a copy of all pleadings and correspondence relating to the JMA claim as
and when received or sent by Optionor or any other indemnified party; and
(ii) to and hereby does indemnify Optionor, Monie Marie
Incorporated, Pat Somphone and his family (including Shao-Ying Somphone and
Chan-Op-Somphone) and the children of them, from and against any claims against
or liability of Optionor or Monie Marie Incorporated or Pat Somphone or his
family, (including Shao-Ying Somphone and Chan-Op-Somphone) and the children of
them, by or to Regent Capital Partners, Ltd. ("Regent") under that certain
Agreement and Option dated June 10, 1994 (as to which Optionor represents that
attached as Exhibit 3 hereto is a true and correct copy of the same, that same
has not been modified in any respect and that no legal proceedings have been
commenced as to the same), or by or to any of Regent's successors or assigns, or
by or to Melvin B. Miller, or any of his various investor limited partners (and
Optionee shall and hereby does assume and agree to pay or settle any liability
or claim of liability as a result of such claims or liability, and Optionee
further agrees to defend against such claims or liability at its own expense
with counsel of its choice) provided, however, that Optionee's obligations under
this subparagraph (ii) shall cease upon and not survive expiration of the Option
to Lease. In the event of a claim covered by this indemnity under this
subparagraph (ii), Optionee shall have the right to terminate the Option to
Lease at any time, and Optionor and the other indemnitees agree that Optionor
and the other indemnitees will not take any action without Optionee's consent
and
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<PAGE>
shall cooperate with Optionee in the defense and settlement of any such claim.
Optionor agrees to immediately notify Optionee of all such claims, and to
immediately send to Optionee a copy of all pleadings and correspondence related
thereto, as and when received or sent by Optionor or any other indemnified
party, and that Optionee shall have control over the defense of any such claim.
At least one day prior to the Lease Commencement Date, Optionee
shall pay to Optionor, in advance, the sum of THIRTY-THREE THOUSAND THREE
HUNDRED THIRTY-THREE DOLLARS AND 33/100 ($33,333.33) which sum shall represent
the balance of the first month's rent, over and above the FIFTY THOUSAND DOLLARS
($50,000.00) credit provided above, and the Lease will not be effective if this
THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE DOLLARS AND 33/100
($33,333.33) sum is not received by Optionor in a timely manner.
8. Bonds:
Prior to the commencement of any demolition of any existing
improvements which are presently on the Premises and prior to the commencement
of any construction of any Improvements, and continuing until completion of the
Improvements, Optionee shall have in place a Completion and Performance Bond and
a Labor and Material Payment Bond (collectively the "Bonds") from an insurance
or surety company which guarantees that at least $4 million of Optionee's
Improvements will be completed on the Premises, that all contractors and
subcontractors, materialmen and others providing any work or labor regarding the
Improvements will be paid, and that the Land and the Improvements made to the
Land by Optionee will be free and clear of any lien resulting from construction
of the Improvements. These Bonds, including the form and content thereof, and
the insurer or surety (which shall be a reputable company) are subject to
Optionor's review and approval. Optionor's approval of the Bonds and the insurer
or surety shall not be unreasonably withheld. The Bonds will be in a sum of at
least FOUR MILLION DOLLARS ($4,000,000.00). The Completion and Performance Bond
shall include a provision that guarantees payment of rent under the Lease until
the Improvements are completed, or alternatively, in lieu of this provision, the
Optionee shall on or before the Lease Commencement Date pay to Optionor the
additional sum of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) as and for a
security deposit for the payment of rent or any other sum required to be paid by
Lessee under the Lease, and which security deposit may without notice be applied
by Lessor to the payment of any rent or other sum which is not timely paid under
the Lease beyond any applicable notice and grace period, and which deposit,
shall remain in effect until substantial completion of the Improvements (which
shall be deemed to occur when Optionee commences the conduct of business in the
Premises), at which point it shall immediately be returned to Lessee, including
any interest earned thereon. Any portion of the deposit which is applied by
Lessor shall be
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<PAGE>
reimbursed by Lessee within ten (10) days after demand by Lessor. Optionee shall
have the right to deliver to Optionor an irrevocable clean letter of credit in
lieu of the $300,000.00 cash deposit, in form and substance reasonably
satisfactory to Optionor, which shall be held and applied in the same manner as
the cash deposit.
9. Optionor's Right to Conduct Business:
During the Lease Option Period and any extension thereof, and until
the Lease Commencement Date, Optionor shall have the right to continue to
conduct its current business now being conducted on the Premises. Optionor shall
pay all expenses for the Premises with respect to the time prior to the Lease
Commencement Date. Optionee's exercise of the Option to Lease shall constitute
written notice to Optionor to vacate the premises by the date set forth in the
written notice, which vacation date will not be less than thirty (30) days after
receipt of such notice. In the event the vacation date is after the Lease
Commencement Date, Optionee will still be obligated to pay rent commencing on
the Lease Commencement Date. During the vacation period, Optionor shall have the
right but not the obligation to remove or otherwise dispose of any buildings,
personal property, furnishings, fixtures or equipment which belong to Optionor
or which are located upon the Premises. In the event Optionor does not remove or
otherwise dispose of such items, Optionee shall have the absolute right to
dispose of all or any of such items as Optionee may deem fit, without any
liability to Optionor. Optionee shall be authorized to place a "For Lease" sign
upon the Premises at such location and in such form, size and content as shall
reasonably be approved by Optionor, at any time following the date on which
Optionee files its application for a use permit with applicable governmental
authorities pertaining to Optionee's proposed Improvements. During the Lease
Option Period and any extension thereof, and until the Lease Commencement Date,
Optionor shall make no permit or zoning filings with respect to the Premises or
the use thereof that will materially affect Optionee's use of the Premises
without Optionee's consent.
10. Optionee's Activities Regarding the Premises:
Prior to the Lease Commencement Date, Optionee shall not construct
or commence construction of any improvements on the Premises. Optionor shall
have no liability for the acts, operations, or costs of Optionee or Optionee's
agents regarding any work or activities on or related to the Premises, except to
the extent resulting from the acts or omissions of Optionor, its agents or
employees. Optionee indemnifies and holds Optionor harmless from any costs or
obligations to consultants, surveyors, architects, engineers, or agents of
Optionee regarding the Optionee's activities of rezoning, development, or of
planning for the development of the Premises. Optionor agrees that Optionee
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<PAGE>
shall have the right and license to enter onto the Premises for any soil
testing, environmental studies (Phases I and II), boring, drilling, surveying
and for the preparation of detailed plans for the Premises. Optionor agrees to
cooperate with Optionee in providing access to the Premises and to execute
applications for zoning use permits, variances, and planning as required by the
County or Optionee. Optionor may record a Notice of Non-Responsibility regarding
the Premises. During the Lease Option Period, Optionor shall create no liens or
encumbrances on the Premises, provided, however that Optionor shall have the
right to create liens or encumbrances (including a mortgage of its fee interest)
which are or will be subordinate to the rights of Optionee under this Agreement
or under the Lease, provided, further however, that Optionor will create no
easements or restrictive covenants without Optionee's written consent.
11. Broker:
Optionee represents that Equis Corporation, McCaffery Group and
McCaffery Interests are the only companies and/or real estate brokers who have
represented the Optionee in negotiations leading up to this Agreement. Optionee
agrees to pay all commissions and/or fees owing to any of the foregoing entities
in conjunction with this transaction and hereby indemnifies and holds Optionor
harmless from the payment thereof. Optionor and Optionee each indemnify and hold
harmless from any claim by any other person for a commission or other
compensation claiming to have dealt with the indemnifying party, with respect to
this transaction, including the Lease.
12. No Partnership:
Nothing contained in this Agreement, or in the Lease shall be deemed
or construed by any person to create the relationship of principal and agent, or
of partnership, or of joint venture, or of any association between Optionor and
Optionee. Neither the method or computation of rent or any other provisions
contained in such documentation, nor any acts of the parties, shall be deemed to
create any relationship between Optionor and Optionee other than the
relationship of landlord and tenant, or of the relationship of independent
parties agreeing to perform the covenants contained in this Agreement, or in the
Lease.
13. This Agreement is Not a Lease:
OPTIONOR AND OPTIONEE ACKNOWLEDGE THAT THIS AGREEMENT IS NOT A
LEASE, AND THERE SHALL BE NO LEASE UNTIL THE LEASE IS FULLY EXECUTED AND UNTIL
THE OPTION TO LEASE HAS BEEN EXERCISED IN THE MANNER PROVIDED IN THIS AGREEMENT.
Jd / P.S.
---------------------
initials / initials
7
<PAGE>
14. Time is of the Essence:
Time shall be and is of the essence of each and every part of this
Agreement and the Lease.
15. Parties are Not in Bankruptcy:
Optionee represents and warrants that Optionee and the guarantor of
this Agreement are not in bankruptcy, and that there is no bankruptcy,
insolvency, receivership or similar action or proceeding, whether voluntary or
involuntary, pending against, contemplated by, or threatened against Optionee,
or the guarantor of this Agreement or any officer, director, shareholder, or
member of Optionee or of the guarantor of this Agreement.
Also, Optionor represents and warrants that Optionor is not in
bankruptcy, and that there is no bankruptcy, insolvency, receivership or similar
action or proceeding, whether voluntary or involuntary, pending against,
contemplated by, or threatened against Optionor, or the general partner of
Optionor.
16. Authority to Execute:
Optionor and Optionee each represent and warrant that each has full
authority to execute this Agreement.
17. Right to Assign and Inurement:
Optionor shall have the right to assign Optionor's rights, interests
and obligations under this Agreement. Optionee shall have the right to assign
Optionee's rights and obligations under this Agreement without Optionor's
approval; provided, however, that Optionee shall not be released from any of its
obligations hereunder, and the proposed assignee shall execute and deliver to
Optionor, an assumption agreement in recordable form, whereby the assignee
expressly assumes all of the terms, covenants, and conditions of this Agreement
which are to be performed by Optionee. This Agreement shall be binding upon the
successors and assigns of the parties hereto.
18. Notices:
Notices, consents, approvals and demands as contemplated hereby must
be in writing to be effective and shall be given or served personally or by any
recognized overnight courier providing receipt of delivery, or by certified or
registered mail, return receipt requested, upon Optionor or Optionee, as the
case may be, at the address hereinafter set forth:
Jd / P.S.
---------------------
initials / initials
8
<PAGE>
To Optionor:
The Somphone Limited Partnership,
a Nevada Limited Partnership
c/o Monie Marie Incorporated, a Nevada Corp.,
General Partner
c/o Pat P. Somphone, President
2304 LaSolana Way
Las Vegas, Nevada 89102
With a Copy to:
James H. Walton, Esquire
Nitz, Walton & Heaton
514 South Third Street
Las Vegas, Nevada 89101
To Optionee:
S & W of Las Vegas, L.L.C., a
Delaware Limited Liability Company,
1114 First Avenue
New York, New York 10021
Attn: James Dunn, Executive Director
With a Copy to:
Bruce D. Saber, Esquire
Fried, Frank, Harris, Shriver, and Jacobson
One New York Plaza
New York, NY 10004
All notices and demands shall be effective upon the earlier of
receipt or three (3) business days after being deposited in the United States
mail. However, the time period in which a response to any such notice or demand
must be given shall commence to run from the date of receipt on the return
receipt of the notice or demand by the addressee thereof. Rejection or other
refusal to accept or the inability to deliver because of changed address or
which no notice was given as provided below shall be deemed to be receipt of the
notice of demand sent.
By giving to the other party ten (10) days' written notice thereof
in the manner provided above, the parties hereto and their respective permitted
successors and assigns shall have the right from time to time during the term of
this Agreement to change their respective addresses for notices and any other
address within the United States of America.
Jd / P.S.
---------------------
initials / initials
9
<PAGE>
19. Implementation:
Each of the parties shall at all times on demand execute such
documents and do such acts as may be reasonably necessary or appropriate to
implement and effectuate this Agreement, its purposes and intent.
20. Non-waiver:
The waiver by either party or any of the covenants contained herein
shall not be deemed a waiver of such party's rights to enforce the same or any
other covenant contained herein.
21. Nevada Law:
The Agreement shall be construed and enforced in accordance with
Nevada law.
22. Integration and Merger:
The Lease, the Guaranty of The New York Restaurant Group L.L.C., a
Delaware Corporation, and this Agreement, and any Exhibits attached to any of
the foregoing contain the entire agreement between the parties hereto, and no
promise, inducement, or representation other than herein set forth has been
made, offered or agreed upon, and all prior or contemporaneous agreements,
representations and understandings concerning the subject matter hereof are
merged herein. No amendment or, addition to, or modification of this Agreement
shall be effective unless the same is in writing and signed by all the parties.
23. Attorney's Fees:
Should any litigation be commenced between the parties hereto
concerning any provision of this Agreement or the rights and duties of any
person or entity in relation thereto, the party or parties prevailing in such
litigation shall be entitled, in addition to such other relief as may be
granted, to a reasonable sum as and for his or its or their attorney's fees and
court costs in such litigation which shall be determined by the court in such
litigation or in a separate action brought for that purpose.
24. Survival:
All representations and obligations of Optionee or Optionor
contained in Paragraphs 7(a) , 7(b) (i), 9, 10, 11, 15, 16, 17, 19, and 23 of
this Agreement shall survive any termination of this Agreement.
Jd / P.S.
---------------------
initials / initials
10
<PAGE>
25. Recordation of Memorandum of Option Agreement:
Optionor acknowledges that Optionee may record a Memorandum of
Option Agreement, in the form attached hereto as Exhibit 4, which will become a
matter of public record affecting the condition of the title.
26. No Other Optionees:
Optionor represents that it has not granted any previous options to
lease the Land other than the option contained in that certain Agreement and
Option dated June 10, 1994 (Exhibit 3 hereto) (the "Regent Option").
27. Counterparts:
This Agreement may be executed in counterparts.
28. Implementation:
Each of the parties shall at all times on demand execute such
documents and do such acts as may be reasonably necessary or appropriate to
implement and effectuate this Agreement, its purposes and intent including, but
not limited to, the execution of affidavits reasonably required by a title
company in order to insure the Optionee's rights under this Agreement (including
affidavits with respect to the Regent Option) , the Lease and the purchase
option contained in the Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the
day and year first written above.
Optionee:
S & W of Las Vegas, L.L.C., a
Delaware Limited Liability Company
By: The New York Restaurant Group, L.L.C.,
a Delaware Limited Liability Company,
Majority Member
By: La Cite, Inc., a Delaware Corporation, Manager
By: /s/ James Dunn
---------------------------------
Name Printed: James Dunn
Its: Authorized Officer
Dated: February 14, 1997
Jd / P.S.
---------------------
initials / initials
11
<PAGE>
Optionor:
The Somphone Limited Partnership, a Nevada Limited
Partnership
By: Monie Marie Incorporated, a Nevada Corporation, its
General Partner
By: /s/ Pat P. Somphone
---------------------------------
Pat P. Somphone, President
Dated: February 14, 1997
GUARANTY
GUARANTY OF OPTION AGREEMENT dated February 14, 1997 (hereafter
"Agreement") by and between The Somphone Limited Partnership, a Nevada Limited
Partnership, as "Optionor" and S & W of Las Vegas, L.L.C., a Delaware Limited
Liability Company, as Optionee.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
undersigned Guarantor hereby unconditionally and irrevocably guarantees the full
and faithful performance by Optionee of all the terms, covenants, obligations,
and conditions of the above-referenced Agreement. This Guaranty shall remain in
full force and effect regardless of any amendment, modification, extension,
compromise, or release of any term, covenant or condition of the Agreement or of
any party thereto, as the case may be. The undersigned hereby indemnifies
Optionor against any and all liability, loss, costs, charges, penalties,
obligations, expenses, attorneys' fees, litigation, judgment, damages, claims
and demands of any kind whatsoever in connection with, arising out of or by
reason of the assertion by Optionee of any defense to its obligations under the
Agreement or the assertion by Guarantor of any defense to its obligations
hereunder based on any action or inaction of Optionee, which assertion is
determined by an unappealable final judgment to be incorrect. Guarantor waives
any right or claim of right to cause a marshalling of Optionee's assets or to
proceed against Guarantor in any particular order, and Guarantor agrees that any
payments or performance required to be made hereunder shall become due
immediately upon the happening of a default under the Agreement (which shall not
be deemed to have occurred until any notice required by the Agreement to be
given to Optionee has been given and until any grace period given to the
Optionee pursuant to the Agreement has expired) , and, except as set forth
above, Guarantor hereby expressly waives and relinquishes all rights and
remedies accorded by applicable law to guarantors, including, but not limited
to, notice of demand, notice of default,
Jd / P.S.
---------------------
initials / initials
12
<PAGE>
any failure to pursue Optionee or its property, any defense arising out of the
absence, impairment or loss of any right of reimbursement or subrogation and any
defense arising by any defense of Optionee or by reason of the cessation of the
liability of Optionee by reason of the bankruptcy or reorganization of Optionee
or for any other reason, or any defense by reason of the assertion by Optionor
against Optionee of any of the rights or remedies reserved to Optionor pursuant
to the provisions of the said Agreement, or by reason of summary or other
proceedings against Optionee, excluding in all cases the defense of prior
payment or performance. This Guaranty is for the express benefit of Optionor and
its successors and assigns who may become the Optionor under the Agreement, and
this Guaranty may be enforced by them. The obligations of the Guarantor
hereunder are independent of the obligations of Optionee, and a separate action
or actions may be brought and prosecuted against the Guarantor whether or not
action is brought against Optionee. Guarantor hereby agrees to pay reasonable
attorneys' fees and all other costs and expenses which may be incurred by
Optionor in the enforcement of any of the obligations or liabilities of the
Optionee under the Agreement or of the Guarantor under this Guaranty. This
Guaranty shall be deemed made in the State of Nevada and each and every of the
provisions of this Guaranty shall be construed and interpreted in accordance
with the laws of such state. This Guaranty shall be binding upon the successors
and assigns of the Guarantor. This Guaranty has been executed on the same date
of the execution of the Agreement referred to above.
Guarantor also represents and warrants that S & W of Las Vegas, L.L.C., a
Delaware Limited Liability Company lawfully exists and is authorized to enter
into the Agreement.
The New York Restaurant Group, L.L.C.,
a Delaware Limited Liability Company,
By: La Cite, Inc., a Delaware Corporation, Manager
By: /s/ James Dunn
------------------------------------------
Name Printed: James Dunn
Its: Authorized Officer
Dated: February 14, 1997
Jd / P.S.
---------------------
initials / initials
13
<PAGE>
SECOND AMENDMENT TO MARINA CITY RETAIL LEASE
THIS SECOND AMENDMENT TO LEASE ("Second Amendment") is made as of the 17th
day of June, 1999 by and between MARINA CITY HOTEL ENTERPRISES, L.L.C., an
Illinois limited liability company ("Landlord") and S & W CHICAGO, L.L.C., a
Delaware limited liability company ("Tenant"), and is consented to by NOMURA
ASSET CAPITAL CORPORATION, a Delaware corporation ("Mortgagee") and by THE NEW
YORK RESTAURANT GROUP, L.L.C., a Delaware limited liability company
("Guarantor").
W I T N E S S E T H:
A. Landlord and Tenant have entered into that certain Marina City Retail
Lease dated as of July 31, 1997, which Lease demises to Tenant Space Number G
(the "Premises") at Marina City, Chicago, Illinois (the "Project"), which was
amended by First Amendment to Lease also dated as of July 31, 1997 (the Marina
City Retail Lease and First Amendment are hereinafter referred to collectively
as the "Lease").
B. In the course of performance of Tenant's Work at the Premises, Tenant
has determined that the ramp which provides handicap access from the State
Street elevation to the plaza level of the Premises (the "Ramp") may, in part,
be located on property owned by the City of Chicago (the "City"), in violation
of ordinances of the City and in violation of the terms of the Lease. Tenant
represents that it has obtained the commitment of the City not to object to the
installation, maintenance and use of the Ramp at the proposed location. So long
as the City does not object to the location of the Ramp, Landlord hereby agrees
not to object thereto, as hereinafter provided, subject to and conditioned upon
the agreement of Tenant to assume all risks (including the risk that removal may
be required) and specifically to indemnify, defend and hold harmless Landlord
from and against any and all liability which may arise in connection with the
installation, maintenance and use of the Ramp at the proposed location.
C. In accordance with the provisions of Section 2.1.A of the Lease, the
Landlord has measured the Premises to determine the actual square footage of the
Premises. The Landlord and Tenant desire to amend various provisions of the
Lease to account for such remeasuring.
D. Landlord and Tenant also desire to confirm the actual Commencement Date
under Section F of the Basic Lease Provisions and the Expiration Date under
Section G of the Basic Lease Provisions and to make several other revisions to
the terms of the Lease.
NOW, THEREFORE, in consideration of the rents, covenants and agreements
hereinafter set forth, Landlord and Tenant hereby agree as follows:
A1. Defined Terms. Terms defined in the Lease and delineated therein by
initial capital letters shall have the same meanings ascribed thereto in the
Lease, except to the extent that the meaning of any such term is specifically
modified by the provisions of this Second Amendment. In
1
<PAGE>
addition, terms not defined in the Lease but defined herein will, when
delineated with initial capital letters, have the meanings ascribed thereto in
this Second Amendment. Terms and phrases which are not delineated herein by
initial capital letters shall have the meanings commonly ascribed thereto.
A2. Tenant's Specific Indemnity Regarding Ramp. Tenant hereby agrees to
indemnify, defend, and forever hold Landlord harmless from and against any
claims, losses, damages, actions, liabilities, causes of action, suits,
investigations and judgments of any nature whatsoever, including, without
limitation, reasonable attorneys' fees and costs of litigation, incurred by
Landlord in connection with the installation, maintenance and use of the Ramp in
the proposed location, including any and all costs in connection with the
removal of the Ramp from the proposed location and the installation of an
alternative means of handicap access to the Premises in another area of the
Project.
Notwithstanding anything to the contrary contained herein, in the
event that the Project or any portion thereof is sold to a third party purchaser
and such purchaser objects to the maintenance and use of the Ramp at the
proposed location, Tenant, at Tenant's sole cost and expense, shall take
whatever measures are required to satisfy the objections of such purchaser,
including obtaining from the City an encroachment permit allowing for the
maintenance and use of the Ramp at such location or removing the Ramp and
installing a new handicap access in a different location acceptable to such
purchaser and the City.
The foregoing indemnity and agreement shall survive the expiration
or earlier termination of this Lease.
A3. Commencement and Expiration Dates. Landlord and Tenant hereby confirm
that the Commencement Date of the Lease under Section F of the Basic Lease
Provisions was January 1, 1998, and that the Expiration Date under Section G of
the Basic Lease Provisions shall be December 31, 2012.
A4. Permitted Use. Section 2.5 of the Lease is amended to provide that the
Tenant is permitted to utilize the portion of the Premises located on the Bridge
level of the Project as a beer garden, so long as Tenant complies with all
applicable laws, rules, ordinances and the provisions of this Lease.
A5. That the provisions of Section C of the Basic Lease Provisions of said
Lease are hereby deleted in their entirety and the following is inserted in lieu
thereof:
"C. Square Footage (Section 2.1): Approximately 22,682 square feet, a
portion of which is located on the concourse level and an additional
portion of which is located on the plaza level of the State's Street
riverside of Marina City."
A6. The Initial Term Base Rent amounts provided at Section J of the Basic
Lease Provisions are hereby deleted in their entirety and the following is
inserted in lieu thereof:
2
<PAGE>
"J. Base Rent (Section 4.4):
<TABLE>
<CAPTION>
Initial Term Annually Monthly Per Sq. Ft.
------------ -------- ------- -----------
<S> <C> <C> <C>
Commencement Date to the expiration
of the first (1st) full Lease Year $450,691.34 $37,557.61 $19.87
Next four (4) full Lease Years $536,882.94 $44,740.25 $23.67
Next five (5) full Lease Years $586,783.34 $48,898.61 $25.87
Next five (5) full Lease Years $654,829.34 $54,569.11 $28.87"
</TABLE>
The balance of Section J shall not be affected by the modification described in
this Section A6.
A7. The Percentage Rent amounts provided at Section K of the Basic Lease
Provisions are hereby deleted in their entirety and the following is inserted in
lieu thereof:
"K. Percentage Rent (Section 4.5):
Commencement Date to the expiration of the first (1st) full Lease
Year, 5.5% of annual Gross Sales exceeding a Breakpoint of
$8,194,388 per annum.
Next four (4) full Lease Years, 5.5% of annual Gross Sales exceeding
a Breakpoint of $9,761,508 per annum.
Next five (5) full Lease Years, 5.5% of annual Gross Sales exceeding
a Breakpoint of $10,668,788 per annum.
Next five (5) full Lease Years, 5.5% of annual Gross Sales exceeding
a Breakpoint of $11,905,988 per annum.
The annual Breakpoint at which Tenant shall be obligated to commence
the payment of Percentage Rent during the Option Periods shall be
adjusted by dividing the annual Base Rent payable during the
applicable Option Period by five and one-half percent (5.5%)."
A8. Square Footage of the Retail Area. The reference at Section 2.1.A. to
the number 100,000 is hereby changed to 109,000.
A9. Ratification. All clauses and terms of the Lease, as modified by this
Second Amendment, are hereby ratified, and Landlord and Tenant hereby confirm
that, as of the date of this Second Amendment, the Lease is and remains in good
standing and in full force and effect.
3
<PAGE>
A101. Multiple Counterparts. To facilitate execution hereof, this Second
Amendment may be executed in one or more counterparts as may be convenient or
required, and an executed copy hereof delivered by facsimile shall have the
effect of an original executed instrument. All counterparts hereof collectively
shall constitute a single instrument.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day
and year first above written.
LANDLORD:
MARINA CITY HOTEL ENTERPRISES, L.L.C.,
an Illinois limited liability company
By: /s/ David Katz
-----------------------------------------------------
Name: DAVID KATZ
-----------------------------------------------------
Title: MANAGER
-----------------------------------------------------
TENANT:
S & W CHICAGO, L.L.C.
a Delaware limited liability company
By: The New York Restaurant Group, L.L.C., a Delaware
limited liability company, its Majority Member
By: La Cite, Inc. a Delaware corporation, its Manager
By: /s/ James M. Dunn
---------------------------------------------
James M. Dunn
Its Authorized Representative
4
<PAGE>
CONSENT OF GUARANTOR
The undersigned, THE NEW YORK RESTAURANT GROUP, L.L.C., a Delaware limited
liability company ("Guarantor"), hereby consents to the terms and conditions of
the foregoing Second Amendment to Lease dated June __, 1999, which consent is
hereby given by the undersigned Guarantor for all purposes required under and in
accordance with that certain Lease Guaranty executed by Guarantor in connection
with the Lease.
IN WITNESS WHEREOF, the undersigned Mortgagee has cause this Consent to be
executed effective as of the date of the Second Amendment to Lease.
GUARANTOR:
NEW YORK RESTAURANT GROUP, L.L.C.,
a Delaware limited liability company
By: LaCite, Inc., a Delaware corporation, its Manager
By: /s/ James M. Dunn
-------------------------------------------------
James M. Dunn
Its Authorized Representative
5
<PAGE>
CONSENT OF MORTGAGEE
The undersigned, CAPITAL COMPANY OF AMERICA LLC, a Delaware limited
liability company, having an address at Two World Financial Center, Building B,
New York, New York 10281, successor, by assignment to NOMURA ASSET CAPITAL
CORPORATION, a Delaware corporation ("Mortgagee"), hereby consents to the terms
and conditions of the foregoing Second Amendment to Lease dated June __, 1999,
which consent is hereby given by the undersigned Mortgagee for all purposes
required under and in accordance with that certain Subordination,
Non-Disturbance and Attornment Agreement made as of July 31, 1997 by and among
Mortgagee, Landlord and Tenant and for all purposes as may be otherwise required
under and in accordance with any other agreements by, between or among such
parties, including, without limitation, the Tri-Party Agreement.
IN WITNESS WHEREOF, the undersigned Mortgagee has cause this Consent to be
executed effective as of the date of the Second Amendment to Lease.
MORTGAGEE:
CAPITAL COMPANY OF AMERICA LLC
By: /s/ David Katz
---------------------------------------
David Katz
Its Director
6
<PAGE>
Exhibit 10.7
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919
Attention: Law Department
SPECIFIC ASSIGNMENT, SUBORDINATION,
AND ATTORNMENT AGREEMENT
THIS SPECIFIC ASSIGNMENT, SUBORDINATION, AND ATTORNMENT AGREEMENT ("Agreement")
is entered into as of the 18th day of September, 1998, by and among S & W D.C.,
L.L.C., a Delaware limited liability company ("Tenant"), 1112 NINETEENTH STREET
ASSOCIATES, a District of Columbia joint venture ("Borrower"), and AID
ASSOCIATION FOR LUTHERANS, a Wisconsin corporation ("Lender").
RECITALS
A. Tenant is the lessee and Borrower is the lessor under that Certain Lease
Agreement dated July 8, 1998, as amended, (the "Lease").
B. Lender has made a loan to Borrower which is secured by a Deed of Trust and
Security Agreement from Borrower to Lender dated March 3, 1994 (the "Deed
of Trust") and an Assignment of Rents and Leases from Borrower to Lender
dated March 3, 1994 (the "Assignment") covering the property described on
EXHIBIT A attached hereto wherein the premises (the "Premises") covered by
the Lease are located (the "Property").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and to induce Lender to make the
requested loan, Tenant, Borrower, and Lender hereby agree and covenant as
follows:
1. ASSIGNMENT. Borrower does hereby absolutely and presently grant, transfer,
and assign to Lender the Lease and all rents and other sums payable under
the Lease; provided, however, that until written demand is made by Lender
to Tenant, all rents and other sums payable under the Lease shall be paid
to Borrower, but only as they accrue. Borrower covenants and agrees that
upon Tenant's receipt of written notice from Lender to pay the
SPECIFIC ASSIGNMENT
August 17, 1998
- 1 -
<PAGE>
rent to Lender and its successors and assigns, Tenant shall pay the rent
and all other sums due under the Lease as such rent and other sums become
due to the Lender and shall have no liability to Borrower for such rent
and other sums due under the Lease which are paid to Lender and its
successors and assigns. Tenant hereby recognizes the Assignment of the
Lease made by Borrower to Lender and agrees to pay, upon receipt of
written demand from Lender, all rents and other sums as directed by
Lender.
2. SUBORDINATION. Borrower, Tenant and Lender hereby agree that the Lease and
all of its terms and provisions (including, without limitation, any option
or options to purchase or rights of first refusal affecting the Property,
or any portion thereof, contained therein) is and shall at all times be
subject and subordinate in all respects to the Deed of Trust and to all
supplements, amendments and modifications thereto, and to all extensions,
substitutions, rearrangements and/or replacements thereof.
3. NON-DISTURBANCE AND ATTORNMENT. If Tenant is not in default under any of
the terms, covenants or conditions contained in the Lease or this
Agreement, or if applicable cure periods have not expired. Lender agrees
that in the event of foreclosure of the Mortgage, trustee's sale, deed in
lieu of foreclosure, or other enforcement of the terms and conditions of
the Mortgage, or the exercise by Lender of its rights under the
Assignment, or in the event Lender comes into possession or acquires title
to the Property as a result of foreclosure or the threat thereof, or as a
result of other means, such action shall not result in either a
termination of the Lease, or a diminution or impairment of any of the
rights granted to Tenant in the Lease, except as hereinafter provided.
If the interest of Borrower in the Property shall be transferred to Lender
or any transferee of Lender (such transferee, its successors and assigns,
including, but not limited to, Lender, shall hereinafter be referred to as
("Purchaser") by reason of foreclosure, trustee's sale, deed in lieu of
foreclosure or other proceeding for the enforcement of the Mortgage or
rights of Lender under the Assignment, and Tenant is not in default of its
obligations under the Lease, or if applicable cure periods have not
expired. Purchaser shall not name or join Tenant in any foreclosure,
trustee's sale or other proceeding to enforce the Mortgage or Assignment,
and Purchaser shall be bound to Tenant, except as provided in Section 4,
below, and Tenant shall be bound to any Purchaser, under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof,
and any extensions thereof with the same force and effect as if such
Purchaser were the original landlord under the Lease. Tenant does hereby
attorn to such Purchaser, including Lender if Lender is such Purchaser, as
the landlord under the Lease, said attornment to be effective and
self-operative without the execution of any further instruments upon
Purchaser's succeeding to the interest of the Borrower
under the Lease.
4. LIMITATION ON PURCHASER OBLIGATIONS. Notwithstanding anything to the
contrary contained in Section 3 hereof, a Purchaser shall not be:
4.1 liable for any damages or other relief attributable to any act or
omission of any prior lessor under the Lease (including, without
limitation, Borrower);
SPECIFIC ASSIGNMENT
August 17, 1998
- 2 -
<PAGE>
4.2 subject to any offsets or defenses that Tenant may have against a
prior lessor under the lease (including, without limitation,
Borrower);
4.3 liable for any damages or other relief attributable to any latent or
patent defects in construction with respect to the Property;
4.4 liable for the return of any security deposit under the Lease unless
such security deposit shall have been actually deposited with
Purchaser;
4.5 bound by any rent or additional rent that Tenant might have paid in
advance to any prior lessor under the Lease (including, without
limitation, Borrower), for any period beyond the month in which
Purchaser succeeds to the interest of Borrower under the Lease;
4.6 bound by any waiver or forbearance by any prior lessor under the
Lease (including, without limitation, Borrower) or bound by any
agreement or modification of the Lease made without the prior
written consent of Lender; or
4.7 bound by any covenant made by any prior lessor under the Lease
(including, without limitation, Borrower) to complete any
construction on the Property covered by the lease or to pay any sums
to Tenant in connection therewith, unless Purchaser shall have
expressly consented thereto in writing.
5. FURTHER ACTIONS. Tenant covenants and agrees from time to time to do all
acts and execute such instruments as it shall be requested by Lender to do
or execute for the purposes of carrying out and effectuating this
Agreement and the intent hereof, and evidencing this Agreement, whether by
filing with any public office, or agency or otherwise.
6. COVENANTS OF TENANT. Tenant agrees that during the term of the Lease,
Tenant will not:
6.1 pay any rent or additional rent more than one (1) month in advance
to any lessor (including, but not limited to, Borrower); or
6.2 cancel, surrender, amend or modify the Lease without Lender's prior
written consent nor terminate the Lease because of a default
thereunder by Borrower unless Tenant shall have first given Lender
written notice thereof and a reasonable opportunity to cure such
default.
In the event the Lease is rejected or deemed rejected in any bankruptcy
proceeding with respect to landlord, Tenant shall not exercise any right
it may have to treat the Lease as terminated under 11 U.S.C.
Section 365(h), as amended,
SPECIFIC ASSIGNMENT
August 17, 1998
- 3 -
<PAGE>
7. MERGER. Borrower, Tenant and Lender agree that unless Lender shall
otherwise consent in writing, the fee title to the Property and the
leasehold estate created by the Lease shall not merge but shall remain
separate and distinct, notwithstanding the union of said estates either in
Borrower or Tenant or any third-party by purchase, assignment or
otherwise.
8. LIMITATION ON LIABILITY. Notwithstanding anything to the contrary
contained herein or in the Lease, in the event that any Lender shall
acquire title to the Property, such Lender shall have no obligation, nor
incur any liability, beyond the then interest if any, of such Lender in
the Property, and Tenant shall look exclusively to such interest of such
Lender if any, in the Property for the payment and discharge of any
obligations imposed upon such Lender hereunder or under the Lease, and
such Lender is hereby released and relieved of any other liability
hereunder and under the Lease. As regards such Lender, Tenant shall look
solely to the estate or interest owned by such Lender in the Property and
Tenant will not collect or attempt to collect any such obligation or
liabilities or any judgment therefor, out of any other assets of Lender.
By executing this Agreement, Borrower specifically acknowledges and agrees
that nothing contained in this paragraph shall impair, limit, offset,
lessen, abrogate or otherwise modify the obligations of Borrower to Tenant
under the Lease.
9. MODIFICATION OF AGREEMENT. This agreement may not be modified orally or in
any other manner except by an agreement in writing signed by the parties
hereto or their respective successors in interest.
10. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, successors
and assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the District of Columbia.
12. CERTIFICATION RELATING TO LEASE. Tenant and Borrower hereby certify that,
as of the date hereof, there are no defaults (or events that with the
giving of notice and/or the passage of time could become a default) on the
part of the other party under the Lease, that the Lease is a complete
statement of the agreement of the parties under the Lease with respect to
the leasing of the Premises, that the Lease is in full force and effect,
and that all conditions to the effectiveness or continuing effectiveness
thereof required to be satisfied as of the date hereof have been
satisfied.
13. INTEGRATION. This Agreement shall be the whole and only agreement with
regard to the subjection and subordination of the Lease and the leasehold
estate created thereby, together with all rights and privileges of Tenant
thereunder, to the lien or charge of the Deed of Trust and shall supersede
and cancel, but only insofar as would affect the priority between the
Lease and the Deed of Trust any prior agreements as to such subjection or
subordination, including, but not limited to, those provisions contained
in the Lease that provide for the subjection or subordination of the Lease
and the leasehold estate created thereby to a deed or deeds of trust or to
a mortgage or mortgages.
SPECIFIC ASSIGNMENT
August 17, 1998
- 4 -
<PAGE>
14. NOTICES. All notices and demands that may or are required to be given by
any party to any other party hereunder shall be given in writing and shall
be deemed to have been fully given within three (3) business days after
being deposited in the United States mail, certified or registered,
postage prepaid, and addressed to such party at the address set forth
below beside its signature. The parties may change their addresses by
giving notice to the other parties in the same manner as above provided.
Tenant agrees that it shall send a copy of any notice of default or
similar statement under the Lease to Lender at the same time such notice
or statement is sent to the Lessor under the Lease.
15. CAPTIONS. The captions and headings of the paragraphs of this Agreement
are for convenience only and are not to be used in construing this
Agreement.
16. COUNTERPARTS. This Agreement may be executed in counterparts, and all
counterparts together shall be construed as one document.
In WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
ADDRESS: TENANT:
1114 First Avenue, 6th Floor S & W D.C., LLC,
New York, NY 10021 a Delaware limited liability company
By: /s/ James Dunn
-----------------------------------
Name: JAMES DUNN
Title: PRESIDENT
By: /s/ Mark Levine
-----------------------------------
Name: MARK LEVINE
Title: Secretary/Treas
GUARANTOR:
THE NEW YORK RESTAURANT
GROUP, INC., a Delaware corporation
By: /s/ James Dunn
-----------------------------------
Name: JAMES DUNN
Title: PRESIDENT
By: /s/ Mark Levine
-----------------------------------
Name: Mark Levine
Title: Secretary/Treas
SPECIFIC ASSIGNMENT
August 17, 1998
- 5 -
<PAGE>
(SIGNATURES CONTINUED FROM PREVIOUS PAGE)
ADDRESS: LENDER:
- -------- -------
4321 North Ballard Road AID ASSOCIATION FOR LUTHERANS,
Appleton, Wisconsin 54919 a Wisconsin corporation
Attn: Investment Department
Loan No. 71830
By: /s/ Wayne C. Streck
-----------------------------------
Wayne C. Streck
Vice President -
Mortgages and Real Estate
By: /s/ David Crist
-----------------------------------
David Crist
Assistant Secretary
ADDRESS: BORROWER:
- -------- ---------
2145 K Street, N. W. 1112 NINETEENTH STREET
Washington, D.C. 20037 ASSOCIATES, a District of Columbia
joint venture
By: /s/ Thaddeus A. Lindner
-----------------------------------
Name: THADDEUS A. LINDNER
Title: PARTNER
By: /s/ Sergius Gambal
-----------------------------------
Name: SERGIUS GAMBAL
Title: PARTNER
SPECIFIC ASSIGNMENT
August 17, 1998
- 6 -
<PAGE>
STATE OF New York )
) ss.
COUNTY OF New York )
On 8-27-98, 1998, before me, the undersigned, a Notary Public in and for said
State, personally appeared James Dunn and Mark Levine, personally known to me or
proved to me on this basis of satisfactory evidence to be the persons who
executed the within instrument as the President and the Sec./Treas,
respectively, of S & W D.C., L.L.C., a Delaware limited liability company, the
company that executed the within instrument, and acknowledged to me that such
company executed the within instrument pursuant to its bylaws or a resolution of
its board of directors.
WITNESS my hand and official seal
JOSEPH R. PEARCE
Notary Public, State of New York /s/ [ILLEGIBLE]
No. 31-8306010 ------------------------------
(SEAL) Qualified in Kings County Notary Public
Cert. filed in New York County
Commission Expires June 30, 2000
My Commission expires:__________________
STATE OF WISCONSIN )
) ss.
COUNTY OF OUTAGAMIE )
On Sept. 15, 1998, before me, the undersigned, a Notary Public in and for
said State, personally appeared Wayne C. Streck and David Crist, personally
known to me or proved to me on the basis of satisfactory evidence to be the
persons who executed the within instrument as the Vice President - Mortgages and
Real Estate and Assistant Secretary, respectively, of AID ASSOCIATION FOR
LUTHERANS, a Wisconsin corporation, the corporation that executed the within
instrument and acknowledged to me that such corporation executed the within
instrument pursuant to its bylaws or a resolution of its board of directors.
WITNESS my hand and official seal.
(SEAL) /s/ Kathleen M. Van Boxtel
---------------------------------------
Notary Public
My Commission expires: 8-11-2002.
SPECIFIC ASSIGNMENT
August 17, 1998
- 7 -
<PAGE>
STATE OF )
)ss.
COUNTY OF )
On 18 SEPTEMBER, 1998, before me, the undersigned, a Notary Public in and for
said State, personally appeared THADDEUS A. LINDNER and SERGIUS GAMBAL,
personally known to me or proved to me on this basis of satisfactory evidence to
be the persons who executed the within instrument as the PARTNER and PARTNER,
respectively, of 1112 NINETEEN STREET Associates, a District of Columbia joint
venture, the joint venture that executed the within instrument, and acknowledged
to me that such joint venture executed the within instrument, pursuant to its
bylaws or a resolution of its board of directors.
WITNESS my hand and official seal.
(SEAL)
/s/ L. A. Johnson
---------------------------------------
Notary Public
My Commission expires: 11/30/99.
L. A. JOHNSON
Notary Public, District of Columbia
My Commission Expires November 30, 1999
- 8 -
<PAGE>
Exhibit A
SPECIFIC ASSIGNMENT
August 17, 1998
- 9 -
<PAGE>
1112 Nineteenth Street Associates
2145 K Street, N.W., Suite 100
Washington, D.C. 20037
July 8, 1998
S & W D.C., L.L.C.
c/o The New York Restaurant Group, Inc.
1114 First Avenue, 6th Floor
New York, New York 10021
Attn: Eugene Zuriff, Esquire
Dear Mr. Zuriff:
All defined terms used in this Letter shall have the same meanings
ascribed to them in the Agreement of Lease dated July 8, 1998 by and S & W D.C.,
L.L.C., a Delaware limited liability company, and 1112 Nineteenth Street
Associates, a District of Columbia joint venture.
This letter will confirm that in the event the Premises are not
substantially in broom-clean condition upon the date Landlord delivers the
Premises to Tenant and such condition increases Tenant's cost to clean the
Premises, Landlord Agrees to pay such increased costs of cleaning the Premises,
within ten (10) business days of Landlord's receipt of invoices evidencing such
increased costs, in an amount not to exceed Two Thousand Dollars ($2,000). In no
event shall this limited obligation of Landlord under this letter agreement to
pay the increased costs of cleaning the Premises delay the Commencement Date of
the Lease.
Yours sincerely,
1112 Nineteenth Street Associates, a
District of Columbia joint venture
WITNESS:
/s/ [ILLEGIBLE] By: Thaddeus A. Lindner
- ------------------------------------- -----------------------------------
Thaddeus A. Lindner, Partner
WITNESS:
/s/ L. A. Johnson By: Sergius Gambal
- ------------------------------------- -----------------------------------
Sergius Gambal, Partner
<PAGE>
RESOLUTION OF S&W D.C., LLC.
WHEREAS, there has been presented to and discussed at this meeting, a
lease to be entered into by S&W D.C., LLC, as Tenant, with 1112 Nineteenth
Street Associates as Landlord,
WHEREAS, the members of this limited liability company deem it to be in
the best interests of this LLC and its members that the Lease be entered into,
NOW, THEREFORE, it is resolved that this LLC execute the Lease with 1112
Nineteenth Street Associates which has been presented to and discussed at this
meeting; and
IT IS FURTHER RESOLVED, that The New York Restaurant Group, Inc., and it
hereby is, authorized, empowered and directed to execute and deliver on behalf
of this Corporation the said Lease.
Dated: New York, New York
July 10, 1998
S&W D.C., LLC
By: New York Restaurant Group, Inc., Manager
By: /s/ James Dunn
--------------------------------------------
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ Mark Levine
--------------------------------------------
Secretary
<PAGE>
RESOLUTION OF S&W D.C., LLC.
WHEREAS, there has been presented to and discussed at this meeting, a
lease to be entered into by S&W D.C., LLC, as Tenant, with 1112 Nineteenth
Street Associates as Landlord,
WHEREAS, the members of this limited liability company deem it to be in
the best interests of this LLC and its members that the Lease be entered into,
NOW, THEREFORE, it is resolved that this LLC execute the Lease with 1112
Nineteenth Street Associates which has been presented to and discussed at this
meeting; and
IT IS FURTHER RESOLVED, that The New York Restaurant Group, Inc., and it
hereby is, authorized, empowered and directed to execute and deliver on behalf
of this Corporation the said Lease.
Dated: New York, New York
July 10, 1998
S&W D.C., LLC
By: New York Restaurant Group, Inc., Manager
By: /s/ James Dunn
--------------------------------------------
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ Mark Levine
--------------------------------------------
Secretary
<PAGE>
RESOLUTION OF S&W D.C., LLC.
WHEREAS, there has been presented to and discussed at this meeting, a
lease to be entered into by S&W D.C., LLC, as Tenant, with 1112 Nineteenth
Street Associates as Landlord,
WHEREAS, the members of this limited liability company deem it to be in
the best interests of this LLC and its members that the Lease be entered into,
NOW, THEREFORE, it is resolved that this LLC execute the Lease with 1112
Nineteenth Street Associates which has been presented to and discussed at this
meeting; and
IT IS FURTHER RESOLVED, that The New York Restaurant Group, Inc., and it
hereby is, authorized, empowered and directed to execute and deliver on behalf
of this Corporation the said Lease.
Dated: New York, New York
July 10, 1998
S&W D.C., LLC
By: New York Restaurant Group, Inc., Manager
By: /s/ James Dunn
--------------------------------------------
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ Mark Levine
--------------------------------------------
Secretary
<PAGE>
PERSONAM JURISDICTION ON THE GROUNDS OF MINIMUM CONTACTS, WAIVES ANY OBJECTION
TO VENUE, AND WAIVES ANY PLEA OF FORUM NON CONVENIENS, THIS CONSENT TO AND
SUBMISSION TO JURISDICTION IS WITH REGARD TO ANY ACTION RELATED TO THIS LEASE.
REGARDLESS OF WHETHER LANDLORD OR GUARANTOR'S ACTIONS TOOK PLACE IN THE DISTRICT
OF COLUMBIA OR ELSEWHERE IN THE UNITED STATES, THIS SUBMISSION TO JURISDICTION
IS NONEXCLUSIVE, AND DOES NOT PRECLUDE THE OTHER PARTY FROM OBTAINING
JURISDICTION OVER GUARANTOR OR LANDLORD IN ANY COURT OTHERWISE HAVING
JURISDICTION.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and
year first above written.
GUARANTOR:
ATTEST: The New York Restaurant Group, Inc.,
a Delaware corporation
/s/ Mark Levine By: /s/ James Dunn
- ------------------------------------- -----------------------------------
Secretary Name: James Dunn
---------------------------------
Title: President
--------------------------------
- 7 -
<PAGE>
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (this "Lease") is made as of the 8th day of July,
1998, by and between (i) 1112 Nineteenth Street Associates, a District of
Columbia joint venture, and (ii) S & W D.C., L.L.C., a Delaware limited
liability company ("Tenant").
AGREEMENT
---------
1. DEFINITIONS. Except as otherwise expressly provided or unless the
context otherwise requires, the following terms shall have the meanings assigned
to them in this Paragraph:
A. DEFINITIONS OF BUSINESS TERMS
1. BASE RENT: Three Hundred Thirty-Three Thousand
Dollars ($333,000.00) PER ANNUM, payable in equal monthly installments of
Twenty-Seven Thousand Seven Hundred Fifty Dollars ($27,750.00).
2. BROKER: Equis Corporation.
3. BUILDING: The building located at 1112 19th Street,
N.W., Washington, D.C. located on the Land.
4. COMMENCEMENT DATE. Determined pursuant to
Paragraph 3.
5. PREMISES: The entire Building, containing
approximately 20,000 gross square feet of space, and the Land.
6. EFFECTIVE DATE: The date of execution hereof by both
Landlord and Tenant.
7. LAND: The Land upon which the Building is situated,
as more particularly described in EXHIBIT A hereto.
8. LANDLORD'S ADDRESS: 2175 K Street, N.W., Suite 100,
Washington, D.C. 20037, Attention: Mr. Thaddeus A. Lindner and Mr. Sergius
Gambal.
9. PERCENTAGE RENT: Four and one-half percent (4.5%) of
Gross Receipts in excess of (i) Eleven Million Dollars ($11,000,000.00) in any
Lease Year during the first fifteen and one-half (15 1/2 years) of the Term,
(ii) Fifteen Million Dollars ($15,000,000.00) in any Lease Year during the first
Renewal Term, and (iii) Twenty One Million Three Hundred Seventy Five Thousand
Dollars ($21,375,000.00) in any Lease Year during the second Renewal Term. In
each case, the Percentage Rent shall be determined, in arrears, in accordance
with Paragraph 6 below.
<PAGE>
10. SECURITY DEPOSIT: None.
11. TERM: Fifteen and one-half (15 1/2) years,
commencing on the Commencement Date and ending, in all events, fifteen and
one-half (15 1/2) years from the last day of the month in which the Commencement
Date occurs, unless extended pursuant to Paragraph 3.2 below or earlier
terminated pursuant to the provisions of this Lease.
12. GUARANTOR: The New York Restaurant Group, Inc., a
Delaware corporation.
13. GUARANTY: That certain Guaranty of even date
herewith from Guarantor in favor of Landlord guarantying full payment and
performance of Tenant's obligations under this Lease.
B. ADDITIONAL DEFINITIONS
1. ADDITIONAL RENT: Any and all amounts required to be
paid by Tenant pursuant to the provisions of this Lease (including, but not
limited to, the payments to be made pursuant to Paragraphs 6 through 10 and 23
hereof, but excluding Monthly Base Rent) and any charges or expenses paid or
incurred by Landlord on behalf of Tenant pursuant to this Lease.
2. ALTERATIONS: Any improvements, alterations, fixed
decorations or modifications, structural or otherwise, to the Premises,
including, but not limited to, the installation, substitution, alteration, or
modification of carpeting, partitions, fixtures, counters, doors,
air-conditioning ducts, plumbing, piping, lighting fixtures and wiring of any
kind, hardware, locks, ceilings, window and wall coverings and the like, but
specifically excluding Tenant's Property (as defined in Paragraph 1.B.11 below).
3. GROSS RECEIPTS: The entire amount of the actual
receipts, whether for cash or otherwise, of all sales of food, liquor,
merchandise, service or any other receipt whatsoever of all business conducted
in or from the Premises (including any sidewalk or other public areas that
Tenant is able to use or to obtain access) during the applicable period,
including, but not limited to, mail orders, telephone orders and/or other orders
in whatever manner received or filled, whether in whole or in part, at the
Premises, (including any sidewalk or other public areas that Tenant is able to
use or to obtain access) and including all deposits not refunded to purchasers,
orders taken, sales to employees, sales through vending machines or other
devices, and sales by any subtenant, concessionaire or licensee or otherwise in
or from the Premises, provided that nothing herein shall prevent Landlord from
requiring an additional or different Percentage Rent as a condition to approval
of any subtenant, concessionaire or licensee hereunder. No deduction shall be
allowed for uncollected or uncollectible accounts, any income or similar tax
based on income or any gross receipts tax. Gross Receipts shall not include any
(i) sales tax, use tax, or any other tax separately collected by Tenant or paid
to any duly constituted governmental authority, (ii) the exchange of merchandise
between the restaurants or stores of Tenant, if any, where such exchange of
goods or merchandise are made solely for the convenient operation of the
business of Tenant and not for the purpose of consummating a sale which had
theretofore been made at, in, from or upon the Premises and/or for the purpose
of depriving Landlord of the benefit of a sale which otherwise would be made at,
in, from or upon the Premises, (iii) the amount of returns to shippers or
manufacturers, (iv) the amount of any cash or
-2-
<PAGE>
credit refund made upon any sale where the merchandise sold, or some part
thereof, is thereafter returned by the purchaser and accepted by Tenant, but
only to the extent of such refund, if the selling price of such merchandise was
previously included in Gross Receipts, (v) sales of Tenant's store fixtures, and
(vi) the amount of any sales to employees or sales made pursuant to a customer
promotional program, except to the extent of amounts charged for the same (the
exclusions set forth in clauses (i) through (vi) are collectively referred to as
the "Exclusions"). Notwithstanding anything in the Lease (including this
Paragraph I B 3) to the contrary, the aggregate amount of the Exclusions shall
not exceed three (3) percent of Gross Receipts in any Lease Year.
4. GROUND LEASES: All ground and other underlying leases
from which Landlord's title to the Land and/or the Building is or may in the
future be derived. "Ground Lessors" shall denote those persons and entities
holding such ground or underlying leases.
5. HOLIDAYS: New Year's Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
6. LEASE YEAR: That period of twelve (12) consecutive
calendar months commencing on the first day of the calendar month in which the
Commencement Date occurs, and each consecutive twelve (12)-month period
thereafter.
7. MONTHLY BASE RENT: Equal monthly installments of
one-twelfth (1/12th) of the Base Rent.
8. REAL ESTATE TAXES: Taxes and assessments, general or
special, ordinary or extraordinary, foreseen or unforeseen, assessed, levied or
imposed upon the Building or the Land, or assessed, levied or imposed upon the
fixtures, machinery, equipment or systems in, upon or used in connection with
the operation of the Building or the Land under the current or any future
taxation or assessment system or modification of, supplement to, or substitute
for such system, and whether or not based on or measured by the receipts or
revenues from the Building or the Land (including all taxes and assessments for
public improvements or any other governmental purpose, charges of any business
improvement district, and any gross receipts or similar taxes). Real Estate
Taxes shall include the reasonable expenses (including, but not limited to,
reasonable attorneys' fees) incurred by Landlord in obtaining or attempting to
obtain a reduction of such taxes, rates or assessments. Real Estate Taxes shall
not include any estate, inheritance, succession, capital levy, corporate
franchise, transfer or income tax of Landlord. If there is any change by the
taxing body in the period for which any of the Real Estate Taxes are levied,
assessed or imposed, Landlord shall have the right, in its reasonable
discretion, to make appropriate adjustments with respect to computing increases
in Real Estate Taxes provided Tenant is not thereby unduly prejudiced.
9. RENT: All Base Rent and Additional Rent.
10. TENANT'S PERSONAL PROPERTY: All equipment,
machinery, improvements, furniture, furnishings and other property now or
hereafter installed or placed in or on the Premises by and at the sole expense
of Tenant or with Tenant's permission (other than any
-3-
<PAGE>
property of Landlord) with respect to which Tenant has not been granted any
credit or allowance by Landlord and which (a) is not used, or was not procured
for use, in connection with the operation, maintenance or protection of the
Premises, the Building or the Land, and (b) is removable without damage to the
Premises, the Building or the Land and (c) is not a replacement of any property
of Landlord, whether such replacement is made at Tenant's expense or otherwise.
Notwithstanding any other provision of this Lease, Tenant's Personal Property
shall not include any Alterations or any improvements or other property
installed or placed in or on the Premises as part of the Tenant Work, whether or
not any such property was purchased or installed at Tenant's expense. Tenant's
Personal Property shall include its furniture, equipment, logos and Removable
Trade Fixtures (as defined below). For purposes hereof, "Removable Trade
Fixtures" shall mean Tenant's (i) removable decor items and office equipment,
(ii) signs, sign posts and sign standards, and (iii) food and customer service
equipment (including, without limitation, walk-in refrigerators and freezers,
remote refrigeration system and exhaust systems and hoods).
11. TENANT WORK: The initial improvements to the
Building to be performed by Tenant, as more particularly described in EXHIBIT D
hereto.
12. WORK AGREEMENT: The Work Agreement between Landlord
and Tenant attached hereto as EXHIBIT D.
2. PREMISES. For and in consideration of the Rent reserved and the mutual
covenants contained in this Lease, Landlord does hereby lease and demise unto
Tenant, and Tenant does hereby lease and accept from Landlord, the Premises for
the Term and upon the terms and conditions set forth in this Lease. Any
approximations of square footage contained in this Lease shall in no way affect
the payment of Rent under this Lease should any variance be found to exist
between said approximation and the actual square footage. Landlord represents to
Tenant that it owns the Premises
3. TERM; COMMENCEMENT DATE; PERMITS, ETC.
3.1 COMMENCEMENT DATE. The Commencement Date shall occur upon the
earlier to occur of: (i) the date Tenant opens a restaurant for business to the
public from the Premises or (ii) one-hundred eighty (180) days after Landlord
delivers to Tenant possession of the Premises free of other tenancies. The Term
shall commence upon the Commencement Date and shall expire on the date that is
fifteen and one-half (15 1/2) years following the day prior to the Commencement
Date, unless extended or earlier terminated pursuant to the provisions of this
Lease (such date as extended pursuant to Paragraph 3.2 below or earlier
termination is hereinafter referred to as the "Lease Expiration Date"). This
Lease shall otherwise become effective upon the Effective Date, except that all
payments of Base Rent and Additional Rent hereunder shall commence as of the
Commencement Date. If Landlord has not delivered the Premises to Tenant on or
before February 15, 1999, then this Lease shall not be void, voidable or, except
as set forth in the next sentence, subject to termination, nor shall Landlord be
liable to Tenant for any loss or damage resulting from any failure of Landlord
to deliver the Premises to Tenant on or before such date. If the Premises have
not been delivered before such date, Tenant shall have the right to terminate
this Lease any time after February 15, 1999 and before Tenant's receipt of a
Delivery Notice (as defined below). If Landlord has been unable to deliver the
-4-
<PAGE>
Premises by January 1, 2000, then either Landlord or Tenant may terminate this
Lease at any time upon written notice. For purposes of this Lease, a Delivery
Notice shall mean and refer to a written notice to Tenant setting a date within
thirty (30) days of such notice by which Landlord states that it shall deliver
the Premises to Tenant.
3.2 RENEWAL OPTION. Tenant is granted the option to extend the Term
for two (2) extended terms of five (5) years each (each, a "Renewal Term"),
provided that (i) Tenant is not in default at the time of exercise of each
respective option or on the first day of such Renewal Term, and (ii) Tenant
gives Landlord written notice of its exercise of the option at least three
hundred sixty-five (365) days prior to the expiration of the Term or the first
Renewal Term, as the case may be. Each Renewal Term shall be upon the same
terms, conditions and rental, except that the Base Rent shall be increased to
(i) Five Hundred Forty Thousand Dollars ($540,000.00) per year during the first
Renewal Term, and (ii) Eight Hundred Thousand Dollars ($800,000.00) during the
second Renewal Term. In addition, for each Lease Year during each Renewal Term,
Tenant shall pay the Percentage Rent.
3.3 DECLARATION. Landlord and Tenant agree to execute a Declaration,
in the form attached hereto as Exhibit B, to confirm the Commencement Date and
other matters set forth thereon. Failure to execute the Declaration shall
constitute a default under this Lease, but shall not affect the commencement or
expiration of the Term.
4. RENT; MONTHLY BASE RENT; ALLOWANCE AND ABATEMENT.
4.1 MONTHLY BASE RENT. The first payment of Monthly Base Rent shall
be due on the Effective date and thereafter shall be payable on the first day of
each and every month as and when due during the Term. If the Commencement Date
is a date other than the first day of a month, however, Rent for the period
commencing with and including the Commencement Date and ending on and including
the day prior to the first day of the following month shall be prorated at the
rate of one-thirtieth (1/30th) of the Monthly Base Rent per day. All payments of
Rent shall be payable to Landlord at Landlord's Address, in lawful money of the
United States, without previous notice or demand and without deduction, set-off
or counterclaim whatsoever. Landlord shall have the right to change the place
where Rent shall be paid by written notice to Tenant.
4.2 RENT CREDIT. Landlord hereby agrees to provide Tenant with a
rent credit in the aggregate amount of Eighty-Two Thousand Five Hundred Dollars
($82,500.00) (the "Rent Credit"). The Rent Credit shall be amortized (and
realized by Tenant) without interest on a straight-line basis over the initial
two (2) Lease Years, such that beginning upon the Commencement Date the Monthly
Base Rent shall be reduced by Three Thousand Four Hundred Thirty-Seven and
50/100 Dollars ($3,437.50) during each month of such two (2)- Lease Year period
($3,427.50 x 24 months = $82,500.00). In addition to the Rent Credit, Landlord
hereby agrees to provide Tenant with an additional rent credit (the "Additional
Rent Credit"), in an amount not to exceed Twenty-Five Thousand and No/100
Dollars ($25,000.00) for any costs incurred by Tenant directly related to
upgrading the utility services to the Building, which Additional Rent Credit
shall be credited in the same manner and over the same time period as the Rent
Credit. Tenant shall provide written receipts to Landlord evidencing the amounts
paid by Tenant for such upgrading. Thereafter, Landlord shall deliver written
notice to Tenant
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confirming the amount of the Additional Rent Credit or questioning the amount or
nature of such costs for purposes of this Paragraph 4.2.
5. ACCEPTANCE OF THE PREMISES. Taking possession of the Premises by Tenant
shall be conclusive evidence that Tenant: (a) accepts the Premises as suitable
for the purposes for which they are leased; (b) accepts the Premises and every
part and appurtenance thereof as being in a good and satisfactory condition; and
(c) accepts the Premises in "As Is" condition and waives any defects in the
Premises. Tenant shall not occupy or use the Premises prior to the Commencement
Date without Landlord's prior consent and unless all provisions of the Lease
shall be in full force and effect. Landlord shall not be liable to Tenant or any
of Tenant's agents, employees, licensees, servants, or invitees for any injury
or damage to person or property due to the condition or design of or any defect
in the Building or its mechanical systems and equipment which may exist or
occur. Tenant, for itself and its agents, employees, licensees, servants, and
invitees, expressly assumes all risks of injury or damage to person or property,
either proximate or remote, resulting from the condition of the Premises or any
part thereof. Notwithstanding anything to the contrary in this Lease, Landlord
represents to Tenant that, except as set forth in that certain letter report of
AMN Engineers dated February 1, 1994, Landlord has no actual knowledge of any
structural defects in the Building.
6. PERCENTAGE RENT.
6.1 CALCULATION. For each Lease Year or portion thereof during the
Term (including any Renewal Term), Tenant shall pay to Landlord, as "Percentage
Rent" hereunder, an amount equal to four and one-half percent (4.5%) of the
Gross Receipts in excess of (i) Eleven Million Dollars ($11,000,000.00)
attributable to such Lease Year during the initial fifteen and one half (15 1/2)
years of the Term, (ii) fifteen Million Six Hundred Thousand Dollars
($15,600,000.00) attributable to each Lease Year during the first Renewal Term,
and (iii) Twenty One Million Three Hundred Seventy Five Thousand Dollars
($21,375,000.00) attributable to each Lease Year during the second Renewal Term,
in each case payable monthly in arrears. Such Percentage Rent shall be in
addition to the Base Rent and other Additional Rent payable hereunder. Anything
contained in this Lease to the contrary notwithstanding, there shall be no
abatement, apportionment or suspension of the Percentage Rent payable hereunder.
Commencing with the first (1st) Lease Year of the Term, and continuing
throughout the remainder of the Term, the payment of Percentage Rent due under
this Lease shall be calculated annually in accordance with the provisions of
this Paragraph 6.1 and shall be payable as provided in Paragraph 6.2 below.
6.2 PERIODIC PAYMENT AND REPORTING. Within sixty (60) days after the
expiration of each Lease Year, Tenant shall deliver to Landlord (i) a statement
certified without material qualification by the independent certified public
accountant regularly retained by Tenant, or a "Big Five" accounting firm or such
other accounting firm as may be approved by Landlord in its sole and absolute
discretion, setting forth the amount of Tenant's Gross Receipts for each such
Lease Year and (ii) payment of the Percentage Rate. If the accountants'
certification does not verify the amount of Gross Receipts for any Lease Year,
Tenant shall deliver to Landlord, together with the conflicting accountants'
certification, a written statement by the accountants who prepared such
certification explaining the discrepancy. Tenant shall
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require its subtenants, if any, to furnish similar statements to Tenant within
the same periods specified. For the last Lease Year, the statements of Gross
Receipts shall end with the expiration or termination of this Lease. All such
statements of Gross Receipts shall list as separate amounts (a) Gross Receipts
upon which Percentage Rent shall be computed and (b) other categories of
receipts not subject to Percentage Rent. If Tenant fails to timely deliver any
of the annual reports required by this Paragraph 6.2, Tenant shall pay Landlord,
a late charge fee in accordance with Paragraph 10 hereof.
6.3 RECORDS MAINTENANCE. For the purpose of ascertaining the amount
payable as Percentage Rent, Tenant agrees to prepare and keep on the Premises
for a period of not less than three (3) years following the end of each Lease
Year adequate records which shall show inventories and receipts of food, liquor
and merchandise at the Premises, and daily receipts from all sales and other
transactions and any other persons conducting any business upon or from the
Premises, including subtenants, licensees or concessionaires. Tenant shall
record at the time of each sale or other transaction, all receipts from sales or
other transactions whether for cash or credit in a cash register or in cash
registers sealed in a manner approved by Landlord and having such other features
as shall be approved by Landlord. Tenant further agrees to keep on the Premises
for three (3) years following the end of each Lease Year adequate records in
keeping with Generally Accepted Accounting Principles ("GAAP") evidencing the
gross income, sales and tax returns with respect to such Lease Years and all
pertinent original sales records, which may include: (a) cash register tapes,
including tapes from temporary registers; (b) serially numbered sales slips; (c)
the originals of all mail orders at and to the Premises; (d) the original
records of all telephone orders at and to the Premises; (e) settlement report
sheets of transactions with subtenants, concessionaires and licensees; (f) the
original records showing that merchandise returned by customers was purchased at
the Premises by such customers; (g) memorandum receipts or other records of
merchandise taken out on approval; (h) such other sales records, if any, which
would normally be examined by an independent accountant pursuant to accepted
auditing standards in performing an audit of Tenant's sales; and (i) the records
specified in (a) through (h) above of any subtenants, assignees,
concessionaires, or licensees. Landlord and Landlord's authorized
representatives shall have the right to examine the foregoing records during
reasonable business hours.
6.4 AUDIT RIGHTS. Landlord shall have the right to have an audit
made of Tenant's books and records pertaining to sales at the Premises. If any
statement required by Paragraph 6.2 above is found to differ by more than three
percent (3%) from the audited amount, Tenant shall pay for any and all costs and
fees of such audit and any deficiency in Percentage Rent within fifteen (15)
days after notice from Landlord, and if such audit proves such statements to be
correct, or such statements collectively do not vary by more than three percent
(3%) from the results of the audit, then the expenses of such audit shall be
borne by Landlord. In the event Landlord is unable to conduct a proper
examination and/or audit, in the reasonable judgment of Landlord's auditor due
to Tenant's failure or inability to produce adequate records, the parties agree
that Landlord shall have been deprived of an important right under this Lease
and, as a result thereof, will suffer damages in an amount which is not readily
ascertainable; therefore, in addition to, and not in lieu of, any other remedies
which Landlord has under this Lease, at law or in equity, shall have the right,
at its option, to collect, as liquidated damages (and not as a penalty), an
amount equal to fifteen percent (15%) of the greater of (i) Percentage
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Rent reported for the period or periods in question or (ii) the Base Rent
payable for the period or periods in question.
6.5. RADIUS RESTRICTION.
6.5.1 Except as expressly provided in Paragraph 6.5.2 below,
during the Term, neither Tenant nor Tenant's management, or any person or entity
controlled by Tenant or controlling Tenant (including, without limitation, the
New York Restaurant Group, Inc.), or controlled by the same person or entity or
persons or entities who control Tenant (individually and collectively, the
"Tenant Affiliate"), shall own, operate or maintain, or have any significant
affiliation, investment or interest, directly or indirectly, through or with any
other person, partnership, corporation, agent or employee in any similar or
competing business as that being operated at the Premises, within a radius of
five (5) miles from the Premises (which distance shall be measured in a straight
line without reference to road mileage) (the "Restricted Area"). Tenant
acknowledges that Landlord's obtaining a fair and equitable rental for the
Premises under this Lease is dependent upon Tenant's concentrating its business
efforts within the geographical area in which the Premises are located so as to
maximize the Gross Receipts, and Tenant further acknowledges that any activity
by Tenant within such geographical area in operating or participating in the
operation of a similar or competing business shall necessarily have an adverse
effect on the volume of Gross Receipts by Tenant at the Premises to the
detriment of Landlord and will deprive Landlord of the fair rental to which the
parties have agreed. Accordingly, in the event that during the Term there is a
breach of the covenant set forth in the first sentence of this Paragraph 6.5,
then the Gross Receipts of any such other place of business shall be included in
the Gross Receipts made from the Premises to determine the Percentage Rent due
under this Lease, as fully as though such Gross Receipts had actually been made
from the Premises. In such event, all of the provisions of this Paragraph 6
shall be applicable to the Gross Receipts of, and all the books and records
pertaining to, such competing restaurants.
6.5.2 Notwithstanding anything to the contrary in Paragraph
6.5.1 above, a Tenant Affiliate shall have the right to open and operate an
Existing Restaurant Concept (as defined below) of Guarantor, other than a
Smith & Wollensky steakhouse, grill or similar concept or any other
restaurant with a theme that has been introduced into the Premises
(collectively, the "S & W Concept") in the Restricted Area. The term
"Existing Restaurant Concept" shall mean any of the following restaurant
concepts operated by Guarantor or its affiliates as of the date of this
Lease: The Manhattan Ocean Club, Cite, Maloney & Porcelli, and Park Avenue
Cafe, but expressly excluding the S & W Concept). Neither Tenant nor any
Tenant Affiliate shall open or operate any S & W Concept in the Restricted
Area (other than at the Premises) during the Term.
7. REAL ESTATE TAXES. Base Year Real Estate Taxes are included as a
portion of Base Rent. "Base Year Real Estate Taxes" are hereby defined as the
lesser of (i) the Real Estate Taxes for the second Lease Year or (ii) Sixty
Thousand Dollars ($60,000.00). For the second Lease Year and each Lease Year
during the Term (including any Renewal Term), Tenant shall pay all real estate
taxes in excess of the Base Year Real Estate Taxes, calculated (if Landlord so
elects) on a semi-annual basis. Landlord shall provide Tenant with (i) copies of
all bills for Real Estate Taxes arising during the prior Lease Year or a part
thereof, (ii) determine the actual Real Estate Taxes for such Lease Year or a
part thereof, and (iii) provide to Tenant a statement of the
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amount payable by Tenant on account of Real Estate Taxes for such period (but
Tenant shall not be relieved of any of its obligations hereunder in the event
Landlord's expense statement is not provided semi-annually). Within thirty (30)
days after the delivery of such statement, Tenant shall pay to Landlord any
excess of Real Estate Taxes, over the Base Year Real Estate Taxes, calculated
(if Landlord so elects) on a semi-annual basis. Tenant's liability for the final
payment of Real Estate Taxes shall survive the expiration or termination of the
Term. Landlord represents to Tenant that as of July 1, 1998, the real estate tax
assessment for the Premises is Two Million Seventy Six Thousand Eight Hundred
Dollars ($2,076,800) and the applicable real estate tax rate is Two Dollars and
Fifteen Cents ($2.15) per One Hundred Dollars ($100.00) of assessment.
8. SALES, USE OR OTHER TAXES. If, during the Term (including any Renewal
Term), any governmental authority having jurisdiction levies, assesses or
imposes any tax on the Premises or any part thereof or the rents payable
hereunder, in the nature of a sales tax, a use tax (including a gross receipts
tax) or any other tax except (a) income taxes (including corporate franchise or
unincorporated business taxes); (b) estate or inheritance taxes; or (c) Real
Estate Taxes, Tenant shall pay the same to Landlord as Additional Rent at the
time of, and together with, the first payment of Monthly Base Rent due following
receipt by Tenant of written notice of the amount of such tax. If any such tax
is levied, assessed or imposed and the amount of the tax required to be paid by
Tenant is not ascertainable because the tax relates to more than the Premises or
the rents payable hereunder, then Tenant shall pay such share of the total taxes
that Landlord shall reasonably estimate.
9. PERSONAL PROPERTY TAXES. Tenant shall pay, before delinquency, all
taxes, assessments, license fees and other charges that are levied or assessed
against Tenant's Personal Property installed or located in or on the Premises
and against the value of leasehold improvements that become payable during the
Term, any business and professional occupational license taxes or fees
applicable to Tenant. On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments. If any of such taxes or fees are levied
against Landlord or Landlord's property, or if the assessed value of the Land or
the Building is increased by the inclusion of a value placed on Tenant's
Personal Property, and if Landlord pays the taxes on any of these items or the
taxes based on the increased assessment of these items, Tenant, on demand, shall
reimburse Landlord for the sum of the taxes levied against Landlord, or the
proportion of the taxes resulting from the increase in Landlord's assessment.
10. LATE CHARGE; INTEREST. All payments of Monthly Base Rent, Percentage
Rent and Additional Rent shall be paid to Landlord, without notice or demand,
and without any setoff, deduction or counterclaim whatsoever. All payments of
Additional Rent due hereunder shall be paid with the installment of Monthly Base
Rent next due after such Additional Rent shall have accrued. Nothing contained
in Paragraphs 6 through 10 or elsewhere herein shall be construed at any time to
reduce the amount of Monthly Base Rent as increased each year. Notwithstanding
any dispute which may arise in connection with the computation or estimate of
the amount of Additional Rent due, Tenant shall be obligated to pay the amount
reasonably specified by Landlord, pending the resolution of any dispute. Any
installment of Monthly Base Rent, Percentage Rent or Additional Rent not paid
within five (5) days of the due date thereof shall be subject to a late charge
of five percent (5%) of such installment. In addition, such unpaid installment
shall bear interest until paid at the rate of the lower of (i) eighteen percent
(18%) per annum or (ii) the maximum rate of interest permitted by law. Tenant's
obligations to pay any
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amounts of Monthly Base Rent, Percentage Rent and Additional Rent shall survive
the expiration or termination of this Lease.
11. USE OF PREMISES; CONTINUOUS OPERATION
11.1 USE. During the Term (including any Renewal Term), the
Premises shall be used and occupied by Tenant solely for the purpose of
operating a white table cloth restaurant and food service establishment,
similar to any of Tenant's existing restaurant concepts, serving liquor for
on-premises consumption, and for no other purpose whatsoever. In addition,
the Premises shall not be used for any illegal purpose or in violation of any
applicable law, or in any manner which could or might (i) create any nuisance
or trespass; (ii) violate any of the covenants, agreements, terms, provisions
and conditions of this Lease, or of any lien, covenant or encumbrance which
runs with the Land and thereby affects the Building; or (iii) impair the
appearance or reputation of the Building. Tenant shall have unlimited access
to the Premises for deliveries of goods and the removal of wastes. Tenant
shall have the right to inspect the Building to determine if it can be used
for rooftop patio dining. If Tenant determines that the Building is suitable
for such use, subject to the other provisions of this Lease, Tenant may, at
its expense and without liability to Landlord, perform any upgrades to the
Building necessary to allow and support such use. In connection with such
upgrades, Landlord, upon the written request of Tenant, shall reasonably
cooperate with Tenant in respect of any required filings, provided the same
do not cause Landlord to incur any expense nor create any liability for
Landlord.
11.2 CONTINUOUS OPERATION.
(a) Tenant hereby covenants, warrants and represents that it
will occupy the Premises on the Commencement Date (or as soon thereafter as
Tenant shall have completed its Tenant Work). Tenant shall accept the Premises
in their "as is-where is" condition on the Effective Date. Tenant hereby further
covenants, warrants and represents that at all times during the Term hereof,
Tenant shall continuously and uninterruptedly operate a full-service, sit-down,
white table cloth restaurant from the Premises of the type described in
Paragraph 12.1. In no event shall Tenant be permitted to be open for business
beyond the hours of operating permitted pursuant to the laws of the District of
Columbia. If Tenant shall fail to (i) open for business within sixty (60) days
after the Commencement Date or (ii) remain open for business as herein provided
at the hours set forth herein, the same shall constitute a material breach of
this Lease giving rise to the remedies provided in this Lease and available at
law or in equity, and in addition Landlord shall be entitled, among its other
remedies, to (x) collect from Tenant an amount equal to all Monthly Base Rent
due under this Lease PLUS an additional amount (which shall constitute
Additional Rent under this Lease) of twelve percent (12%) of the Monthly Base
Rent per day for each and every day until the date Tenant fully utilizes the
Premises for Tenant's business pursuant to this Lease, (y) terminate this Lease
or exercise any of the remedies set forth in Paragraph 20 below, or (z) enjoin
the removal or discontinuance of Tenant's business from the Premises by seeking
injunctive relief or other appropriate remedy. The operating covenant set forth
herein shall not be violated on account of closings attributable to Holidays,
closings one (1) day a week, one (1) two (2) week vacation period each Lease
Year, any casualty or condemnation, strike, natural disaster, alterations or
refurbishings diligently prosecuted or other
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events beyond Tenant's reasonable control (such events being referred to herein
as "Permitted Closings").
(b) Tenant shall not allow any objectionable odors to emanate
from the Premises. With respect to objectionable odors which emanate or are
dispelled from the Premises, Landlord shall have the right to require Tenant to
take all actions which Landlord deems appropriate to eliminate such odors,
including, without limitation, requiring Tenant to clean and maintain all of its
equipment in a first-class manner to assure that it is operating properly,
requiring Tenant to comply with operating techniques expected of similar
restaurant operations, requiring Tenant to install, repair or replace any
exhaust, ventilation, or air filtration systems within the Premises which
Landlord deems appropriate, and/or requiring Tenant to make any other capital
improvements within the Premises which Landlord reasonably deems appropriate.
(c) Tenant shall conduct no distress sales, such as `going out
of business', fire, or bankruptcy sales on the Premises or elsewhere in the
Building, and default by reason of Tenant's conducting such a sale shall
constitute a default under this Lease entitling Landlord to the remedies
provided in this Lease and available at law or in equity, including, but not
limited to, injunctive relief or other appropriate remedy.
12. ADDITIONAL MATTERS. With regard to use and occupancy of the Premises,
Tenant will (i) keep the inside and outside of all glass in the doors and
windows of the Premises clean; (ii) keep all exterior store front surfaces of
Premises clean; (iii) keep the Premises clean at all times, including removal of
ice and snow; (iv) replace promptly, at its expense, any cracked or broken plate
or window glass of the Premises with glass of like kind and quality; (v)
maintain the Premises and any garbage or dumpster areas at its expense in a
clean, orderly and sanitary condition and free of insects, rodents, vermin and
other pests; (vi) remove all garbage, trash, rubbish or refuse from the Premises
at its expense on a regular basis; (vii) keep all mechanical apparatus free of
vibration and noise which may be transmitted beyond the Premises; (viii) comply
with all laws, ordinances, rules and regulations of governmental authorities and
all reasonable requirements and recommendations of Landlord's fire insurance
carrier now or hereafter in effect; (ix) procure and maintain, at its sole cost
and expense, any permits and license required in the transaction of Tenant's
business at the Premises or adjacent sidewalks; in connection with such
upgrades, Landlord, upon the written request of Tenant, shall reasonably
cooperate with Tenant in respect of any required filings, provided the same do
not cause Landlord to incur any expense nor create any liability for Landlord;
and (x) take such action as may be necessary to prevent water damage to the
Premises in the event of forecasted flooding, including, without limitation,
surrounding the perimeter of the Building with plastic and a sandbag barrier.
Tenant will not (I) place or maintain any merchandise or other articles in any
vestibule or entry of the Premises, on the sidewalks adjacent thereto or
elsewhere on the exterior of the Premises; (II) use or permit the use of any
objectionable advertising medium such as, without limitation, loud speakers,
phonographs, public address systems, sound amplifiers, radio or broadcasts
within the Building which is in any manner audible or visible outside of the
Premises; (III) permit undue accumulations of garbage, trash rubbish or other
refuse within or without the Premises; (IV) cause or permit objectionable odors
to emanate or be dispelled from the Premises onto the adjacent sidewalks; or (V)
solicit business on the adjacent sidewalks.
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13. REPAIRS BY TENANT. Tenant agrees to maintain the Premises and the
fixtures and systems therein (including, without limitation, all interior
structural elements of the Building) in good order, repair and condition, during
the Term at its sole cost and expense, and will, at the expiration or other
termination of the Term, surrender and deliver the same and all keys, locks and
other fixtures connected therewith (except only Tenant's Personal Property) in
the same good order, repair and condition as they are now in or shall be in at
the Commencement Date, except as repaired, rebuilt, restored, altered or added
to as permitted or required by this Lease, and ordinary wear and tear and damage
by casualty or condemnation excepted. Tenant shall be solely responsible for
keeping the Premises in good condition and repair throughout the Term,
including, but not limited to, making all required and necessary repairs and
replacements to the doors, light bulbs and fixtures (including tubes and
casings), windows, glass, ceiling, mechanical, electrical and plumbing equipment
of the Premises. The plumbing facilities shall not be used for any purpose other
than that for which they are constructed and no foreign substance of any kind
shall be thrown therein, and the expense of any breakage, stoppage or damage
resulting from a violation of this provision shall be Tenant's liability. Tenant
shall also initiate and carry out a program of regular maintenance and repair of
the Premises, including, but not limited to, (i) the painting or refinishing of
all areas of the interior and maintaining or replacing of all trade fixtures and
equipment, ceiling tile, flooring and other items of display used in the conduct
of Tenant's business, so as to impede, to the extent possible, deterioration by
ordinary wear and tear and to keep the same in attractive condition throughout
the Term and (ii) obtaining and maintaining, at Tenant's cost, service contracts
with reputable, licensed mechanical contractors reasonably acceptable to
Landlord to carry, out a program of regular maintenance and repair of the
heating, air-conditioning and ventilating systems, including, but not limited
to, the replacement of any filters. The HVAC service contract must include all
services suggested by the equipment manufacturer in the operating/maintenance
manual for the HVAC system, and must become effective as of the Commencement
Date. Within thirty (30) days prior to the expiration date hereof, Tenant shall
have the HVAC system checked and serviced to insure proper functioning and shall
furnish Landlord with satisfactory proof thereof. Tenant shall make all repairs
to the Premises necessitated by any act or omission of Tenant or its agents,
employees, or invitees. Tenant shall be responsible for the cleaning and
maintenance of all grease traps within the Premises. To this end, Tenant
covenants to enter into a grease trap cleaning contract reasonably acceptable to
Landlord on or prior to the Commencement Date, and to furnish Landlord with a
copy thereof. Tenant shall not place a load upon the floor of the Premises
contrary to the weight, method of installment and position approved by Landlord,
which approval shall not be unreasonably withheld, conditioned or delayed. No
equipment may be used or installed which will or may necessitate any changes,
replacements or additions to or require the use of the water system, plumbing
system, heating system, air conditioning system, security system or the
electrical system of the Premises without the prior written consent of Landlord
(except the provisions hereof shall not be applicable with respect to any Tenant
Work).
14. REPAIRS. Tenant agrees to maintain the foundation and exterior
structural elements of the Building and the roof and roof system, in good order,
repair and condition. Tenant shall have the obligation to make, at its sole cost
and expense, any structural and other repairs and replacements to the Building.
Landlord shall have no duty to Tenant to maintain or to make any repairs or
improvements to the Premises or any part thereof. Landlord shall not be liable
for any damage caused to the person or property of Tenant, its agents,
employees, sublessees, contractors or invitees arising from the leaking of gas,
water, sewer or steam pipes, or
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from electricity, or from any other cause whatsoever (other than the acts of
Landlord or its agents).
15. LAWS AND ORDINANCES. Tenant will obtain and maintain, at its sole cost
and expense, any and all certificates of occupancy for Tenant's use of the
Premises. It is expressly understood that if any future law, ordinance,
regulation, or order, or any change in the use of the Premises by Tenant,
requires a new certificate of occupancy for the Premises, Tenant will obtain
such permit at Tenant's own expense. Tenant will, at its own cost, promptly
comply with and carry out all orders, requirements or conditions now or
hereafter imposed upon Tenant or the Premises by the ordinances, laws, rules,
orders or regulations of the District of Columbia or the state in which the
Premises is located, whether required of Landlord or otherwise (it being
understood that, in all events, Tenant shall be responsible for complying with
all requirements of the Americans With Disabilities Act and all laws pertaining
to the collection, sorting, separation and recycling of trash). Tenant will
defend, indemnify and save Landlord harmless from all penalties, liabilities,
damages, costs, expenses, suits, claims and demands resulting from Tenant's
failure or negligence in this respect, unless caused by acts of Landlord or its
agents.
16. NO LANDLORD'S WORK; TENANT'S WORK; ALTERATIONS
16.1 LANDLORD'S WORK AND TENANT'S WORK. Tenant acknowledges that it
accepts the Premises in its "as-is" condition, and that Landlord is under no
obligation to make any improvements of any nature to the Premises. The parties
acknowledge that Tenant shall make certain initial improvements or "Tenant Work"
to the Premises in accordance with the terms and conditions set forth in the
Work Agreement attached hereto as EXHIBIT D.
16.2 ALTERATIONS BY TENANT. Tenant will not make or permit any
Alterations to the Premises or to the Building without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed; provided that Tenant may make minor, non-structural interior
Alterations costing less than Twenty Five Thousand Dollars ($25,000.00) per year
without Landlord's consent. Notwithstanding anything to the contrary in this
Lease, Tenant shall not construct any additional structures or add any
additional floors to the Building (subject to the final three (3) sentences of
Paragraph 11.1 above). If Landlord consents to any Alterations, Landlord may
impose any conditions it deems appropriate, including, without limitation, the
approval of plans and specifications, supervision of the work by Landlord's
architect or contractor, and satisfactory evidence from Tenant of Tenant's
ability to pay for such Alterations. Alterations may be made only at Tenant's
expense by contractors or subcontractors reasonably approved in writing by
Landlord, and only after Tenant shall have obtained any necessary permits from
all applicable governmental and quasi-governmental authorities having
jurisdiction, and furnished copies of the permits to Landlord. All Alterations
must conform to all rules and regulations established from time to time by the
Board of Fire Underwriters having jurisdiction or similar body exercising
similar functions and to all laws, regulations and requirements of the District
of Columbia or any state government (including, but not limited to, all rules
and regulations applicable to historical properties and the provisions of the
Americans With Disabilities Act). Tenant shall obtain and deliver to Landlord
written, unconditional waivers of mechanic's and materialmen's liens against the
Building and the Land from all contractors, subcontractors and material
suppliers for all work performed and materials furnished in connection with the
Alterations on a timely basis. All agreements with contractors performing
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Alterations shall limit their lien rights to the right to file a lien against
Tenant's leasehold interest in the Premises. Notwithstanding the foregoing, if
any mechanic's lien is filed against Landlord with respect to its interest in
the Building and/or the Land for work or materials done for or furnished to
Tenant, or claimed to have been done for or furnished to Tenant, the lien shall
be discharged by Tenant within thirty (30) days thereafter, solely at Tenant's
expense plus five percent (5%). If Tenant fails to discharge such lien Landlord
may do so and treat the cost thereof as Additional Rent; but such discharge by
Landlord shall not be deemed to waive the default of Tenant in not discharging
the same. Tenant will defend, indemnify and hold Landlord harmless from and
against any and all liabilities, costs (including reasonable attorneys' fees),
expenses, liens, suits, claims, demands or damage to persons or property which
may arise from the making of any Alterations. Except as expressly permitted
hereby, if any Alteration is made without the prior written consent of Landlord,
and Tenant fails to remove the same within twenty (20) days after written notice
from Landlord to Tenant, then Landlord may correct or remove the Alteration at
Tenant's expense, and all costs and expenses incurred by Landlord in connection
with the removal of any mechanic's lien or the correction or removal of the
Alternation plus five percent (5%) shall be payable as Additional Rent with the
next due payment of Monthly Base Rent.
17. OWNERSHIP OF ALTERATIONS AND EQUIPMENT AND OTHER PROPERTY; REMOVAL OF
TENANT'S PERSONAL PROPERTY
17.1 LANDLORD'S PROPERTY. Any Alterations and other property
installed or located in the Premises by or on behalf of either party shall
(except for Tenant's Personal Property) remain upon and be surrendered to
Landlord with the Premises as a part thereof upon the expiration or termination
of the Term; PROVIDED, HOWEVER, that if Tenant is not in default under this
Lease, Tenant shall have the right to remove, prior to the expiration of the
Term, Tenant's Personal Property, and provided further, that if Landlord shall
elect that any Tenant Work or any Alterations be removed at the expiration of
the Term, Tenant shall cause the same to be removed at Tenant's expense and
shall surrender the Premises to Landlord in the condition in which the Premises
were originally received from Landlord, except as repaired, rebuilt, restored,
altered or added to as permitted or required under this Lease and except for
ordinary wear and tear and damage by fire or condemnation, or shall reimburse
Landlord for the cost of doing so.
17.2 REMOVAL. Provided Tenant is not in default under this Lease
Tenant shall have the right to remove all of Tenant's Personal Property from the
Premises at the expiration or termination of this Lease. Tenant shall repair any
and all damage occasioned by such removal. Any property belonging to Tenant or
any other person, which is left in the Premises after the date the Lease has
expired or is terminated for any reason, shall be deemed to have been abandoned.
In such event, Landlord shall have the right to declare itself owner of such
property and to dispose of it in whatever manner Landlord considers appropriate
without waiving its right to claim from Tenant all expenses and damage caused by
Tenant's failure to remove the property, and Tenant shall not have any right to
compensation or claim against Landlord as a result.
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18. DAMAGE OR DESTRUCTION.
18.1 GENERAL PROVISIONS. If following any damage to the Premises by
fire or other insured casualty, restoration of the Premises is possible in
accordance with Landlord's reasonable estimate, within a period of twelve (12)
months from the date of the damage: (i) Landlord agrees to make all insurance
proceeds it may receive available for restoration of the Premises by Tenant
pursuant to the provisions set forth in Paragraph 18.2 hereof, up to the limit
of insurance proceeds received subject to any prior rights of any mortgagee to
such proceeds; and (ii) if the Premises are untenantable for Tenant's permitted
uses, in whole or in part, during such period of restoration by Landlord, the
Monthly Base Rent (but not Percentage Rent or Additional Rent) hereunder shall
be abated proportionately to the extent and for the period of such
untenantability; provided that, in all events, the abatement period shall expire
upon the earlier to occur of (w) expiration of such twelve (12) month period,
(x) such time as Tenant shall have substantially completed all of its
restoration obligations hereunder, (y) the date the Premises is otherwise
rendered tenantable, or (z) the date Tenant conducts business from the damaged
portion of the Premises.
18.2 RESTORATION BY TENANT. All work necessary to restore and repair
the Premises following any damage or casualty shall be performed by Tenant
pursuant to the provisions of this Paragraph 18.2, including, without
limitation, reconstruction, repair or restoration of exterior portions of the
Building (such work being referred to herein as the "Restoration Work"). All
Restoration Work shall be subject to all of the provisions of the Work Agreement
regarding Tenant Work (including, without limitation, Landlord's right to
approve plans and specification and the general contractor and the right to
oversee the work). Landlord shall advance any insurance proceeds which it
receives to Tenant to pay for the Restoration Work in accordance with
disbursement procedures typically required by lenders in District of Columbia
when making construction loans. Such disbursement procedures shall include,
without limitation: (i) implementation of customary retainage requirements; (ii)
delivery of certificates from the architect and the general contractor for the
Restoration Work and any architect or inspector engaged by Landlord to monitor
the same confirming that the work for which disbursement is being requested has
been properly performed pursuant to approved plans and specifications; (iii)
delivery of date-down endorsements to Landlord's title insurance policy prior to
making any disbursement; and (iv) delivery of lien waivers from all parties
performing materials, labor, goods or other services in connection with the
Restoration Work prior to making any disbursement. Tenant shall commence the
Restoration Work as soon as possible following any casualty, and shall
diligently prosecute the same to completion. Tenant's failure to promptly
commence and diligently prosecute the Restoration Work (including any design
work necessary therefor) shall constitute an Event of Default hereunder.
Landlord shall have the right, at any time, but shall not be required to,
relieve Tenant of its obligation to perform the Restoration Work and to perform
such work itself. Landlord shall have no obligation to advance funds for
replacement or repair any of Tenant's Personal Property or any property required
to be insured by Tenant pursuant to the provisions hereof; upon completion of
the foregoing repair or reconstruction work, Tenant shall proceed with all due
diligence to repair, restore or replace all of Tenant Personal Property and such
other property as it is required to insure, and shall prosecute the same to
completion.
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18.3 TERMINATION RIGHTS. If restoration is not possible, in
accordance with Landlord's reasonable estimate, within a period of twelve (12)
months, Landlord, at its sole option, shall have the right to terminate this
Lease by giving written notice thereof to Tenant within sixty (60) days after
the occurrence of such damage, in which event this Lease and the tenancy
hereunder, shall terminate as of the date specified in such notice, which date
shall be no later than one hundred twenty (120) days after the occurrence of
such damage. Further, in the event at least sixty percent (60%) of the Building
is damaged during the last eighteen (18) months of the Term, Landlord may
terminate this Lease by written notice to Tenant. No compensation or claim or
diminution of rent will be allowed or paid by Landlord by reason of
inconvenience, annoyance or injury to business, arising from the necessity of
repairing the Premises or any portion of the Building, however the necessity may
occur, as determined in the sole discretion of Landlord.
19. CONDEMNATION. If the Premises or any part thereof shall be taken or
threatened to be taken by any governmental or quasi-governmental authority
pursuant to the power of eminent domain, or by deed in lieu thereof, Tenant
agrees to make no claim for compensation in the proceedings (except as
specifically set forth below), and hereby assigns to Landlord any rights which
Tenant may have to any portion of any award made as a result of any such taking,
and this Lease shall terminate as to the portion of the Premises actually taken
by the condemning authority and Monthly Base Rent (but not Percentage Rent or
Additional Rent) shall be adjusted to such date. The foregoing notwithstanding,
Tenant shall be entitled to claim in the condemnation proceedings, such awards
as may be allowed for its relocation expenses and the unamortized value (over
the initial Term of this Lease) of the non-removable portions of the Tenant
Work, but only if such awards shall be made by the condemnation court in
addition to and stated separately from the award made by it for the Land and the
Building or part thereof so taken and does not reduce the amount of Landlord's
recovery. In no event shall Tenant be entitled to any award for the unexpired
portion of the Term of this Lease. If the nature, location or extent of any
proposed condemnation affecting the Building or the Land is such that Landlord
elects to demolish all or a portion of the Building, then Landlord may terminate
this Lease by giving at least sixty (60) days written notice of termination to
Tenant at any time after such condemnation and this Lease shall terminate on the
date specified in such notice. Monthly Base Rent shall be adjusted to such date.
In the event more than twenty percent (20%) of the Premises is taken in any
condemnation or similar proceeding, either Landlord or Tenant shall have the
right to terminate this Lease by written notice to the other given within thirty
(30) days after the taking. In the Lease is not so terminated, then this Lease
shall continue in full force and effect, except that the Base Rent payable
hereunder (but not the Percentage Rent, Percentage Rent or any Additional Rental
obligations of Tenant hereunder) shall be equitably adjusted based upon the
portion of the Premises so taken.
20. DEFAULTS; LANDLORD'S REMEDIES.
20.1 EVENTS OF DEFAULT. Any of the following occurrences or acts
shall constitute an event of default ("Event of Default") under this Lease:
(a) If Tenant shall fail to pay any Monthly Base Rent,
Percentage Rent or any Additional Rent within five (5) business days after
written notice from Landlord that the same is past due;
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(b) Any default by Guarantor under the Guaranty.
(c) If the Premises shall become vacant, deserted or abandoned
for a period of at least five (5) consecutive days, except in connection with
any Permitted Closings; or
(d) If Tenant shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any federal or state bankruptcy
law or any similar federal or state law, or shall be adjudicated a bankrupt or
become insolvent or shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally as they become
due; or
(e) If a petition or answer proposing the adjudication of
Tenant as a bankrupt or its reorganization pursuant to any federal or state
bankruptcy law or any similar federal or state law shall be filed in any court
and Tenant shall consent to or acquiesce in the filing thereof or such petition
or answer shall not be discharged or denied within sixty (60) days after the
filing thereof; or
(f) If a receiver, trustee or liquidator of Tenant of all or
substantially all of the assets of Tenant, or of the Premises or Tenant's estate
therein shall be appointed in any proceeding brought by Tenant, or if any such
receiver, trustee or liquidator shall be appointed in any proceeding brought
against Tenant and shall not be discharged within sixty (60) days after such
appointment; or
(g) If Tenant shall fail to maintain the insurance required
under Paragraph 22; or
(h) An assignment, sublease or other transfer or change in
restaurant concept in breach of Paragraph 25; or
(i) Tenant or a Tenant affiliate shall open or operate an S &
W Concept in the Restricted Area (other than at the Premises pursuant to this
Lease) during the Term.
(j) If Tenant shall fail to observe or perform any of the
covenants, conditions and agreements of this Lease other than those referred to
in Paragraph 20.1 (a) through (i) above, and such failure shall continue for a
period of thirty (30) days after written notice to Tenant of such failure;
provided, however, that if such failure is not reasonably capable of being cured
within such thirty (30)-day period, then so long as Tenant has commenced
curative action within such period and thereafter continues to diligently pursue
such curative action, such thirty (30)-day period shall be extended for the
period necessary to cure such default, but not more than ninety (90) days,
inclusive of the original thirty (30)-day period.
20.2 LANDLORD'S REMEDIES. If an Event of Default shall have occurred
and is continuing Landlord shall have the following rights and remedies then or
at any time thereafter, the election of which, singly or one or more in
combination with each other, shall be at the sole option of Landlord:
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(a) To make any payment required to be made by Tenant or to do
any act required to be done by Tenant, provided that the making of any such
payment or the expense of doing such act by Landlord shall constitute Additional
Rent hereunder due and payable together with interest and late charges with the
installment of Monthly Base Rent next due, but the making of such payment or the
doing of such act by Landlord shall not operate to cure such Event of Default or
to estop Landlord from the pursuit of any remedy to which Landlord would
otherwise be entitled.
(b) To terminate this Lease by written notice to Tenant,
whereupon this Lease shall end and all rights of Tenant (but not the liability
of Tenant) hereunder shall expire and terminate, any other notice to quit or
notice of Landlord's intention to re-enter the Premises being hereby expressly
waived by Tenant. Upon such termination by Landlord, Tenant will at once
surrender possession of the Premises to Landlord and remove all of Tenant's
Personal Property therefrom, and Landlord may forthwith re-enter and repossess
the Premises and remove all persons and effects therefrom, by summary
proceeding, ejectment or other legal action or by using such force as may be
permitted. Landlord shall be under no liability by reason of any such reentry,
repossession or removal.
(c) To enter upon and take possession of the Premises and
expel or remove Tenant and any other person who may be occupying the Premises or
any part thereof, without being liable for prosecution or any claim for any
damages or liability therefor and without terminating this Lease, and, if
Landlord so elects, make such Alterations and repairs as, in Landlord's absolute
discretion, may be necessary to relet the Premises or any part thereof, without
notice to Tenant, for such rent and such use, and for such period of time and
subject to such terms and conditions as Landlord may deem advisable, and receive
the rent therefor. Upon each such reletting, all rent received by Landlord from
such reletting shall be applied, first, to the payment of any obligations of
Tenant to Landlord hereunder, including interest thereon, other than any Rent;
second, to the payment of any costs and expenses of such reletting, including
brokerage fees, reasonable attorneys' fees and the costs of Alterations, and
repairs; third, to the payment of any Monthly Base Rent, Percentage Rent and
Additional Rent due and unpaid, together with interest and late charges; and the
residue, if any, shall be held by Landlord and applied in payment of future Rent
as the same may become due and payable hereunder. Tenant agrees to pay Landlord,
on demand, any deficiency that may arise by reason of such reletting. Landlord
shall not be liable for any failure to relet the Premises or any part thereof or
for any failure to collect any rent due upon any such reletting. Notwithstanding
any such reletting without termination, Landlord may at any time thereafter
elect to terminate this Lease for such prior default.
20.3 EXTENT OF LIABILITIES. If Landlord terminates this Lease or
Tenant's right of possession of the Premises pursuant to Paragraph 20.2 hereof:
(a) Tenant shall remain liable for and shall pay on demand by
Landlord (i) the full amount of all Monthly Base Rent, Percentage Rent and
Additional Rent
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which would have accrued until the date on which this Lease would have expired
had such termination not occurred, and any and all damages and expenses incurred
by Landlord in reentering and repossessing the Premises, in making good any
default of Tenant, in making any Alterations to the Premises, in protecting and
preserving the Premises, and in reletting the Premises, and any and all expenses
which Landlord may incur during the occupancy of any new tenant, LESS (ii) the
net proceeds of any reletting of the Premises which has occurred at the time of
the aforesaid demand by Landlord to Tenant. Tenant agrees to pay to Landlord the
difference between items (i) and (ii) above for the period through and including
the date on which this Lease would have expired if it had not been terminated.
Landlord shall be entitled to any excess with no credit to Tenant. Landlord may,
in its sole discretion, make demand on Tenant as aforesaid on any one or more
occasions, and any suit brought by Landlord to enforce collection of such
difference for any one month shall not prejudice Landlord's right to enforce the
collection of any difference for any subsequent month or months. In addition to
the foregoing, and without regard to whether this Lease has been terminated,
Tenant shall pay to Landlord all costs incurred by Landlord, including
reasonable attorneys' fees, with respect to any lawsuit or action instituted or
taken by Landlord to enforce the provisions of this Lease. Tenant's liability
shall survive the institution of summary proceedings and the issuance of any
warrant hereunder.
(b) If Landlord determines that it is impracticable or
extremely difficult to fix the actual damages, then, as an alternative to the
remedy set forth in subparagraph (a), Tenant will pay to Landlord on demand,
liquidated and agreed final damages for Tenant's default calculated in
accordance with this paragraph. Liquidated damages hereunder shall be an amount
equal to the excess, if any, of (i) all Monthly Base Rent, Percentage Rent and
Additional Rent payable under this Lease from the date of such demand for what
would be the then unexpired term of this Lease in the absence of such
termination, over (ii) the then fair market rental value of the Premises, as
reasonably determined by Landlord. If any law shall limit the amount agreed
upon, Landlord shall be entitled to the maximum amount allowable under such law.
Nothing herein shall be construed to affect or prejudice Landlord's right to
prove, and claim in full, unpaid rent accrued prior to termination of this
Lease.
(c) Tenant's liability for Percentage Rent for each month
following any termination of the Lease or Tenant's right to possession of the
Premises through the unexpired Term hereof shall be computed by dividing (i) the
total of all amounts which Tenant was liable to pay to Landlord as Percentage
Rent hereunder from the Commencement Date until the date upon which this Lease
or Tenant's right to possession of the Premises was terminated (or the day
Tenant ceased conducting business from the Premises, if such date is earlier) by
(ii) the number of months in the Term prior to such date.
20.4 TENANT'S WAIVER. Tenant, on its own behalf and on behalf of all
persons claiming through or under Tenant, including, but not limited to, all
creditors, does hereby specifically waive any and all rights and privileges
which Tenant and all such persons might otherwise have under any present or
future law (a) to redeem the Premises, or (b) to the benefit of any law which
exempts property from liability for debt or for distress for rent.
20.5 LANDLORD'S LIEN. Landlord shall have (in addition to all other
rights) a right of distress for rent and a lien on all Tenant Work and the
Tenant's Personal Property as security for all Monthly Base Rent, Percentage
Rent and Additional Rent payable under this
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Lease. In order to perfect and enforce said lien, Landlord may, at any time
after default by Tenant in the payment of Rent or default of other obligations
to be performed or complied with by Tenant under this Lease, seize and take
possession of any and all of the Tenant Work and the Tenant's Personal Property.
If Tenant fails to redeem the property so seized, by payment of whatever sum may
be due Landlord under and by virtue of the provisions of this Lease, then and in
that event, Landlord shall have the right, after twenty (20) days written notice
to Tenant of its intention to do so, to sell Tenant's property so seized at
public or private sale and upon such terms and conditions as to Landlord may
appear advantageous, and after the payment of all proper charges incident to
such sale, apply the proceeds thereof to the payment of any balance due to
Landlord on account of Rent or other obligations of Tenant pursuant to this
Lease. In the event there shall then remain in the hands of Landlord any balance
realized from the sale of Tenant's property as aforesaid, the same shall be paid
over to Tenant. The exercise of the foregoing remedy by Landlord shall not
relieve or discharge Tenant from any deficiency owed to Landlord which Landlord
has the right to enforce pursuant to any other provision of this Lease. Upon
Tenant's written request, Landlord agrees to subordinate its Landlord's lien to
(i) any purchase money loan provided to purchase specific items of equipment or
furniture, (ii) the lien securing a working capital loan or similar line of
credit in favor of any bona-fide third-party lender, as long as such purchase
money or other lender enters into a landlord's subordination agreement
reasonably acceptable to Landlord (which agreement shall, in all events, require
the secured party to provide reasonable advance written notice to Landlord of
its intent to remove any of Tenant's property from the Premises and require the
secured party to promptly repair all damage to the Premises occasioned by the
removal of Tenant's property) and (iii) any lessor of specific equipment leased
to Tenant.
20.6 REMEDIES CUMULATIVE. Pursuit of any of the foregoing remedies
shall not preclude Landlord from pursuing any other remedies herein or at law or
in equity provided, nor shall pursuit of any remedy by Landlord constitute a
forfeiture or waiver of any Monthly Base Rent or Additional Rent due hereunder
or of any damages accruing to Landlord by reason of Tenant's violation of any
provisions of this Lease.
20.7 LANDLORD'S DEFAULT. Tenant agrees to provide written notice to
Landlord and any lender having a lien on the Building or Land (provided such
lender so requests of Tenant in writing) in the event Landlord breaches any of
its obligations hereunder. In the event Landlord (or Landlord's lender) shall
fail to cure any such breach within thirty (30) days after receipt of written
notice from Tenant (or if such breach is not reasonably capable of being cured
within thirty (30) days, such additional period as may reasonably be necessary
to cure the same with due diligence), THEN Landlord shall be in default
hereunder, and Tenant shall be entitled to bring an action for damages or
injunctive relief against Landlord.
21. UTILITIES. Tenant shall procure, at its own cost and expense, all gas,
electricity, heat, telephone, cable television and other utility services it may
desire directly from the local utility provider. Tenant shall procure separate
metering for its electric and other utility usage. Tenant acknowledges that
Landlord shall have no obligation to furnish any utilities or services to Tenant
whatsoever. In no event shall Landlord have any obligation to Tenant should any
of such services be suspended reduced, eliminated or curtail and in no event
shall the Rent payable by Tenant hereunder be reduced, deferred or otherwise
affected on account thereof.
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22. TENANT'S INSURANCE.
22.1 LIABILITY INSURANCE. Tenant, at Tenant's expense, shall carry
and keep in full force and effect at all times during the Term of this Lease for
the protection of Landlord and Tenant, public liability insurance and liquor
liability insurance, each with limits of at least Five Million Dollars and
No/100 ($5,000,000.00) in the aggregate and Two Million Dollars ($2,000,000.00)
for each occurrence.
22.2 TENANT'S CASUALTY AND PROPERTY INSURANCE. Tenant, at Tenant's
expense, shall further carry a fire and extended "all risk" insurance policy
including extended coverage endorsement for the risks of water escape and
leakage from fire protective devices covering the entire Building and the
Premises and all of Tenant's Personal Property, in each case for not less than
the full replacement cost thereof. Tenant shall procure (i) fire and extended
coverage and casualty insurance covering the entire Building and the Premises,
all structural elements thereof and all systems therein (including portions
thereof installed as a part of the Tenant Work) for the full replacement costs
thereof, (ii) liability insurance, (iii) umbrella insurance, (iv) flood
insurance, and (v) such other insurance policies which Landlord determines are
necessary to afford all appropriate coverage for the Premises, all in amounts,
with deductibles and with companies reasonably acceptable to Landlord. Subject
to the requirements of any financing secured by the Land and/or the Building,
all proceeds of such insurance shall be used to repair or replace the building
and items so insured, unless this Lease is terminated pursuant to the provisions
of Paragraph 18 hereof. In the event Landlord's lender does not permit
disbursement of such insurance proceeds for repair, replacement or restoration,
neither Landlord nor Tenant shall have any obligation to rebuild, repair or
replace, except as otherwise expressly set forth in this Lease. All personal
property in the Premises, shall remain at Tenant's sole risk and Landlord shall
not assume any liability or be liable for any damage to or loss of such personal
property, arising from the bursting, overflowing or leaking of the roof or of
water, sewer or steam pipes, or from heating or plumbing fixtures or from the
handling of electric wires or fixtures or from any other cause whatsoever.
22.3 POLICY REQUIREMENTS. The public liability and property damage
insurance policies and any other insurance policies carried by Tenant with
respect to the Premises shall (i) be issued in form reasonably acceptable to
Landlord and Landlord's lender by good and solvent insurance companies qualified
to do business in the jurisdiction in which the Building is located and
reasonably approved by Landlord; (ii) designate as additional insureds Landlord,
Tenant and mortgagees, as their interests may appear, with respect to the Land
or the Building, and any other parties in interest from time to time reasonably
designated in writing by notice from Landlord to Tenant; (iii) be written as
primary policy coverage and not contributing to or in excess of any coverage
which Landlord may carry; (iv) provide for thirty (30) days' prior written
notice to Landlord of any cancellation or other expiration of such policy or any
defaults thereunder; and (v) contain an express waiver of any right of
subrogation by the insurance company against Landlord and mortgagees with
respect to the Land or the Building, and the employees and agents of each of the
foregoing, as to property damage. Neither the issuance of any insurance policy
required hereunder nor the minimum limits specified herein with respect to
Tenant's insurance coverage shall be deemed to limit or restrict in any way
Tenant's liability arising under or out of this Lease. On or before the
Commencement Date and, thereafter, not less than thirty (30) days before the
expiration of the insurance policy in question, Tenant shall
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deliver to Landlord a certificate of insurance issued by the insurer, as to each
policy of insurance required to be maintained by Tenant under this Lease.
22.4 ADDITIONAL INSURANCE. Tenant shall replace any damaged glass
with glass of like kind and quality at Tenant's expense within seventy-two (72)
hours after the damage occurs from any cause whatsoever. Failure to replace any
damaged glass as herein provided shall constitute a default under this Lease.
22.5 EFFECT OF TENANT'S ACTIVITIES ON INSURANCE. Tenant shall not
conduct or permit to be conducted any activity, or place any equipment in or
about the Land or the Building which will increase the rate of, or make void or
voidable, any fire or other insurance maintained by Landlord or any mortgagee on
the Building, the Land or the property kept thereon or therein, which will
conflict with the provisions of any such insurance policy or which will make it
impracticable for Landlord to obtain insurance covering any risks against which
Landlord reasonably deems it advisable to obtain insurance. In the event any
increases in the rates of such insurance are, in Landlord's reasonable judgment,
due to Tenant's presence in the Premises, to any activity conducted or property
installed or placed by Tenant on or about the Premises or to Alterations
installed by Tenant or at Tenant's request, Tenant shall reimburse Landlord for
the amount of such increases promptly upon demand therefor. Statements by the
applicable insurance company or insurance rating bureau that such increases are
due to any activity, property or improvements shall be conclusive for the
purposes of determining Tenant's liability hereunder.
23. TENANT'S INSURANCE. Tenant's insurance under Section 22 is the primary
coverage for the Land, the Building and the Premises, and is not in addition to
(or to be affected by) any insurance which Landlord may elect to carry for its
own benefit.
24. WAIVER OF SUBROGATION. In any case in which Tenant shall be obligated
to pay to Landlord any loss, cost, damage, liability or expense suffered or
incurred by Landlord, Landlord shall allow to Tenant as an offset against the
amount thereof the net proceeds of any insurance collected by Landlord for or on
account of such loss, cost, damage, liability or expense, or the net proceeds
which would have been collected if Landlord had procured the insurance required
of it hereunder, whether or not actually procured by Landlord. In any case in
which Landlord shall be obligated to pay to Tenant any loss, cost, damage,
liability or expense suffered or incurred by Tenant, Tenant shall allow to
Landlord as an offset against the amount thereof the net proceeds of any
insurance collected by Tenant for or on account of such loss, cost, damage,
liability or expense or the maximum amount which would have been collectible had
Tenant procured the insurance policies required of it pursuant to this Lease,
whether or not actually procured by Tenant. Landlord and Tenant agree that each
insurance policy described above, or otherwise covering the Premises or any part
thereof, or personal property, fixtures and equipment located thereon and
therein, shall contain a clause or endorsement pursuant to which the insurance
companies waive subrogation and consent to a waiver of right of recovery.
Landlord and Tenant further agree that each will not make any claim against or
seek to recover from the other for any loss, cost, damage, liability, expense or
peril covered by such insurance.
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25. ASSIGNMENT AND SUBLETTING.
25.1 GENERAL PROVISIONS.
(a) Tenant shall not, directly or indirectly, voluntarily or
involuntarily (i) assign, mortgage, pledge, encumber or otherwise transfer this
Lease or any of its rights hereunder, (ii) sublet the Premises or any part
thereof, or permit the use of the Premises or any part thereof by any persons
other than Tenant or its employees, agents and invitees, (iii) permit the
assignment or other transfer of this Lease or any of Tenant's rights hereunder
by operation of law or otherwise, or (iv) change the restaurant concept in the
Premises from the S & W Concept, in each case without the prior written consent
of Landlord, which consent, subject to the other provisions of this Paragraph
25, shall not be unreasonably withheld, conditioned or delayed. Tenant shall
reimburse Landlord for its reasonable attorney's fees incurred in reviewing any
requested consent, whether or not consent is ultimately given.
(b) The consent by Landlord to any change in restaurant
concept or to assignment, subletting or transfer to any person is not to be
construed as a waiver or release of Tenant from any provision of this Lease nor
as a waiver of the necessity for such consent in a subsequent instance. In the
event of any change in restaurant concept at the Premises or assignment,
subletting or other transfer, Tenant shall remain fully liable as a principal
and not as a guarantor or surety under this Lease. Neither an assignment,
subletting or other transfer or change in restaurant concept at the Premises nor
the collection of rent by Landlord from any person other than Tenant, nor the
application of any such rent as provided in this Paragraph, shall be deemed a
waiver of any of the provisions of this Paragraph or release Tenant from its
obligation to comply with the provisions of this Lease, and Tenant shall remain
fully and primarily liable for all of Tenant's obligations under this Lease. If
this Lease is assigned, whether or not in violation of the provisions of this
Lease, Landlord may collect rent from the assignee. If the Premises or any part
thereof is sublet, Landlord may, upon an Event of Default by Tenant hereunder,
collect rent from the subtenant. In either event, Landlord may apply the amount
collected from the assignee or subtenant to Tenant's monetary obligations
hereunder. For purposes of this paragraph, a transfer or transfers of fifty
percent (50%) or more in interest of Tenant (whether interests in a limited
liability company, stock, partnership interest or other form of ownership or
control) by any person or persons having an interest in ownership or control of
Tenant, or the merger of Tenant into another organization after which merger
Tenant shall not be the surviving entity, shall be deemed an assignment of this
Lease for which the Landlord's consent must be obtained. The initial public
offering of Tenant's stock or the transfers of publicly traded shares of stock
in Tenant made in the ordinary course, and not as a part of any takeover
attempt, merger, consolidation, capital or similar transaction or other
transaction intended to effect a change in the operating control of Tenant,
shall not constitute a prohibited assignment or transfer for purposes of this
Paragraph 25. Any lawful levy or sale or execution or other legal process shall
be classified as an assignment within the meaning of this Lease, as shall be an
adjudication in bankruptcy, voluntary or involuntary, or an appointment of a
receiver by a state or Federal Court, or insolvency of Tenant, or the execution
of a deed or other instrument for the benefit of creditors. Any assignment,
subletting, transfer or change in restaurant concept at the Premises without
Landlord's prior written consent shall, at Landlord's option, be void and shall
constitute an Event of Default under this Lease entitling Landlord to terminate
this Lease and to exercise all other remedies available to Landlord under this
Lease or at law or in equity.
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(c) Notwithstanding the provisions of subsection (a) of this
Paragraph, Landlord shall not unreasonably withhold, delay, or condition its
consent to a proposed assignment or subletting of the Premises or change in
restaurant concept at the Premises by Tenant provided all of the following
conditions, are satisfied in Landlord's reasonable discretion (the "Transfer
Conditions"):
(i) No Event of Default exists under this Lease and no
event exists which may become an Event of Default with the giving of notice or
the passage of time or both;
(ii) Landlord receives at least thirty (30) days' prior
written notice of Tenant's intention to assign, sublet, or transfer or change in
the restaurant concept at the Premises;
(iii) The proposed assignee or subtenant provides
Landlord with satisfactory and realistic annualized sales projections indicating
Gross Receipts at least equal to the highest annual Gross Receipts generated by
Tenant during the preceding three (3) Lease Years of the Term or, in the case of
a change in the restaurant concept at the Premises, the reasonably estimated
annual sales projections of Gross Receipts expected to be generated by Tenant
using the new restaurant concept at the Premises;
(iv) The proposed assignee or subtenant is experienced
in, and has a track record of, successful operation of "white table cloth"
restaurants (as such term is commonly understood in the District of Columbia
restaurant trade) similar to Tenant's business in the Premises (but not
necessarily limited to the same cuisine as the initial tenant), has a good
reputation in the restaurant industry, will maintain the same level of service
and usage, and is not an entity to which Landlord or an affiliate of Landlord
has made a prior decision not to lease space in its buildings or with which
Landlord has had adverse dealings;
(v) The proposed use of the Premises complies with the
provisions of Paragraph 11.1 and have a decor and physical layout that is
consistent with the aesthetics and first-class quality of the then-existing
Premises;
(vi) The proposed assignee or subtenant is not a party
by whom any suit or action could be defended on the grounds of sovereign or
diplomatic immunity;
(vii) The proposed subtenant or assignee has sufficient
financial strength to satisfy all of its rental and other obligations under this
Lease;
(viii) Tenant or the proposed assignee or subtenant
submits to Landlord sufficient information upon which Landlord can reasonably
base an informed judgment on the above criteria, including, in addition to such
other information as Landlord shall require, the name, business experience,
financial position (including, without limitation, its most recent audited
financial statements), and business references (including any landlords in other
locations) of the proposed subtenant or assignee, a description of the proposed
transaction which shall include any and all documents relating thereto, the
consideration to be delivered to Tenant for the assignment or sublease, and the
identity of any partners, members, or principals of subtenant or assignee who
may be involved in such a transaction, regardless of whether it is the intention
of
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such parties to actively participate in the operation of the Premises, the
identity of any broker entitled to a commission in respect of such subletting or
assignment and the commission, if any, payable to such broker, and any other
information reasonably requested by Landlord; and
(ix) Tenant shall deliver a copy of any proposed
assignment or sublease with the notice referred to in subparagraph (ii) above
for approval by Landlord provided that: (a) any such assignment shall include an
assumption by the assignee, from and after the effective date of such
assignment, of the performance and observance of the covenants, conditions and
obligations to be performed and observed on the part of Tenant contained in this
Lease; (b) any such sublease shall specify that such sublease shall not be
further assigned nor the Premises further sublet except in strict accordance
with the provisions of this Lease and shall specify that the term of such
sublease shall not extend beyond one day prior to the expiration of this Lease;
and (c) any such sublease or assignment shall provide that Landlord shall be
entitled, in its sole discretion, to treat said agreement as void in the event
such sublessee or assignee has not obtained its liquor license(s) from the
governmental authorities responsible for liquor licenses within four (4) months
after such conditional transfer, notwithstanding Landlord shall have previously
granted its consent thereto; and
(x) Neither the proposed subtenant or assignee (as then
constituted), nor any "Affiliate") (as hereinafter defined) of such party has a
history of late payments, defaults, bankruptcies, court cases or other property
management problems (excluding problems attributable to any predecessor of such
assignee or subtenant that does not then control or have an ownership interest
in such party); and
(xi) The Guarantor signs and delivers to Landlord an
agreement in form and substance satisfactory to Landlord wherein such Guarantor
consents to the assignment, subletting or transfer or change in restaurant
concept at the Premises and reaffirms its obligations under the Guaranty. For
purposes hereof, an "Affiliate" shall mean an entity owned or controlled by, or
under common control with, whether directly or indirectly, the proposed assignee
or subtenant, or an entity in which the proposed assignee or subtenant controls
or has direct or indirect ownership interest. Landlord shall respond to any
consent for approval to any proposed assignment or subletting or change in
restaurant concept at the Premises within sixty (60) days following any request
therefor, accompanied by such additional information pertaining to the proposed
assignee or subtenant or the change in restaurant concept at the Premises as
Landlord may reasonably request. Notwithstanding any assignment, subletting or
transfer or change in restaurant concept at the Premises pursuant to this
paragraph, Tenant shall remain fully and primarily liable for the payment and
performance of, and compliance with, all of its obligations under this Lease
(including, without limitation, compliance with the prohibition set forth in
Paragraph 6.5.2 [last sentence]).
(d) Documentation. No permitted assignment or subletting by
Tenant shall be effective until there has been delivered to Landlord a fully
executed counterpart of the assignment or sublease which expressly provides that
(i) the assignee or subtenant may not further assign or sublet the assigned or
sublet space without Landlord's prior written consent (which, in the case of a
further assignment proposed by an assignee, shall not be unreasonably withheld,
subject to Landlord's rights under the provisions of this Paragraph), (ii) the
assignee or
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subtenant will comply with all of the provisions of this Lease pertaining to
such sublet space, and Landlord may enforce the Lease provisions directly
against such assignee or subtenant, (iii) in the case of an assignment, the
assignee assumes all of Tenant's obligations under this Lease arising on or
after the date of the assignment, and (iv) in the case of a sublease, the
subtenant agrees to be and remain jointly and severally liable with Tenant for
the payment of rent pertaining to the sublet space in the amount set forth in
the sublease, and for the performance of all of the terms and provisions of this
Lease applicable to such sublet space. In addition to the foregoing, no sublease
by Tenant shall be effective until there has been delivered to Landlord a fully
executed counterpart of Landlord's consent to sublease form. The failure or
refusal of a subtenant or assignee to execute any such instrument shall not
release or discharge the subtenant or assignee from its liability as set forth
above. Notwithstanding the foregoing, however, no subtenant or assignee shall be
permitted to occupy the Premises unless and until such subtenant or assignee
provides Landlord with certificates evidencing that such subtenant or assignee
is carrying all insurance coverage required of such subtenant or assignee under
this Lease.
26. SIGNS. Tenant shall have the right to install exterior and interior
signage of such size and color, design and location as may reasonably be
designated and approved by Landlord in writing. Such signage shall be installed
and at all times thereafter maintained in good condition and repair and shall be
in conformance with all governmental codes having jurisdiction thereof and
Landlord's reasonable requirements for the preparation of Tenant's signage. In
all events, Tenant's signs shall be subject to approval by the District of
Columbia. Tenant shall make all repairs required by reason of the installation,
maintenance and removal of its signage. Tenant shall be responsible for the
day-to-day maintenance, repair and replacement of all of its signs. Damage to
the signs by fire or other casualty shall be Tenant's responsibility to repair
or replace. At the expiration of Tenant's occupancy of the Premises, Tenant
shall be responsible for removing all signs and repairing any damage to the
Building occasioned thereby.
27. RULES AND REGULATIONS. Tenant shall comply with the rules and
regulations set forth in Exhibit C attached hereto and with any reasonable
additions thereto and modifications thereof adopted from time to time by
Landlord, and each such rule or regulation shall be deemed to be a covenant of
this Lease to be performed and observed by Tenant.
28. LANDLORD ACCESS. Landlord may enter the Premises at any time in case
of any emergency and at reasonable hours and upon reasonable notice to exhibit
the same to prospective purchasers, mortgagees or tenants, to inspect the
Premises to see that Tenant is complying with all its obligations hereunder, to
make repairs required of Landlord under the terms hereof or to make repairs to
any adjoining property of Landlord or any entity affiliated with Landlord.
Notwithstanding the foregoing, Landlord shall show the Premises to prospective
tenants only during the last twelve (12) months of the Term.
29. SUBORDINATION. This Lease is subject and subordinate to the lien of
any and all mortgages (which term "mortgages" shall include deeds of trust and
similar security instruments) and ground or other underlying leases which may
now or hereafter encumber or otherwise affect the Land, the Building, or both,
as well as the obligation to pay any and all renewals, extensions,
modifications, recastings or refinancing thereof; provided, however, that in the
event the mortgagee under any such mortgage, or ground lessor under any such
ground lease, shall require this Lease to be superior and paramount to such
mortgage or ground lease, Tenant agrees to
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execute and deliver any documents required for such purpose within five (5) days
after delivery of such documents to Tenant. This paragraph shall be
self-operative and no further instruments of subordination need be required by
any mortgagee, trustee or Ground Lessor. Nevertheless, if requested by Landlord,
Tenant shall promptly execute any certificate or other document specified by
Landlord in confirmation of this subordination. Tenant hereby constitutes and
appoints Landlord as Tenant's attorney-in-fact to execute any such certificate
or document on behalf of Tenant if Tenant does not execute it within five (5)
days after receiving it. Tenant agrees that, if any proceedings are brought for
the foreclosure of any such mortgage, Tenant, if requested to do so by the
purchaser at the foreclosure sale, shall attorn to the purchaser, shall
recognize the purchaser as Landlord under this Lease, and shall make all
payments required hereunder to such new Landlord without deduction or setoff.
Tenant waives the provisions of any law or regulation, now or hereafter in
effect, which may give or purport to give Tenant any right to terminate or
otherwise adversely affect this Lease or the obligations of Tenant hereunder in
the event that any such foreclosure or termination or other proceeding is
prosecuted or completed. Anything contained herein to the contrary
notwithstanding, (i) Landlord shall procure for Tenant a subordination,
attornment and non-disturbance agreement signed by Landlord's current mortgagee
in such lender's usual and customary form within sixty (60) days of the
Commencement Date and (ii) Landlord shall endeavor in good faith to procure a
commercially reasonable non-disturbance agreement for Tenant from any future
mortgagee.
30. ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS.
30.1 ESTOPPEL CERTIFICATE. Tenant shall, without charge, at any time
and from time to time, within ten (10) business days after the request by
Landlord, any ground lessor, the holder of any indebtedness secured by the Land,
the Building or both, or any prospective purchaser of the Land, the Building or
both, or to any other person or entity designated by Landlord, execute,
acknowledge and deliver to such requesting party a written estoppel certificate
certifying, as of the date of such certificate: (a) that this Lease is
unmodified and in full force and effect (or if there has been a modification,
that the Lease is in full force and effect as modified and setting forth such
modifications); (b) the amounts of Monthly Base Rent, Percentage Rent and
Additional Rent currently due and payable by Tenant; (c) that Tenant has
accepted possession of the Premises; (d) to the best of Tenant's knowledge,
whether or not there are then existing any setoffs, charges, liens, claims or
defenses against the enforcement of any right hereunder (and, if so, specifying
the same in detail); (e) that Tenant has no knowledge of any then uncured
defaults by Landlord of its obligations under this Lease; (f) that Tenant is not
in default; and (g) to the best of Tenant's knowledge, any other factual
certifications requested. Any statement delivered pursuant to this paragraph may
be relied on by the requesting party. Tenant's failure to timely deliver the
estoppel certificate after request by Landlord immediately shall be deemed an
Event of Default without cure under this Lease.
30.2 FINANCIAL STATEMENTS. Tenant covenants and agrees that at any
time, within thirty (30) days after notice and demand by Landlord, Tenant will
furnish (and, in the case of Guarantor, caused to be furnished) to Landlord
certified financial statements or annual reports of Tenant and Guarantor as of
the end of Tenant's and Guarantor's last calendar year and Tenant consents to
the delivery of same by Landlord to lenders or prospective lenders or purchasers
of all or part of the Building, the Land or both or of any interest therein.
Such financial statements shall (i) be prepared in accordance with generally
accepted accounting principles consistently
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applied, (ii) provide reasonably detailed income and expense statements and net
worth determinations of Tenant, and (iii) be certified as true and correct by an
authorized officer of (a) Tenant or Tenant's regular certified public accounting
firm and (b) Guarantor or Guarantor's regular certified public accounting firm.
31. HOLD-OVER. If Tenant fails to surrender the Premises on the day after
the expiration or termination of the Term, then Tenant shall, at Landlord's
election, become a Tenant at sufferance at a monthly rental equal to twice the
Monthly Base Rent for the last month of the Term. Tenant, as a tenant at
sufferance, shall be subject to all of the conditions and covenants of this
Lease (including payment of Percentage Rent and Additional Rent) as though the
tenancy had originally been a monthly tenancy. During any holdover period, each
party shall give to the other at least thirty (30) days' prior written notice to
quit the Premises, except in the event of a nonpayment of Monthly Base Rent,
Percentage Rent or of Additional Rent when due, or of the breach of any other
covenant by the Tenant, in either of which events Tenant shall not be entitled
to any notice to quit, the usual thirty (30) day's notice to quit being
expressly waived. The foregoing notwithstanding, in the event Tenant shall hold
over after expiration of the Term, Landlord, at its election or option (and in
lieu of accepting such holdover thereof), may re-enter and take possession of
the Premises forthwith, without process, or by any legal action or process in
force in the jurisdiction in which the Building is located. Further, in the
event of any such holdover to which Landlord objects, Tenant shall be liable to
Landlord and any other tenants with an interest in the Premises for any and all
damages incurred as a result of such holdover, and shall in addition pay to
Landlord the reasonable value of its use of the Premises, which is hereby agreed
to be two hundred percent (200%) the Rent under this Lease during the last month
of the Term.
32. QUIET ENJOYMENT. Landlord covenants that it has the right to make this
Lease and that, if Tenant pays all of the Monthly Base Rent, Percentage Rent and
the Additional Rent, performs all of its obligations provided for hereunder and
observes all of the other provisions hereof on a timely basis, Tenant shall have
the right, during the Term and subject to the provisions of this Lease, to
quietly occupy and enjoy the Premises without hindrance by Landlord or its
successors and assigns, or anyone claiming by, through or under Landlord.
33. PROHIBITED MATERIALS AND PROPERTY. Tenant shall not bring or permit to
be brought or kept in or on the Premises or elsewhere in the Building any
governmentally regulated quantities of inflammable, combustible, or explosive
fluid, material, chemical or substances (except for standard office or
restaurant supplies stored in proper containers). In addition to the foregoing,
Tenant shall keep the Premises free from governmentally regulated quantities of
pollutants, contaminants, toxic or hazardous waste, or any other substances, the
removal of which is required or the use or maintenance of which is restricted,
prohibited or penalized, by any Federal, state or local law, regulation or
ordinance relating to pollution or the protection of the environment
(collectively, "Hazardous Substances"), and if any Hazardous Substances are
brought or found upon the Premises Tenant shall cause the same to be immediately
removed, with proper disposal, and all required clean-up procedures shall be
diligently undertaken. If at any time during or after the Term hereof the
Premises is found to be contaminated or to contain any Hazardous Substances,
Tenant agrees to indemnify, defend and hold Landlord harmless from and against
any and all claims, actions, demands, liabilities, costs, expenses, damages and
obligations of any nature whatsoever, unless the presence of such substances is
attributable to
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Landlord or its agents or employees or existed prior to the date of this Lease.
The foregoing indemnification shall survive the termination or expiration of the
Lease. In the event that prior to completion of the Tenant Work Tenant discovers
that the Building or Land contains asbestos or any other Hazardous Substances,
Landlord shall be responsible for the cost of abating the same, provided that
Landlord shall have the right to terminate the Lease in the event the abatement
costs are expected to exceed Twenty Five Thousand and No/100 Dollars
($25,000.00), unless Tenant and its parent company agrees to assume liability
for such additional costs. Tenant agrees, at its sole cost and expense, to
conduct such environmental tests and studies as may be necessary to determine
whether or not the Building or Land contains any asbestos or other Hazardous
Materials promptly following the Effective Date, and to promptly furnish
Landlord with copies of all of such reports.
34. LANDLORD'S SUCCESSORS. Landlord (and any successor or affiliate of
Landlord) may freely sell, assign or otherwise transfer all or any portion of
its interest under this Lease or in the Building or the Land. In the event of
any such sale, assignment or other transfer, the party originally executing this
Lease as Landlord shall, and any successor or affiliate of such party shall
without further agreement between Landlord and Tenant (or between Landlord
and/or Tenant and the person who is the purchaser, assignee or other transferee
of Landlord), be relieved of any and all of its obligations under this Lease, in
which event Tenant shall thereafter be bound to such purchaser, assignee or
other transferee with the same effect as though the latter had been the original
Landlord hereunder.
35. ATTORNEYS' FEES. If Tenant shall at any time be in default under this
Lease, and Landlord shall deem it necessary to engage attorneys to enforce its
rights under this Lease, then Landlord, if it is the prevailing party in any
litigation with Tenant, shall be reimbursed for the actual attorneys' fees and
court costs incurred in connection with Tenant's default under this Lease and
such enforcement actions.
36. NOTICES. Any notice provided, required or permitted to be given by
either party to the other under this Lease must be in writing, and may be served
(i) by depositing the same in the United States mail, addressed to the party to
be notified, postage prepaid, and registered or certified, with return receipt
requested; (ii) by hand delivery with a receipt therefor; (iii) by nationally
recognized overnight delivery service, such as Federal Express, Purolator or
Emery; or (iv) by telecopy or facsimile service. For purposes of notices, the
addresses of the parties shall be as follows:
If to Landlord:
2145 K Street, N.W.
Washington, D.C. 20037
Attn: Mr. Thaddeus A. Lindner
Mr. Sergius Gambal
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with copies to:
Mr. Russell C. Lindner
The Forge Company
2145 K Street, N.W.
Washington, D.C. 20037
-and-
Jerry R. O'Conor, Esquire
Tucker, Flyer & Lewis, P.C.
1615 L Street, N.W., Suite 400
Washington, D.C. 20036-5612
If to Tenant:
c/o The New York Restaurant Group, Inc.
1114 First Avenue, 6th Floor
New York, New York 10021
Attn: Mr. James Dunn, President
with a copies to:
Joseph E. Porcelli, Esquire
Maloney & Porcelli
225 Broadway, Suite 2812
New York, New York 10007-3065
-and-
c/o The New York Restaurant Group, Inc.
1114 First Avenue, 6th Floor
New York, New York 10021
Attn: Mr. Mark Levine
Either party may, by written notice to the other, designate a new address to
which such notices shall be directed. All notices shall be effective upon
receipt or refusal to accept receipt. If any mortgagee shall notify Tenant that
it is the holder of a mortgage affecting the Premises or any part thereof, no
notice, request or demand thereafter sent by Tenant to Landlord shall be
effective until a copy of same shall be sent to such mortgagee in the manner
prescribed in this Section at such address as such mortgagee shall designate.
37. REMEDIES CUMULATIVE; NO WAIVER. All rights and remedies given herein
and/or by law or in equity to Landlord are separate, distinct and cumulative,
and none of them, whether exercised by Landlord or not, shall be deemed to be in
exclusion of any other. No failure of Landlord to exercise any power given
Landlord hereunder, and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof. Receipt by Landlord of any Monthly Base Rent
or Additional Rent with knowledge of the breach of any provisions hereof shall
not constitute a
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waiver of such breach and no waiver by Landlord of any provision hereof shall be
deemed to have been made unless made in writing.
38. FINAL AGREEMENT; SEVERABILITY. This Lease, including all Exhibits
attached hereto, is intended by the parties as the final expression of their
agreement and as a complete and exclusive statement of the terms between the
parties having been incorporated herein. No course of prior dealings between the
parties or their affiliates shall be relevant or admissible to determine the
meaning of any of the terms of this Lease. No representations, understandings or
agreements have been made or relied upon in the making of this Lease other than
those specifically set forth herein. This Lease can only be modified by a
writing signed by all of the parties hereto or their duly authorized agents. If
any term, covenant or condition of this Lease or the application thereof to any
person or circumstance shall be held invalid or unenforceable, the remainder of
this Lease or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this Lease
shall be valid and enforced to the fullest extent permitted by law.
39. TIME IS OF THE ESSENCE. Time is of the essence of the obligations of
Tenant contained in this Lease, subject to applicable notice and cure periods.
40. INDEMNITY. Tenant agrees it will defend all actions against Landlord
(including any partners, employees or agents) and that it will indemnify and
save Landlord harmless from and against any and all liabilities, losses,
damages, causes of action, suits, claims, demands, judgments, costs and expenses
of any kind (including court costs and reasonable attorneys' fees) relating to
or arising from or in connection with: (i) the possession, use, occupancy,
management, repair, maintenance or control of the Premises or any portion
thereof; (ii) any act or omission of Tenant or Tenant's agents, sublessees,
contractors, employees or invitees; (iii) any default, violation or injury to
person or property or loss of life sustained in or about the Premises; (iv) any
violation or breach of this Lease by Tenant; or (v) any other matter arising
from Tenant's occupancy or use of the Premises or any act or omission of Tenant,
its agents, sublessees, contractors, employees or invitees. Landlord hereby
agrees to indemnify Tenant and hold Tenant harmless from and against any cost,
damage, liability or expense incurred by Tenant, except for consequential
damages, which (a) results from any willful misconduct or gross negligence of
Landlord or its agents within the Premises and is not covered by the insurance
required to carry by Tenant hereunder; or (b) arises on account of any Hazardous
Substances introduced by Landlord into the Building or otherwise existing as of
the date hereof.
41. EXCULPATION. Notwithstanding any provision to the contrary contained
herein, Tenant shall look solely to the estate and property of Landlord in and
to the Land and the Building in the event of any claim against Landlord arising
out of or in connection with this Lease, the relationship of Landlord and
Tenant, or Tenant's use of the Premises, and Tenant agrees that the liability of
Landlord arising out of or in connection with this Lease, the relationship of
Landlord and Tenant, or Tenant's use of the Premises, shall be limited to such
estate and property of Landlord in and to the Land and the Building. No
properties or assets of Landlord other than the estate and property of Landlord
in the Land and the Building and no property owned by any partner or owner of
Landlord shall be subject to levy, execution or other enforcement proceedings or
other judicial process for the satisfaction of any judgment or for the
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satisfaction of any other remedy of Tenant arising out of or in connection with
this Lease, the relationship of Landlord and Tenant or Tenant's use of the
Premises.
42. NO LIABILITY. Landlord shall not be liable to Tenant, its employees,
agents, contractors, business invitees, licensees, customers, clients, family
members or guests for any damage, compensation or claim arising from (i) (any
accident or damage resulting from the use or operation (by Landlord, Tenant or
any other person or persons whatsoever) of elevators or heating,
air-conditioning, electrical, plumbing or other equipment, appliance or
apparatus, (ii) the termination of this Lease by reason of the destruction of
the Premises, (iii) any fire, explosion or other casualty, (iv) any robbery,
theft, mysterious disappearance or vandalism, (v) any dampness or leakage in any
portion of the Premises or Building from water, rain, snow, ice, drains, pipes
or plumbing, (vi) any falling plaster, tile or other building material, (vii)
any leakage, emanation or disturbance caused by steam, gas or electricity,
(viii) any latent defect in the Building, (ix) any personal injury arising from
the use, occupancy and condition of the Premises, or (x) any other cause
whatsoever; PROVIDED that if any of the foregoing is caused by the negligence of
Landlord or a willful act or failure to act on the part of Landlord, Landlord
shall be liable to Tenant for any actual damages suffered by Tenant as a direct
result of such gross negligence or willful misconduct, except to the extent the
risk of any such loss is allocated to Tenant's insurance pursuant to this
paragraph and Paragraph 22 above. In no event shall Landlord, or its agents or
employees, have any liability to Tenant for lost profits or any consequential
damages whatsoever, Tenant shall not be entitled to any abatement or diminution
of Rent as a result of any of the foregoing occurrences, nor shall the same
release Tenant from its obligations hereunder or constitute an eviction. It is
expressly understood and agreed that Tenant shall look to its insurance policies
and not to Landlord or its agents or employees for reimbursement for any damages
or losses incurred as a result of any of the foregoing occurrences, and that
said policies must contain waiver of subrogation clauses as herein provided.
43. NO PARTNERSHIP. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture between Landlord and Tenant
or create any other relationship between the parties hereto other than that of
Landlord and Tenant.
44. BROKERAGE. Landlord and Tenant each represents to the other that it
has not had dealings with any real estate broker, finder or other person, with
respect to this Lease in any manner other than Equis Corporation, whose
commissions shall be paid by Landlord pursuant to a separate agreement. Landlord
and Tenant each agree to indemnify and hold the other harmless from and against
any breach of the foregoing representation and all costs, expenses and
liabilities in connection therewith, including, without limitation, reasonable
attorneys' fees and expenses, arising out of any dealings Tenant had with any
broker, finder or other persons.
45. TENANT'S AUTHORITY. Tenant shall, concurrently with the signing of
this Lease, furnish to Landlord certified copies of the resolutions of its board
of directors authorizing Tenant to enter into this Lease. Moreover, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that (i) he or she is duly authorized to execute and deliver this
Lease, (ii) Tenant is a duly organized corporation under the laws of the State
of Delaware, is qualified to do business in the District of Columbia, is in good
standing under the laws of the State of Delaware and the laws of the District of
Columbia, and has the power and authority to
-32-
<PAGE>
enter into this Lease, and (iii) all corporate action requisite to authorize
Tenant to enter into this Lease has been duly taken.
46. LANDLORD'S COURTESY ACCOUNT. Tenant shall provide Landlord (or its
designees) with a restaurant credit of Five Thousand Dollars ($5,000.00) for
each Lease Year or part thereof during the Term to be applied toward the
purchase of food and liquor.
47. GOVERNING LAW; CONSTRUCTION. The provisions of this Lease shall be
governed and construed according to the internal laws of the District of
Columbia (without regard to its law relating to choice or conflicts of law).
Should any provision of this Lease require judicial interpretation, it is agreed
that the court interpreting or considering same shall not apply the presumption
that the provisions hereof shall be more strictly construed against a party by
reason of the rule or conclusion that a document should be construed more
strictly against the party who itself or through its agent prepared the same, it
being agreed that all parties hereto have participated in the preparation of
this Lease and that each party consulted legal counsel before the execution of
this Lease.
48. BENEFIT AND BURDEN; NO RECORDING. Subject to the provisions of
Paragraphs 25 and 34 above, the provisions of this Lease shall be binding upon,
and shall inure to the benefit of, the parties hereto and each of their
respective representatives, successors and assigns. Neither this Lease nor any
memorandum or notice thereof shall be recorded by Tenant without the express,
prior written consent of Landlord, and any such recordation by Tenant in
violation of this paragraph shall be null and void and of no force or effect and
shall constitute an Event of Default.
49. NO FURTHER REPRESENTATIONS OR WARRANTIES. This Lease as written,
contains all the terms of the agreement entered into between the parties as of
the date hereof, and Tenant expressly acknowledges that Landlord has made no
representations or warranties whatsoever, and held out no inducements to lease,
other than those expressly set forth in this Lease. Without limiting the
generality of the foregoing, Tenant acknowledges that it has not relied on (and
Landlord has not made) any representations or warranties (express or implied)
other than as expressly set forth in this Lease as to (i) the current or future
Real Estate Tax liability, assessment or valuation of the Premises; (ii) the
potential qualification of the Premises for any and all benefits conferred by
Federal, state or municipal laws, whether for subsidies, special real estate tax
treatment, insurance, financing or refinancing or any other benefits, whether
similar or dissimilar to those enumerated; (iii) the compliance of the Premises
with applicable zoning ordinances and the ability to obtain a change in the
zoning or a variance in respect to the Premises from any source, including, but
not limited to, the District of Columbia or the Federal government or any
institutional lender; (v) the present and future condition and operating state
of any and all machinery or equipment or personal property (if any) on the
Premises and the present or future structural and physical condition of the
Building or its suitability for rehabilitation or renovation; (vi) the presence
or absence of any laws, ordinances, rules or regulations issued by any
governmental authority, agency or board and any violations thereof; and (vii)
the layout, leases, rents, income, expenses or operation relating to, the
Premises or any part thereof. Landlord is not liable or bound in any manner by
any verbal or written statements pertaining to the Premises or the operation,
layout, expenses, condition or income, furnished by any real estate broker,
agent, employee, or other person, unless the same are specifically set forth in
this Lease.
-33-
<PAGE>
50. WAIVER OF JURY TRIAL; TENANT'S AGENT; CONSENT TO JURISDICTION
50.1 WAIVER OF JURY TRIAL.
TO INDUCE THE OTHER PARTY TO ENTER INTO THE LEASE, LANDLORD AND
TENANT EACH WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY OR ALL ISSUES ARISING IN
ANY ACTION OR PROCEEDING BETWEEN LANDLORD AND TENANT OR THEIR SUCCESSORS OR
ASSIGNS, UNDER OR CONNECTED WITH THIS LEASE OR ANY OF ITS PROVISIONS. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY LANDLORD AND TENANT,
AND LANDLORD AND TENANT EACH ACKNOWLEDGES THAT NEITHER LANDLORD OR TENANT NOR
ANY PERSON ACTING ON BEHALF OF LANDLORD OR TENANT HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LANDLORD AND TENANT EACH FURTHER ACKNOWLEDGES THAT IT HAS
BEEN REPRESENTED IN THE SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER
BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. LANDLORD AND TENANT EACH
FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER PROVISION.
50.2 CONSENT TO JURISDICTION. LANDLORD AND TENANT EACH CONSENTS TO
AND SUBMITS TO IN PERSONAM JURISDICTION AND VENUE IN THE DISTRICT OF COLUMBIA,
AND IN THE FEDERAL DISTRICT COURTS WHICH ARE LOCATED IN THE DISTRICT OF
COLUMBIA. LANDLORD AND TENANT EACH ASSERTS THAT IT HAS PURPOSEFULLY AVAILED
ITSELF OF THE BENEFITS OF THE LAWS OF THE DISTRICT OF COLUMBIA AND WAIVES ANY
OBJECTION TO IN PERSONAM JURISDICTION ON THE GROUNDS OF MINIMUM CONTACTS, WAIVES
ANY OBJECTION TO VENUE, AND WAIVES ANY PLEA OF FORUM NON CONVENIENS, THIS
CONSENT TO AND SUBMISSION TO JURISDICTION IS WITH REGARD TO ANY ACTION RELATED
TO THIS LEASE. REGARDLESS OF WHETHER LANDLORD OR TENANT'S ACTIONS TOOK PLACE IN
THE DISTRICT OF COLUMBIA OR ELSEWHERE IN THE UNITED STATES, THIS SUBMISSION TO
JURISDICTION IS NONEXCLUSIVE, AND DOES NOT PRECLUDE THE OTHER PARTY FROM
OBTAINING JURISDICTION OVER TENANT OR LANDLORD IN ANY COURT OTHERWISE HAVING
JURISDICTION.
-34-
<PAGE>
EXHIBIT A
Legal Description of Land
<PAGE>
EXHIBIT A
Metes & Bounds Description - Lot 877, Square 117
Part of Original Lot 28 and all of Original Lot 29, per plat recorded in
Book 4, page 1151 (said Lot 29 also being Lots 45, 46 and 47, per plat recorded
in Book 11, page 62), and part of Alley Closed, per plat recorded in Book 146,
page 86; all in Square 117 and all as found among the records of the Office of
the Surveyor for the District of Columbia, more particularly described, in one
piece, as follows:
Beginning at the southeast corner of said Original Lot 29, said beginning
being a point on the west line of 19th Street, 110 feet wide, removed North,
126.0 feet from the intersection of said west line of 19th Street and the north
line of L Street, 90 feet wide, and leaving said beginning and running with the
south line of said Original Lot 29, West, 91.92 feet; thence leaving said south
line of Original Lot 29 and running with the the east line of said Alley Closed,
South, 14.50 feet; thence leaving said east line of Alley Closed and running
through said Alley Closed, West, 48.91 feet, to the west line of said Alley
Closed; thence with said west line of Alley Closed and the west lines of said
Original Lots 29 and 28, North, 84.50 feet; thence through said Original Lot 28,
East, 140.83 feet, to the west line of 19th Street, aforesaid; thence with said
west line of 19th Street, South, 70.0 feet, to the place of beginning,
containing 10,566 square feet, per the records of the Assessment and Taxation
Division of the D.C. Department of Finance and Revenue.
<PAGE>
EXHIBIT B
Declaration by Landlord and Tenant
Attached to and made part of the Agreement of Lease entered into by and
between (i) 1112 Nineteenth Street Associates, a District of Columbia joint
venture ("Landlord"), and (ii) S & W D.C., L.L.C., a Delaware limited liability
company ("Tenant").
Landlord and Tenant do hereby declare that:
1. The execution date of the Agreement of Lease is _______________, 1998.
2. The Commencement Date of the Agreement of Lease is _______________.
3. The Lease Expiration Date of the Agreement of Lease is _______________,
subject to any extension of the Term Pursuant to Paragraph 3.2 or the earlier
termination of the Agreement of Lease.
4. The Lease is in full force and effect as of the date hereof, Landlord
has fulfilled all of its obligations under the Lease required to be fulfilled by
Landlord on or prior to such date, and Tenant has no right of set-off, deduction
or counterclaim against any rentals.
LANDLORD:
1112 Nineteenth Street Associates,
WITNESS a District of Columbia Joint Venture
____________________________ By:_____________________________________
Thaddeus A. Lindner, Partner
WITNESS:
____________________________ By:_____________________________________
Sergius Gambal, Partner
<PAGE>
TENANT:
S & W D.C.,, L.L.C.
ATTEST: a Delaware limited liability company
____________________________ By:_____________________________________
Secretary Name:________________________________
Title:_______________________________
[Corporate Seal]
B-2
<PAGE>
EXHIBIT C
Rules and Regulations
1. No awnings or other projections shall be attached to the outside walls
of the Building except as permitted under the Tenant's lease. No drapes, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises, except as may be approved by Landlord in its
reasonable discretion.
2. No sign, advertisement, notice or other lettering or material(s) shall
be exhibited, inscribed, painted or affixed by Tenant on any part of the outside
or inside of the Building without the written consent of Landlord, which shall
not be unreasonably withheld. In the event of the violation of the foregoing,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to Tenant.
3. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown or placed therein.
All damages resulting from any misuse of the fixtures shall be borne by Tenant.
4. Tenant shall not construct, maintain, use or operate within its
Premises or elsewhere within or on the outside of the Building, any electrical
device, wiring or apparatus in connection with a loud speaker system or other
sound system if the music system can be heard outside of the Premises. Tenant
shall not make or permit to be made any disturbing noises or disturb or
interfere with the occupants of neighboring Buildings or premises or those
having business with them, whether by the use of any musical instrument, radio,
tape recorder, whistling, singing or any other way. Tenant shall not throw
anything out of the doors or windows, off the balconies or down the corridors or
stairs.
5. No bicycles, vehicles or animals, birds or pets of any kind shall be
brought into or kept in or about the Premises.
6. No flammable, combustible, explosive, hazardous or toxic fluid,
chemical or substance shall be brought into or kept upon the Premises, other
than normal cleaning fluids in less than regulated amounts stored in lawful
containers and maintained and disposed of in compliance with all applicable
environmental laws.
7. Upon the expiration or termination of the Lease, Tenant shall return to
Landlord all keys used in connection with the Premises, including any keys to
the Premises, to rooms and offices within the Premises, to storage rooms and
closets, to cabinets and other built-in furniture, and to toilet rooms whether
or not such keys were furnished by Landlord or procured by Tenant, and in the
event of the loss of any such keys, Tenant shall pay to Landlord the cost of
replacing the locks. On the expiration or termination of the Lease, Tenant shall
disclose to Landlord the combination of all locks for safes, safe cabinets and
vault doors, if any, remaining in the Premises.
<PAGE>
8. Tenant shall not install or permit or allow the installation of a
television antenna, satellite dish or other roof device in the windows or upon
the exterior of the Building without the prior written consent of Landlord,
which shall not be unreasonably withheld.
C-2
<PAGE>
EXHIBIT D
Work Agreement
THIS WORK AGREEMENT (the "Work Agreement") is attached to and made a part
of the Agreement of Lease dated as of July 8, 1998 (the "Lease") by and between
(i) 1112 Nineteenth Street Associates, a District of Columbia joint venture
("Landlord"), and (ii) S & W D.C., L.L.C., a Delaware limited liability company
("Tenant"). Capitalized terms not defined in this Work Agreement have the same
meaning ascribed to them in the Lease.
1. TENANT WORK; General Provisions. The parties hereto acknowledge that
Tenant intends and shall be obligated to construct, at its sole cost and
expense, certain improvements in and upon the Premises (such improvements being
referred to herein as "Tenant Work") in accordance with the provisions hereof.
It is specifically understood that Landlord shall have no design, permitting,
construction or other obligations of any kind or nature whatsoever (whether with
regard to the Land, the Building or the Building's mechanical, electrical,
plumbing or life/safety systems) in connection with the performance of any
Tenant Work.
2. PLANS AND SPECIFICATIONS. Landlord and Tenant shall use reasonable
efforts to agree upon complete architectural drawings, construction plans and
specifications for the Tenant Work (hereinafter referred to as the "Plans and
Specifications"). Tenant shall furnish Landlord with preliminary plans and
specifications for the Tenant Work by August 10, 1998, which plans shall comply
with building codes of all applicable authorities or agencies having
jurisdiction. Landlord agrees that it will not unreasonably withhold or delay
approval of the preliminary plans and specifications (upon which approval, such
plans and specifications are to be referred to as the "Approved Plans and
Specifications"), provided the same are complete and consistent in all respects
(including design and materials) with plans for a first-class full service
restaurant. Landlord agrees to review Tenant's proposed plans promptly, and to
provide Tenant with any required changes within ten (10) business days after its
receipt of such proposed plans. Landlord and Tenant shall use reasonable efforts
to accommodate the interests of the other and to agree on final construction
plans and specifications. Any modifications to the Approved Plans and
Specifications required to comply with local building codes or other
governmental requirements shall be prepared at Tenant's expense, and any
additional cost of construction occasioned thereby shall be paid by Tenant.
During progress of construction, Tenant shall provide Landlord with one copy of
all shop drawings for Landlord's records, and copies of all field and job
progress reports from Tenant's architect(s). Neither Landlord's approval of the
Plans and Specifications, nor any other inspections or approvals of the
improvements on or about the Premises or plans for construction thereof by
Landlord's employees, agents or inspecting engineers, shall constitute a
warranty or representation as to the technical sufficiency, adequacy, safety or
compliance with laws of the plans, structures, any of their component parts, or
any other physical condition or feature pertaining to the improvements, it being
acknowledged by Tenant that Landlord has made such approvals solely as a
landlord in determining and protecting the value of its property for internal
purposes, and not as an expert in construction-related matters.
3. PERMITS. Tenant, at its sole cost and expense, shall obtain or cause to
be obtained all building permits, licenses, other governmental approvals and
temporary and permanent certificates of occupancy which may be required to
permit the construction of the Tenant Work
<PAGE>
in accordance with the Approved Plans and Specifications and this Lease. Tenant
shall apply for all permits for the construction of the Tenant Work at the
earliest stage possible, shall diligently pursue procuring the same and shall at
all times apprise Landlord of the status of its application. Tenant shall
provide Landlord with copies of all correspondence and other inquiries it may
receive from the District of Columbia or other applicable authority in
connection with its permit application. Tenant further covenants to (i) use a
so-called "expeditor" reasonably acceptable to Landlord in its attempt to
procure a building permit and (ii) make such changes to the Plans and
Specifications as the District of Columbia or other applicable authority may
require as a condition of issuing the building permit, provided that such
changes do not result in increased hard costs to Tenant (exclusive of
architectural or engineering expenses and other soft costs) by more than Fifty
Thousand and No/100 Dollars ($50,000.00) or prevent Tenant, in its reasonable
opinion, from operating a first-class restaurant without undue hardship.
Landlord agrees to assist and cooperate with Tenant, at no out-of-pocket expense
to Landlord, in the obtaining of such permits, licenses, approvals and
certificates.
4. CODE COMPLIANCE. As a part of the Tenant Work, Tenant shall upgrade the
Building and all components thereof and systems therein and make such
improvements thereto as may be necessary to ensure that, upon completion of the
Tenant Work, the Building complies with all applicable laws, ordinances, codes,
rules and regulations, including, without limitation, those relating in any way
to the Americans with Disabilities Act. Tenant's architect shall provide
Landlord with a written certification to the foregoing affect prior to
Landlord's approval of the proposed Plans and Specifications.
5. REQUIRED CONSTRUCTION. Without limiting the generality or applicability
of any applicable provision of this Work Agreement or the Lease, Tenant agrees
that the following provisions shall apply to the performance of the Tenant Work:
(i) All work required to ensure the structural integrity
of the Building shall be substantially complete before Tenant
commences any improvements to the interior of the Building. In
performing any Tenant Work which involve construction work upon the
exterior of the Buildings, Tenant agrees that it shall, at its sole
expense, restore all areas of the Building's exterior, including,
without limitation all adjacent planting areas, sidewalks and
parking areas, if any, affected by the Tenant Work, to their
original condition; and
(ii) Tenant and its contractor performing any Tenant
Work shall provide copies of warranties for the Tenant Work and the
materials and equipment which are incorporated into the Building in
connection therewith, as well as provide to Landlord copies of all
operating and maintenance manuals for all equipment and materials
incorporated into the Building as part of the Tenant Work. Without
limitation, all aspects of Tenants Work shall be warranted to be
free from defects in design and workmanship for a period of not less
than one (1) year from substantial completion of construction.
6. REIMBURSEMENTS. Tenant shall, upon demand, reimburse Landlord for all
reasonable out-of-pocket costs paid by Landlord to a licensed architect or
engineer for a scope of work to include reviewing proposed Plans and
Specifications and any changes thereto, reviewing
<PAGE>
construction contracts and similar documents, reviewing permit applications,
conducting and attending inspections and generally monitoring construction of
the Tenant Work.
7. GENERAL CONTRACTOR. Landlord shall have the right to approve the
identity of the general contractor which will perform the Tenant Work. In all
events, all contractors (including the general contractor) and subcontractors
performing work on behalf of Tenant within the Premises shall be licensed to do
business in the District of Columbia and shall be bondable. Tenant's
construction contract shall indemnify Tenant and Landlord from damages, losses
and expenses associated with the acts and omissions of Tenant's contractor, its
agents, employees and subcontractors, and shall otherwise be subject to
Landlord's prior reasonable approval. All work is to be performed in accordance
with national and/or local building and fire codes and shall be performed in
accordance with all Occupational Safety and Health Administration (OSHA) safety
standards. Tenant agrees to comply (or to cause its contractors to comply) with
all applicable Federal, state and local laws, regulations and ordinances in the
performance of the Tenant Work, and to promptly rectify any violations of such
laws caused by the acts or omission of Tenant, its employees, agents and/or
contractors, and Tenant shall be responsible for any non-compliance by Tenant or
its agents, employees and contractors.
8. INTENTIONALLY OMITTED.
9. INSPECTIONS. Representatives of Landlord shall have the right to enter
the Premises during business hours for the purpose of inspecting the progress of
the Tenant Work and confirming that all Tenant Work is being performed in
accordance with the Approved Plans and Specifications. Tenant agrees to promptly
take all steps necessary to correct any defects in its construction of the
Tenant Work which are discovered by Landlord's architect or construction
supervisor in the course of any such inspections; PROVIDED, Landlord's failure
to require any corrections shall not constitute a warranty that the work
performed prior to the date of the inspection has been completed in accordance
with the Approved Plans and Specifications nor a waiver of the right to object
to any such defects at a later time. Tenant agrees to cooperate with Landlord to
facilitate such inspection, including without limitation: (a) notifying Landlord
and such construction manager of all scheduled construction meetings between
Tenant and its general contractor, which Tenant agrees to conduct on not less
than a weekly basis; (b) providing to Landlord copies of all governmental
inspection reports, promptly after the same have been received by Tenant; (c)
responding promptly to all Landlord requests for information, or other inquiries
regarding the progress of the Tenant Work; and (d) permitting Landlord's
representatives free and clear access to the Premises during any governmental
inspections of the Tenant Work. Tenant shall notify Landlord not less than three
(3) business days in advance of, and shall have the right to participate in, any
inspection of the work being performed by Tenant and its contractor in which a
punch list for such work is intended to be prepared, and shall further have the
right to require the inclusion of any BONA FIDE punch list items on such punch
list.
10. MATERIALS. Tenant shall use only new materials (as specified in the
Approved Plans and Specifications, subject to minor deviations due to
unavailability of any specified materials), or historic materials which are in
good condition where required, in connection with the Tenant Work. All equipment
shall meet all applicable standards and bear Underwriters Laboratories labels.
<PAGE>
11. CLEAN WORK SITE. Tenant's general contractor shall keep all
construction areas clean and free of trash and debris, and shall police the
activities of its contractors, subcontractors and their respective employees
with regard to keeping the Building clean. All construction debris shall be
removed from the Building daily. (No debris shall be stockpiled on the Premises
at any location at any time.) Tenant's contractor(s) shall not be permitted to
smoke on or about the Premises
12. LIEN FREE CONSTRUCTION. All Tenant Work shall be paid for in full and
in a timely fashion by Tenant, and shall be performed in a lien-free,
first-class, and good and workmanlike manner, and in accordance with applicable
codes and requirements. The general contractor and each sub-contractor shall
sign and deliver to Landlord a Release of Liens when requested to do so by
Landlord.
13. INSURANCE REQUIREMENTS. During the course of construction, Tenant
shall secure, pay for, and maintain, or cause its contractors and subcontractors
to secure, pay for, and maintain all of the insurance policies set forth below
(in addition to such insurance as may from time to time be required by the
District of Columbia and/or Federal laws, codes, regulations or authorities):
(i) With respect to the Tenant Work, Builder's Risk
Insurance, naming Landlord as an additional insured and loss payee,
in an amount not less than one hundred percent (100%) of the
replacement cost of the Building, as determined by Landlord.
(ii) Worker's Compensation, as required by state law,
and Employer's Liability Insurance with a limit of not less than
$2,000,000 (or more if required by the laws of the District of
Columbia) and any insurance required by any Employee Benefit Act or
similar statute applicable where the work is to be performed, as
will protect the contractor and subcontractors from any and all
liability under the aforementioned act(s) or similar statute(s).
(iii) Comprehensive General Liability Insurance
(including Contractor's Protective Liability) in an amount not less
than $5,000,000 per occurrence whether involving personal injury
liability (or death resulting therefrom) or property damage
liability or a combination thereof (combined single limit coverage)
with a minimum aggregate limit of $2,000,000. Such insurance shall
insure such general contractor against any and all claims for
personal injury, death, and damage to the property of others arising
from its operations under its contract, whether such operations are
performed by Tenant's contractors, subcontractors, or
sub-subcontractors, or by anyone directly or indirectly employed by
any of them.
(iv) Comprehensive Automotive Liability Insurance, for
the ownership, maintenance, or operation of any automotive
equipment, whether owned, leased, or otherwise held, including
employer's non-ownership and hired car liability endorsements, in an
amount not less than $2,000,000 per occurrence
<PAGE>
and $2,000,000 aggregate, combined single limit bodily injury and
property damage liability.
The insurance policies set forth in clauses (i) - (iv), above, shall insure such
general contractor against any and all claims for bodily injury, including death
resulting therefrom, and damage to the property of others arising from its
operations under its contract in connection with construction of the Premises,
whether performed by such general contractor, or its subcontractors, or
sub-subcontractors, or by anyone directly or indirectly employed by any of them.
The Tenant Work may not commence until all of the foregoing required insurance
has been obtained certificates of such insurance have been delivered to
Landlord. Tenant's insurance policies shall name the Landlord and Landlord's
mortgagee(s) as additional insureds, and shall provide that no change or
cancellation of such insurance coverage shall be undertaken without thirty (30)
days' prior written notice to Landlord. Landlord shall have the right to require
Tenant, and Tenant shall have the duty, to stop work in the Premises immediately
if any of the coverage Tenant is required to carry herein lapses during the
course of the work, in which event the Tenant Work may not be resumed until the
required insurance is obtained and satisfactory evidence of same is provided to
Landlord. The insurance required under this Section 13 shall be in addition to
any and all insurance required to be procured by the parties pursuant to the
terms of the Lease.
14. CONSTRUCTION INDEMNITY. Tenant hereby agrees to indemnify, defend and
hold Landlord harmless from and against any and all losses, costs, claims,
damages, liabilities and expenses (including, without limitation, court costs
and attorneys' fees) of every kind and nature which are incurred by Landlord, in
whole or in part, whether directly or indirectly, in connection with or on
account of the construction by Tenant and its contractors and subcontractors of
the Tenant Work at the Premises.
15. AS-BUILT SPECIFICATIONS. Upon substantial completion of the Tenant
Work, Tenant agrees to provide Landlord with two (2) complete sets of "As-Built"
plans and specifications for the Premises and all ancillary improvements
constructed by Tenant.
16. SUPPLEMENTAL REMEDIES. In the event of any violation of this Work
Agreement which continues for a period of five (5) days after written notice
from Landlord to Tenant identifying the violation with reasonable specificity
(except that no such notice of default shall be required for a failure to obtain
any required insurance). Landlord shall have the right, in addition to any other
remedies provided for in this Lease due to such default by Tenant, to cause
Tenant and Tenant's contractor to stop all Tenant Work, and Landlord may, in
such event, seek any and all appropriate legal and equitable relief in order to
enforce the provisions of this Work Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Work Agreement as of
the date and year first set forth above.
LANDLORD:
1112 Nineteenth Street Associates,
WITNESS: a District of Columbia Joint Venture
/s/ [ILLEGIBLE] By: /s/ Thaddeus A. Lindner
- ------------------------------- -------------------------------------
Thaddeus A. Lindner, Partner
WITNESS:
/s/ [ILLEGIBLE] By: /s/ Sergius Gambal
- ------------------------------- -------------------------------------
Sergius Gambal, Partner
TENANT:
S & W D.C., L.L.C.
ATTEST: a Delaware limited liability company
By: New York Restaurant Group, Inc.,
Manager
/s/ [ILLEGIBLE] By: /s/ Jim Dunn
- ------------------------------- -------------------------------------
Secretary Name: Jim Dunn
-------------------------------
Title: PRESIDENT
------------------------------
[Corporate Seal]
<PAGE>
------------------------------------------
FIRST AMENDMENT
TO
AGREEMENT OF LEASE
(1112 19th Street, N.W., Washington, D.C.)
------------------------------------------
SMITH & WOLLENSKY
July 8, 1998
<PAGE>
--------------------
FIRST AMENDMENT
TO
AGREEMENT OF LEASE
--------------------
This First Amendment to Agreement of Lease (this "First Amendment") is
made as of this 8th day of July, 1998, by and between (i) 1112 Nineteenth Street
Associates, a District of Columbia joint venture ("Landlord"), and (ii) S & W
D.C., L.L.C., a Delaware limited liability company ("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain Agreement of Lease
dated July 8, 1998 (the "Lease") pertaining to the Premises (as defined in the
Lease) at 1112 19th Street, N.W., Washington, D.C.
B. The parties wish to set forth herein their understanding with respect
to leasehold financing.
AGREEMENT
NOW, THEREFORE in consideration of One ($1.00) Dollar and other good and
valuable consideration, the parties agree as follows:
1. SCOPE OF AMENDMENT. The parties hereby amend the Lease, but only
as herein expressly set forth. Except as herein expressly amended, the Lease
shall remain in full force and effect in accordance with its terms.
2. MORTGAGABILITY PROVISIONS. The Lease shall be amended by adding
thereto a new paragraph 68 entitled "Mortgage of Leasehold", which shall read as
follows:
"68(a) Notwithstanding the provisions of Section 25 of this
Lease, Tenant shall have the right to encumber this Lease by a
mortgage, deed of trust, or similar security instrument,
subject to this paragraph and the other provisions of this
Lease. All such instruments are hereinafter referred to as
"Leasehold Mortgages" and the holder of any such Leasehold
Mortgage shall be referred to as "Lender".
(b) Upon written notice to Landlord that Tenant has entered
into a Leasehold Mortgage, Landlord agrees to the following:
(i) Landlord shall not accept any surrender of this
Lease, nor any material modification of this Lease,
without Lender's consent, which consent of Lender, if it
is to obtain the benefit of this paragraph, shall not be
unreasonably withheld, conditioned or delayed.
<PAGE>
(ii) Landlord shall permit Lender to make any payments
or do any other act required of Tenant to prevent the
termination of this Lease. Any such acts by Lender shall
be effective to the same extent as if the same would
have been performed by Tenant.
(c) Should any event of default by Tenant under this
Lease occur, Lender shall have sixty (60) days from
receipt by Tenant of notice of default in which to
remedy such default, so long as Lender shall (i)
additionally cure any default or monetary obligations of
Tenant within such sixty (60)-day period, (ii) continue
to pay and perform the current obligations of Tenant
under this Lease, and (iii) commence foreclosure
proceedings within such sixty (60)-day period and
diligently prosecute the same to conclusion.
(d) Any event of non-monetary default which Lender
cannot practicably remedy shall be deemed remedied if,
within sixty (60) days of receipt by Tenant of a notice
of default, Lender shall (i) commence foreclosure
proceedings, (ii) diligently prosecute such proceedings
to conclusion, (iii) fully cure any monetary defaults,
(iv) pay all current monetary obligations, and (v)
immediately, upon gaining possession of the Premises,
perform all acts necessary to cure such non-monetary
defaults.
(e) Foreclosure of the Leasehold Mortgage or any sale
thereunder shall not require the consent of Landlord and
such foreclosure proceeding shall not constitute a
breach of any provision under the Lease, it being
understood and agreed by the parties that the foregoing
shall not be construed to be a waiver of any rights of
Lender under this Lease.
(f) Should Landlord terminate this Lease by reason of
any default of Tenant, Landlord shall, upon written
request by Lender received within twenty-one (21) days
after such termination, execute and deliver to Lender a
new lease of the Premises for the remainder of the Term
of the Lease under the same terms and conditions as are
contained in this Lease, except that, as a condition
precedent to the effectiveness of any such new lease,
Lender shall cure any and all defaults under this Lease
(determined as if this Lease had not been terminated)
and shall pay any and all of Landlord's reasonable legal
fees incurred in connection with Tenant's default under
this Lease and, if applicable, the new lease requested
by Lender.
-2-
<PAGE>
(g) Tenant and, if Lender succeeds to Tenant's interest
under this Lease or if Lender exercises any rights under
this Paragraph 68, Lender shall promptly reimburse
Landlord for any reasonable legal fees that Landlord
incurs as a result of the existence, operation or
enforcement of any Leasehold Mortgage.
IN WITNESS WHEREOF, the parties, pursuant to due authority, have executed
this First Amendment to Agreement of Lease under seal as of the day and year
first hereinabove written.
LANDLORD:
--------
1112 Nineteenth Street Associates,
WITNESS: a District of Columbia Joint Venture
/s/ [ILLEGIBLE] By: /s/ Thaddeus A. Lindner
- ------------------------------- -------------------------------------
Thaddeus A. Lindner, Partner
WITNESS:
/s/ [ILLEGIBLE] By: /s/ Sergius Gambal
- ------------------------------- -------------------------------------
Sergius Gambal, Partner
TENANT:
------
S & W D.C., L.L.C.
ATTEST: a Delaware limited liability company
By: New York Restaurant Group, Inc.,
Manager
/s/ [ILLEGIBLE] By: /s/ James Dunn
- ------------------------------- -------------------------------------
Secretary Name: James Dunn
-------------------------------
Title: President
------------------------------
[Corporate Seal]
Guarantor has reviewed this
First Amendment to Agreement of
Lease and hereby consents to the
same.
The New York Restaurant Group, Inc.,
a Delaware corporation
By: /s/ James Dunn
--------------------------------
James Dunn, President
-3-
<PAGE>
------------------------------------------
SECOND AMENDMENT
TO
AGREEMENT OF LEASE
(1112 19th Street, N.W., Washington, D.C.)
------------------------------------------
SMITH & WOLLENSKY
April 29, 1999
<PAGE>
--------------------
SECOND AMENDMENT
TO
AGREEMENT OF LEASE
--------------------
This Second Amendment to Agreement of Lease (this "Second Amendment") is
made as of this 29th day of April, 1999, by and between (i) 1112 Nineteenth
Street Associates, a District of Columbia joint venture ("Landlord"), and (ii) S
& W D.C., L.L.C., a Delaware limited liability company ("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain Agreement of Lease
dated July 8, 1998, as amended by that certain First Amendment to Agreement of
Lease dated July 8, 1998 (together referred to as the "Lease") pertaining to the
Premises (as defined in the Lease) at 1112 19th Street, N.W., Washington, D.C.
B. The parties wish to set forth herein their understandings with respect
to certain matters relating to development of a sidewalk cafe at the Premises.
AGREEMENT
NOW, THEREFORE, in consideration of One ($1.00) Dollar and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. SCOPE OF AMENDMENT. The parties hereby amend the Lease, but
only as herein expressly set forth. Except as herein expressly amended, the
Lease shall remain in full force and effect in accordance with its terms.
Except as otherwise defined in this Second Amendment, all capitalized terms
shall have the meanings ascribed to them in the Lease.
2. SIDEWALK CAFE DEVELOPMENT DOCUMENTS. Tenant has
requested that Landlord execute and deliver that certain (i) Application For
Public Space Permit (the "Application") and (ii) Covenant For Use of Special
Material (the "Covenant"), and any associated documents that Landlord may
elect to execute (collectively, the "Development Documents"), copies of which
are attached as Exhibits A-1 and A-2 respectively, for the convenience and
substantial benefit of, and solely as an accommodation to, Tenant. Landlord
has agreed to do so provided Landlord's lender approves the same and this
Second Amendment, and Tenant executes and delivers this Second Amendment.
3. TENANT'S OBLIGATIONS. Tenant expressly covenants, acknowledges
and agrees that (i) it shall be responsible for and shall perform any and all
obligations of "Applicant" under the Application and "Owner" under the Covenant,
and (ii) Landlord shall have no liability for payment or responsibility for
performance under the Development Documents.
<PAGE>
4. DEFAULT. Tenant expressly acknowledges and agrees that (i)
Tenant's default under the Application and/or the Covenant shall constitute an
immediate Event of Default under the Lease, entitling Landlord to exercise all
rights and remedies available to Landlord at law or in equity or under the Lease
(as modified by this Second Amendment); and (ii) any and all amounts due from
Tenant under the Development Documents or any of them shall constitute
Additional Rent under the Lease.
5. INSURANCE. Concurrent with Tenant's execution and delivery of
this Second Amendment, Tenant shall provide Landlord and its lender with
insurance, which satisfies all of the insurance requirements of the Lease,
protecting Landlord, its lender, and Tenant from any liability occurring in or
on the contemplated sidewalk cafe and the public space affected by the
Development Documents.
6. INDEMNITY. In addition to all obligations of Tenant and all
rights and remedies available to Landlord under the Lease, and to induce
Landlord to execute and deliver the Development Documents, Tenant expressly
acknowledges, covenants and agrees it will defend all actions against Landlord
(including any partners, employees or agents) and that it will indemnify and
save Landlord harmless from and against any and all liabilities, losses,
damages, causes of action, suits, claims, demands, judgments, costs and expenses
of any kind or nature (including court costs and reasonable attorneys' fees)
relating to or arising from or in connection with the Development Documents or
any of them, including, without limitation, any of the foregoing arising from or
in connection with: (i) the possession, use, occupancy, management, repair,
maintenance or control of the Premises or any portion thereof or the public
space affected by the Development Documents or any of them; (ii) any act or
omission of Tenant or Tenant's agents, sublessees, contractors, employees, or
invitees under the Development Documents or any of them; (iii) any violation or
injury to person or property or loss of life sustained in or about the Premises
or the public space affected by the Development Documents or any of them; (iv)
any violation, breach of, or default under the Development Documents or any of
them or this Lease by Tenant; and (v) any other matter arising from Tenant's
occupancy or use of the Premises or the public space affected by the Development
Documents or any of them or any act or omission of Tenant, its agents,
sublessees, contractors, employees or invitees in connection therewith.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties, pursuant to due authority, have executed
this Second Amendment to Agreement of Lease under seal as of the day and year
first hereinabove written.
LANDLORD:
1112 Nineteenth Street Associates,
WITNESS: a District of Columbia Joint Venture
/s/ [ILLEGIBLE] By: /s/ Thaddeus A. Lindner
- ------------------------------- -------------------------------------
Thaddeus A. Lindner, Partner
WITNESS:
/s/ [ILLEGIBLE] By: /s/ Sergius Gambal
- ------------------------------- -------------------------------------
Sergius Gambal, Partner
TENANT:
S & W D.C., L.L.C.
ATTEST: a Delaware limited liability company
By: New York Restaurant Group, Inc.,
Manager
/s/ [ILLEGIBLE] By: /s/ James Dunn
- ------------------------------- -------------------------------------
Secretary James Dunn, President
[Corporate Seal]
Guarantor has reviewed this Second
Amendment to Agreement of Lease and
hereby consents to the same and
acknowledges that the Guaranty dated
July 8, 1998 guarantees all of Tenant's
payment and performance obligations
under the Lease as modified by this
Second Amendment to Agreement of Lease.
The New York Restaurant Group, Inc.,
a Delaware corporation
By: /s/ James Dunn
--------------------------------
James Dunn, President
-3-
<PAGE>
-------------------------------------
EXHIBIT A-1
TO
SECOND AMENDMENT
TO
AGREEMENT OF LEASE
(APPLICATION)
-------------------------------------
<PAGE>
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUILDING AND LAND REGULATION ADMINISTRATION;
PERMIT PROCESSING DIVISION (727-7039)
[GRAPHIC] GOVERNMENT
OF THE
DISTRICT OF COLUMBIA
APPLICATION FOR PUBLIC SPACE PERMITS
(PRINT IN INK OR TYPE: DO NOT WRITE IN SHADED AREAS)
<TABLE>
<CAPTION>
=================================================================================================================
(A) ALL APPLICANTS MUST COMPLETE ITEMS 1 THRU 18 1. Date of Application
================================================================================---------------------------------
<S> <C> <C> <C> <C>
2. Address of Premise for which Public Space 3. Lot: 4. Square: 5. Type of 6. Previous Permit Number
Work is Proposed Application: If Renewal:
|X| New
1112 - 19th Street, N.W. 877 117 |_| Renewal
- -----------------------------------------------------------------------------------------------------------------
7. Owner of Premise: 8. Owner's Address: 9. Phone
1112 - 19th Street 1050 Thomas Jefferson St. N.W.
Associates Joint Venture Suite 100, Washington, DC 20007
- -----------------------------------------------------------------------------------------------------------------
10. Authorized Agent (If applicable): 11. Firm's Name: 12. Address: 13. Phone
- -----------------------------------------------------------------------------------------------------------------
14. Check all proposed work; indicate the specific street of work and the names of boundary streets, and specify
the length and width of the work area.
=================================================================================================================
Located on the following Between And Length of Width of
Check Proposed Work Street (or Alley) (Street Name) (Street Name) Work (ft) Work (ft)
=================================================================================================================
A. Temporary Use for:
1. Crane
- -----------------------------------------------------------------------------------------------------------------
2. Truck: |_| Dump |_| Concrete
|_| Construction Equipment
- -----------------------------------------------------------------------------------------------------------------
3. Dumpster
- -----------------------------------------------------------------------------------------------------------------
4. Hoists/Scaffolds
- -----------------------------------------------------------------------------------------------------------------
5. Use of Sidewalk for:
( )
- -----------------------------------------------------------------------------------------------------------------
6. Use of Roadway for:
( )
- -----------------------------------------------------------------------------------------------------------------
B. Excavation for:
( )
- -----------------------------------------------------------------------------------------------------------------
C. Sheeting and Shoring
- -----------------------------------------------------------------------------------------------------------------
D. Driveway Construction
- -----------------------------------------------------------------------------------------------------------------
E. Sidewalk Construction
- -----------------------------------------------------------------------------------------------------------------
F. Curb and Gutter Construction
- -----------------------------------------------------------------------------------------------------------------
G. Alley Construction
- -----------------------------------------------------------------------------------------------------------------
H. Grading |_| Street |_| Alley
- -----------------------------------------------------------------------------------------------------------------
|_| Trees
I. |_| Planter Boxes
|_| Hedges
- -----------------------------------------------------------------------------------------------------------------
J. |_| Fence |_| Wall
- -----------------------------------------------------------------------------------------------------------------
K. Other (Specify):
=================================================================================================================
15. Description of Proposed Work: 16. Start Date:
-------------------------
17. End Date:
- -----------------------------------------------------------------------------------------------------------------
16. APPLICANT'S SIGNATURE: I have read and I understand the conditions set forth on this application. I further
understand that penalties are provided for furnishing false information.
AGENT'S SIGNATURE: /s/ [ILLEGIBLE] Date: 5 May 1999
---------------------------------------------------------
OWNER'S SIGNATURE: Date:
---------------------------------------------------------
=================================================================================================================
</TABLE>
COMPLETE Page 4 If Trees, Rental of Public Space, Fuel Oil Tanks, & Parking Lot.
<PAGE>
Page 2
CONDITIONS OF ALL PUBLIC SPACE APPLICATIONS AND PERMITS
The applicant, or the applicants authorized agent, in affixing his or its
signature hereto and in accepting any permit issued on the basis of this
application, agrees that the applicant, and any person, firm or corporation
employed by the applicant, when working on or occupying public space as
authorized by the said permit, whether such work or occupancy is on, or above
the surface of such space, will comply with the following conditions:
(1) That the performance of such work or the occupancy of such space shall
be strictly in accordance with the conditions set forth herein and on both sides
of the permit authorizing such work or occupancy of public space.
(2) That the performance of such work or the occupancy of such space as
authorized by the said permit shall be in full compliance with all applicable
laws and regulations of the District of Columbia.
(3) That the applicant, at the risk and expense, guarantees that the
public space occupied by the applicant or required for the performance of the
work authorized by the said permit, at all times will be kept in a safe
condition, and where the work aforesaid results in any excavation in any street,
alley, sidewalk, or other public space, the applicant will insure that such
excavation is kept in a safe condition until such street, alley, sidewalk, or
other public space has been repaired or resurfaced by the District of Columbia.
The repair or resurfacing of the street, alley, sidewalk or other public space
made necessary by the excavation, will be performed by the District of Columbia
at the expense of the applicant.
(4) That the applicant guarantees that if, in the opinion of the Director
of the Department of Transportation or his representative, any work performed
in, or occupancy of, public space by him or on his behalf, in any manner becomes
dangerous to, or interferes unnecessarily with, pedestrian or vehicular traffic,
the applicant will take such action as, in the opinion of the said Director or
his representative is necessary to remove such dangerous condition or
unnecessary interference with traffic.
(5) That the applicant will save harmless, indemnify and keep indemnified
the District of Columbia, its officers and employees, from all claims, suits,
charges, counsel fees, and judgments to which the said District, its officers
and employees may be subject, on account of injury to persons or damage to
property, including property of the District of Columbia, due to negligence of
the applicant, or occasioned by work not authorized by said permit, or resulting
from failure to observe and comply with terms and conditions of this
application.
(6) That the applicant agrees that the backfilling of any excavation made
by him or on his behalf will be performed in the manner prescribed below and
should any settlement or sinking resulting from backfilling occur within two (2)
years after the District of Columbia, at the applicant's expense, has repaired
or resurfaced the surface of the public space in which excavation was made, the
applicant nevertheless will save harmless, indemnify and keep indemnified the
District of Columbia from any injury, loss, cost, or damage occasioned by a
physical change in such repaired or resurfaced public space.
Should repairs become necessary over said excavation during the
aforementioned period due to settlement, of said excavation occasioned by
improper excavation work or backfilling, the necessary re-excavation and repair
shall be done by the District of Columbia and the cost thereof shall be charged
to the applicant.
(7) That the applicant agrees that all portions of the street excavated
will be put in as good condition as before the excavation was made and that such
excavation will be backfilled within twenty-four (24) hours after approval by
the District, (if required) of the construction, connections or repairs
installed or made therein, such backfilling not to extend more than two inches
(2") above the adjoining pavement or surface and to be thoroughly compacted in
such manner as to avoid any sinking or settlement either of the backfill or of
any pavement laid thereon for a period of two (2) years after the area over such
excavation has been repaired or resurfaced by the District.
(8) That the applicant agrees that on each day any work is to be performed
under the authority of this permit, he will notify the Office of Coordinator of
Underground Construction, prior to the commencement of such work, of all
locations at which any of the said work is to be performed, and whether such
work is new work or work already in progress.
SPECIAL ATTENTION. -- In addition to the requirements of Standard
Specifications of the Department of Transportation regarding work on Saturdays,
Sundays, or legal holidays, the permittee is advised that no work shall be
performed under the permit on Saturdays, Sundays, or legal holidays except with
the consent of the Department of Transportation.
CONDITIONS OF EXCAVATION IN PUBLIC SPACE AND TREATMENT OF TREES IN PUBLIC SPACE
(1) No cut will be made in a roadway or alley unless material to complete
the job is on hand or immediately available, that work will be carried to
completion in the shortest possible time, and that there will be no interference
with traffic unless such interference is specifically Authorized by the Director
of the Department of Transportation or his representative.
(2) A clear, safe pedestrian passageway not less than 6 feet wide, in line
with any existing sidewalk will be provided at all times unless otherwise
authorized by the Director of the Department of Transportation or his
representative.
(3) The applicant will not cut or injure trees, or pile earth or other
material within 3 feet of trees unless such trees are properly protected in a
manner approved by the Director of the Department of Transportation or his
representative.
(4) No existing underground construction will be interfered with.
(5) All pipes and conduits except as otherwise specified in Section 408-2
of D.C. Plumbing Code, will be laid not less than 30 inches below any roadway,
not less than 24 inches below grade on other public space, except that street
light conduits may be laid not less than 18 inches below any approved grade,
unless otherwise authorized.
(6) Surface (lawns, grass, shrubs, sidewalks, etc.) will be restored upon
completion of work.
<PAGE>
Page 3
CONDITIONS OF TREATMENT OF TREES IN PUBLIC SPACE
(1) All material, equipment, surplus excavated material, debris, etc.,
will be removed from public space as soon as possible, consistent with working
hours and conditions, within three working days following the completion of the
work authorized by the permit.
(2) In the event the District of Columbia, as a consequence of any failure
of the applicant to maintain the public space in a safe condition, is required
to repair said public space, such repair by the District of Columbia shall be at
the applicant's expense and the applicant agrees to reimburse the District of
Columbia for all costs of such repair and shall not be relieved of
responsibility for maintaining said public space in safe condition, by reason of
any such repair.
CONDITION OF ERECTING OR REPAIRING RETAINING WALLS, FENCES, COPINGS, LEADS
AND STEPS, PLANT HEDGES, OR PAVED PARKING IN PUBLIC SPACE:
The fence, wall, copings, leads, steps, or hedges will not obstruct
entrance to any accessible parking area required by the Zoning Regulations of
the District of Columbia.
CONDITIONS OF GRADING STREETS OR ALLEYS:
(1) All trees, stumps and underbrush are to be removed from the sub-grade.
(2) The alley or street when graded will be left in a safe, smooth, and
well-drained condition so that no water will be impounded.
(3) Notify Grading Engineer of the Street Division at least ten (10) days
prior to starting this grading work. Notify the Chief Inspector of Street
Division twenty-four (24) hours in advance of starting the work. The permit will
be delivered on the job by the inspector.
CONDITIONS OF CONSTRUCTING SIDEWALK, CURB & GUTTER, ALLEY OR DRIVEWAY:
(1) The work will be done at the whole risk and cost of the property
owner, in accordance with Standard Specifications of the District of Columbia,
and under the supervision of the Department of Transportation, Street Division,
and will conform to line and grade furnished by the said Department, and the
owner will assume responsibility for all damages to persons or property
occurring as a consequence of the use of public space.
(2) The permit is to be delivered by a District representative, to the
applicant or his agent at the site of the work, and, until so delivered, no
operations thereunder, other than the necessary grading of the sidewalk may be
performed by the applicant or his agent. The applicant or his agent will notify
the engineer of Streets not less than twenty-four hours prior to the scheduled
commencement of the work authorized by the permit of the time when construction
operations are to commence, in order that the District representative may
deliver the said permit.
CONDITION OF CONSTRUCTING OR REPAIRING DRIVEWAY:
In the event the District of Columbia, as a consequence of any failure of
the applicant to maintain the public space comprising applicant's driveway in a
safe condition, is required to repair said public space, such repair by the
District of Columbia shall be at the applicant's expense and the applicant
agrees to reimburse the District of Columbia for all costs of such repair and
shall not be relieved of responsibility for maintaining said public space in
safe condition, by reasons of any such repair.
CONDITIONS OF RENTAL OF PUBLIC SPACE AND SIDEWALK CAFE:
(1) The applicant understands that the rental of public space is temporary
and that no right, title, or interest in such public space is conveyed by the
permit.
(2) The Director of Department of Transportation may, by written notice,
require the permittee to vacate all or part of the rented public space at any
time. Upon demand to vacate such public space, the permittee will promptly
remove any personal property on the rented space, or reimburse the District for
the cost of moving such property.
(3) The permittee shall have no recourse against the District of Columbia,
the United States, the officers or agents of District of Columbia, the officers
or agents of the United States for any loss or damage occasioned by the
permittee being required to vacate all or any part of the surface space which he
had been granted permission to use.
(4) All provisions of Article 43 of the D.C. Police Regulations will be
strictly adhered to.
(5) Plans, permits and letters of approval from the Public Space Committee
must be kept on the rented public premises at all times.
<PAGE>
Page 4
----------------------------------------
H.P.A. No.: O.G. No.: S.L. No.:
(DO NOT WRITE IN SHADED AREAS) ----------------------------------------
<TABLE>
<CAPTION>
=============================================================================================================
(B) TREES (COMPLETE ITEMS 19 THRU 22)
=============================================================================================================
<S> <C> <C> <C>
19. Type of Work: 20. Number of Trees: 21. Type of Trees: 22. Name of Trees:
|_| New Building |_| Removal |_| Curb
|_| Driveway |_| Planting |_| Parking
|_| Trimming
=============================================================================================================
(C) RENTAL OF PUBLIC SPACE. SIDEWALK CAFE, PARKING LOT, FUEL OIL TANK
(COMPLETE ITEMS 23 THRU 29)
=============================================================================================================
23. Insurance Company's Name: 24. Policy or Certificate Number: 25. Expiration Date
- -------------------------------------------------------------------------------------------------------------
26. Type of Sidewalk Cafe: 27. Length of Rental Period: 28. Hours of Weekday Use: 29. Hours of Weekend Use
|_| Enclosed From _____ to _____ From _____ to _____
|_| Unenclosed
=============================================================================================================
(D) APPROVALS (OFFICIAL USE ONLY)
=============================================================================================================
|_| PERMIT CONTROL DPW - PUBLIC SPACE WIDTHS/RESTRICTIONS
- -------------------------------------------------------------------------------------------------------------
1. Fine Arts by: __________________ Date: _________
2. Land Mark by: __________________ Date: _________ Street Name: _________________________________________
3. PADC by: _______________________ Date: _________ Street Width: ________________________________________
4. WMATA by: ______________________ Date: _________ Road Width: __________________________________________
Sidewalk Width: ______________________________________
5. Control by: ____________________ Date: _________ Parking: _____________________________________________
Restrictions: ________________________________________
- -------------------------------------------------------------------------------------------------------------
|_| DPW WATER/SEWER |_| ZONING |_| STREETSCAPE
- -------------------------------------------------------------------------------------------------------------
Approved by: Date: District: By: Date: Approved by: Date:
- -------------------------------------------------------------------------------------------------------------
PUBLIC SPACE APPROVAL STAMP
Restrictions of Permit: ------------------------------------------------
Deposit Number:
------------------------------------------------
=============================================================================================================
(E) FINAL APPROVAL FOR PERMIT ISSUANCE (OFFICIAL USE ONLY)
=============================================================================================================
Permit Type Approved by Approval Deposit Amount Permit Number Expiration
Date ($) Date
- -------------------------------------------------------------------------------------------------------------
Temporary Occupancy
- -------------------------------------------------------------------------------------------------------------
Excavation, Sweeping and Storing
- -------------------------------------------------------------------------------------------------------------
Construct Sidewalks,
Curbs, Gutter Alley
- -------------------------------------------------------------------------------------------------------------
Walls, Fences, Copings
Landscapes, Plant
Hedges, Paved Parking
- -------------------------------------------------------------------------------------------------------------
Trees
- -------------------------------------------------------------------------------------------------------------
Driveway Construction
- -------------------------------------------------------------------------------------------------------------
Sidewalk Gate
- -------------------------------------------------------------------------------------------------------------
Other
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-------------------------------------
EXHIBIT A-2
TO
SECOND AMENDMENT
TO
AGREEMENT OF LEASE
(COVENANT)
-------------------------------------
<PAGE>
GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
WASHINGTON, D.C.
COVENANT FOR USE OF SPECIAL MATERIAL ON
THE SIDEWALK AND/OR PARKING
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, 1112 Nineteenth Street Associates are the Owner(s) of the
following described property in Washington, D.C. located at the following street
address: 1112 19th Street N.W. Washington, D.C.; Lot 877, Square 117, hereafter
referred to as "said property"; and
WHEREAS, the Owner(s) of said property(ies) has applied to the District
for the issuance of a public space permit in accordance with the provisions of
24 DCMR Chapter 1, Section 100.1 ET SEQ, (1985) as amended; and
WHEREAS, the Owner(s) of said property(ies) has requested that the
District authorize the use of nonstandard paving materials for paving of the
public parking, sidewalks, and (other public space), hereinafter referred to as
"abutting public spaces," as described in Exhibit A attached hereto; and
WHEREAS, the Owner(s) of said property(ies) has submitted a proposal,
hereinafter referred to as "the paving proposal: attached hereto as Exhibit B,
for the use of nonstandard materials for paving said abutting public space; and
WHEREAS, the rules and regulations of the District of Columbia authorize
the Mayor, or his agent, designee, or representative to impose such conditions
on the issuance of said permit as the Mayor may require, 24 DCMR Chapter 1,
Section 100.1 ET SEQ, (1985), as amended; and
WHEREAS, the District has reviewed and accepted said proposal (as
amended); and
WHEREAS, the Owner(s) of said property(ies) desires to meet the conditions
and requests of the District by complying with all of the terms and conditions
of said permit.
NOW, THEREFORE, in consideration of the foregoing and in consideration of
the issuance of the permit for construction, the Owner(s), for themselves, their
heirs, successors and assignee does hereby declare that said property
shall be held transferred, sold and conveyed subject to the restrictions hereto
set forth to wit:
1. That no right, title, or interest of the public as thereby acquired,
waived or abridged.
2. That the Owner(s) shall pave the abutting public space in accordance with
the requirements set forth in the permit conditions and in accordance with
the paving proposal attached hereto as Exhibit B.
3. That the District has the legal right to authorize work and/or issue
permits for cuts to be made in the said paving and will do so without the
permission of, or notice to, the property owner.
4. That, without prior notice from the District of Columbia, the Owner(s)
shall maintain and repair the abutting public space until such time, and
upon such conditions as the District may require to extinguish said
covenant;
5. That the Owner(s) shall maintain and keep abutting public space to a clean
and safe condition at all times, without the need of prior notice by the
District.
6. That repair(s) of aforesaid public space undertaken by the Owner(s) shall
be made pursuant to a permit issued by the District of Columbia. Repairs
shall be made by and at the expense and risk of the Owner(s).
7. That whenever the Mayor finds that said paving is in such condition as to
be immediately dangerous to persons or property, upon notice so to do, the
Owner(s) will make the pavement safe and secure within 72 hours of the
date said notice is served. That in a case where the public safety
requires immediate action, the Mayor may use such materials, equipment,
workmen and assistants as may be necessary, to make the paving safe and
secure.
8. That the Owner(s) agrees to stockpile the original paving material at a
minimum of ten percent of the total paved area and to retain this
percentage of stockpiled materials on site for all future repairs.
DPW-90-300
(4/3/90)
<PAGE>
2
9. That if the District must authorize or perform excavations in said public
space for the purpose of maintaining, repairing, or installing utilities
in said abutting public space, or for any other public purpose, the
Owner(s) agrees to supply the District with such quantities of stockpiled
materials as are needed to complete repairs. The Owner(s) shall supply
said stockpiled materials within 72 hours of the District's request
therefore.
10. The Owner(s) hereby relieves the District of all duty to repair or
maintain said abutting public space until such time, and upon such
condition as the District agrees to extinguish these covenants.
11. That upon the failure of the Owner(s) to repair or maintain said abutting
public space in a safe condition, or the failure of the Owner(s) to supply
stockpiled materials for utility cut repairs, the District has the right
to cause temporary or permanent repairs using asphalt or standard paving
materials.
12. That the Owner(s) shall reimburse the District for any expense the
District occurs in making any repairs to abutting public spaces.
13. That the Owner(s) shall indemnify and save harmless the District and all
of its officers, agents, and servants against any and all claims or
liability from whatever sources whatsoever, arising from, [ILLEGIBLE] on
or, as a result of any act, occurrence, or default of the Owner(s) as
designing, constructing, paving, [ILLEGIBLE] or repairing said
abutting public space.
14. That the District shall have the right to extinguish this Covenant at any
time and repave said abutting public space using District standard
materials.
15. That the written consent of the District shall be required prior to the
extinguishment of any of the covenants described herein in a document
recordable at the office of the Recorder of Deeds for the District of
Columbia and recorded at no expense to the District. Such consent to
extinguishment shall be given at such time as the District shall issue a
permit enabling the Owners to replace the nonstandard paving materials
with District standard materials. The cost of repaving said abutting
public space with standard District paving materials shall be borne by the
Owner(s).
16. That the covenants contained herein shall be deemed real covenants and
shall run with the land and shall bind the Owner(s) and their heirs,
successors and assigns.
17. That the District shall have the right to specifically enforce this
Declaration.
[SIGNATURE PAGE TO FOLLOW]
<PAGE>
(SIGNATURE PAGE - JOINT VENTURE]
IN WITNESS WHEREOF, the undersigned joint venture, the owner of Lot(s)____
in Square(s) ___________, has caused these presents to be executed in its
name, and does hereby constitute and appoint ___________ as its true and lawful
attorney-in-fact for itself and in its name to appear before any officer
authorized by law to take and certify acknowledgements and then and there to
acknowledge and deliver these presents as its act and deed.
1112 19th Street Associates
---------------------------------------
Joint Venture
Witness:
/s/ L.A. Johnson By: Thaddeus A. Lindner, by [ILLEGIBLE]
- ------------------------------- --------------------------------------
Title
Corporate Seal (if applicable)
Witness:
/s/ L.A. Johnson By: Sergius Gambal, by [ILLEGIBLE]
- ------------------------------- --------------------------------------
Title
Corporate Seal (if applicable)
DISTRICT OF COLUMBIA,
as:
I, L. A. Johnson, a Notary Public, in and for the District of Columbia, do
hereby, certify that Russel C. Lindner as agent for Thaddeus A. Lindner and
Sergius Gambal being personally well-known to me as the authorized
representative(s) of 1112 19th Street Associates, a joint venture, a party to
the foregoing attached Covenant bearing the date of the _______ day of
_________________, 19 _____, and the owner of Lot(s) __________ in Square(s)
___________, appeared before me and acknowledged said Declaration to be the
joint venture's act and deed.
Given under my hand and seal this 5th day of May, 1999.
/s/ L. A. Johnson
---------------------------------------
Notary Public
My Commission Expires: 11/30/99
L. A. Johnson
Notary Public, District of Columbia
My Commission Expires November 30, 1999
<PAGE>
(SIGNATURE PAGE - DISTRICT OF COLUMBIA)
IN WITNESS WHEREOF, the Mayor of the District of Columbia, having first
considered and approved the foregoing Covenants, has directed the execution
thereof in the name of said District of Columbia, by the Secretary of the
District of Columbia, who has hereto set his hand and affixed the seal of the
District of Columbia hereto under authority of the Act of Congress entitled
"An Act to Relieve the Commissioners of the District of Columbia of Certain
Ministerial Duties" approved February 11, 1932.
DISTRICT OF COLUMBIA
(a municipal corporation)
WITNESS: By:
----------------------------------------
Secretary,
District of Columbia
(CORPORATE SEAL)
DISTRICT OF COLUMBIA, as:
I, ____________________________, a Notary Public in and for the
District of Columbia, do hereby certify that
_____________________________________, who is personally well-known to me as
the person named as Secretary of the District of Columbia in the foregoing
Covenant bearing date on the _______ day of _________________, 19 ____, and
hereunto annexed, personally appeared before me in said District and, as
Secretary aforesaid, and by virtue of the authority in him vested,
acknowledged the same to be the act and deed of the Mayor of the District of
Columbia.
Given under my hand and seal this _______ day of _______________, 19 ____.
---------------------------------------
Notary Public
My Commission Expires: ___________________________________
APPROVED:
- -------------------------------------
Deputy Corporation Counsel
<PAGE>
PUBLIC SPACE COVENANT
Table of Exhibits
1. Exhibit A - Metes and bounds description of the area to be paved.
2. Exhibit B - A written description of the materials to be used, total square
footage to be paved, and any details pertinent to the execution
of the pavement proposal.
<PAGE>
---------------------------------------------
AGREEMENT OF LEASE
(1112 19th Street, N.W., Washington, D.C.)
---------------------------------------------
SMITH & WOLLENSKY
July 8, 1998
<PAGE>
TABLE OF CONTENTS
TITLE PAGE
- ----- ----
1. Definitions .......................................................... 1
A. Definitions of Business Terms ................................. 1
B. Additional Definitions ........................................ 2
2. Premises ............................................................. 4
3. Term; Commencement Date; Permits, etc. ............................... 4
3.1 Commencement Date ............................................. 4
3.2 Renewal Option ................................................ 5
3.3 Declaration ................................................... 5
4. Rent; Monthly Base Rent; Allowance and Abatement ..................... 5
4.1 Monthly Base Rent ............................................. 5
4.2 Rent Credit ................................................... 5
5. Acceptance of the Premises ........................................... 6
6. Percentage Rent ...................................................... 6
6.1 Calculation ................................................... 6
6.2 Periodic Payment and Reporting ................................ 6
6.3 Records Maintenance ........................................... 7
6.4 Audit Rights .................................................. 7
6.5. Radius Restriction ............................................ 8
7. Real Estate Taxes .................................................... 8
8. Sale, Use or Other Taxes ............................................. 9
9. Personal Property Taxes .............................................. 9
10. Late Charge; Interest ................................................ 9
11. Use of Premises; Continuous Operation ................................ 10
11.1 Use ........................................................... 10
11.2 Continuous Operation .......................................... 10
12. Additional Matters ................................................... 11
13. Repairs by Tenant .................................................... 12
14. Repairs ............................................................. 12
15. Laws and Ordinances .................................................. 13
16. No Landlord's Work; Tenant's Work; Alterations ....................... 13
16.1 Landlord's Work and Tenant's Work ............................. 13
16.2 Alterations by Tenant ......................................... 13
17. Ownership of Alterations and Equipment and Other Property;
Removal of Tenant's Personal Property ................................ 14
<PAGE>
17.1 Landlord's Property ........................................... 14
17.2 Removal ....................................................... 14
18. Damage or Destruction ................................................ 15
18.1 General Provisions ............................................ 15
18.2 Restoration by Tenant ......................................... 15
18.3 Termination Rights ............................................ 16
19. Condemnation ......................................................... 16
20. Defaults; Landlord's Remedies ........................................ 16
20.1 Events of Default ............................................. 16
20.2 Landlord's Remedies ........................................... 17
20.3 Extent of Liabilities ......................................... 18
20.4 Tenant's Waiver ............................................... 19
20.5 Landlord's Lien ............................................... 19
20.6 Remedies Cumulative ........................................... 20
20.7 Landlord's Default ............................................ 20
21. Utilities ............................................................ 20
22. Tenant's Insurance ................................................... 21
22.1 Liability Insurance ........................................... 21
22.2 Tenant's Casualty and Property Insurance ...................... 21
22.3 Policy Requirements ........................................... 21
22.4 Additional Insurance .......................................... 22
22.5 Effect of Tenant's Activities on Insurance .................... 22
23. Tenant's Insurance ................................................... 22
24. Waiver of Subrogation ................................................ 22
25. Assignment and Subletting ............................................ 23
25.1 General Provisions ............................................ 23
26. Signs ................................................................ 26
27. Rules and Regulations ................................................ 26
28. Landlord Access ...................................................... 26
29. Subordination ........................................................ 26
30. Estoppel Certificates; Financial Statements .......................... 27
30.1 Estoppel Certificate .......................................... 27
30.2 Financial Statements .......................................... 27
31. Hold Over ............................................................ 28
32. Quiet Enjoyment ...................................................... 28
33. Prohibited Materials and Property .................................... 28
34. Landlord's Successors ................................................ 29
35. Attorneys' Fees ...................................................... 29
<PAGE>
36. Notices .............................................................. 29
37. Remedies Cumulative; No Waiver ....................................... 30
38. Final Agreement; Severability ........................................ 31
39. Time is of the Essence ............................................... 31
40. Indemnity ............................................................ 31
41. Exculpation .......................................................... 31
42. No Liability ......................................................... 32
43. No Partnership ....................................................... 32
44. Brokerage ............................................................ 32
45. Tenant's Authority ................................................... 32
47. Landlord's Courtesy Account .......................................... 33
48. Governing Law; Construction .......................................... 33
49. Benefit and Burden; No Recording ..................................... 33
50. No Further Representations or Warranties ............................. 33
50. Waiver of Jury Trial; Tenant's Agent; Consent to Jurisdiction ........ 34
50.1 Waiver of Jury Trial .......................................... 34
50.2 Consent to Jurisdiction ....................................... 34
LIST OF EXHIBITS
A. Legal Description of Land
B. Declaration Confirming Commencement Date
C. Rules and Regulations
D. Work Agreement
<PAGE>
GUARANTY
THIS GUARANTY is made and entered into as of the 8th day of July, 1998, by
The New York Restaurant Group, Inc., a Delaware corporation ("Guarantor"), to
and for the benefit of 1112 Nineteenth Street Associates, a D.C. joint venture,
and its successors and assigns ("Landlord").
BACKGROUND
A. Concurrently with the execution of this Guaranty, Landlord and S & W
D.C., L.L.C., a Delaware limited liability company ("Tenant") have entered into
that certain Agreement of Lease of even date herewith (the "Lease"), regarding
certain premises located in 1112 19th Street, N.W., Washington, D.C. (the
"Premises") and more fully described in the Lease.
B. Guarantor owns all of the interests in stock of Tenant and therefore
has a direct financial interest in Tenant.
C. The parties recognize that Landlord agreed to the Lease solely because
Guarantor agreed to guaranty the timely payment and performance of all of the
obligations of Tenant and its successors and assigns under the Lease, and that
such guaranty was and is a material inducement to the execution and delivery of
the Lease by Landlord.
D. Guarantor warrants and acknowledges that because of its financial
interest in Tenant and in the benefits and advantages which will result from the
Lease, it is and will be significantly benefited by the Lease.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and as an inducement for
the granting, execution and delivery of the Lease, the sum of Ten Dollars
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor hereby unconditionally and
irrevocably guarantees, promises and agrees as follows:
1. GUARANTY OF PAYMENT AND PERFORMANCE.
(a) Guarantor hereby guaranties to Landlord, absolutely,
unconditionally and irrevocably, (a) the full and prompt payment of all sums
which may at any time become due under the Lease, including, but not limited to,
Base Rent, Percentage Rent and Additional Rent, and all other sums and charges
(collectively referred to as "Tenant's Monetary Obligations") which the Tenant
is obligated to pay to or on behalf of Landlord or to pay to third parties under
the provisions of the Lease, and (b) the full and timely performance and
observance of all of the covenants, terms, conditions and agreements provided in
the Lease to be performed and observed
<PAGE>
by Tenant (collectively referred to as "Tenant's Non-Monetary Obligations").
Guarantor hereby covenants and agrees to and with Landlord that if at any time
Tenant shall fail to make payment when due of any of Tenant's Monetary
Obligations, or if at any time Tenant shall fail to perform and observe when and
as required any of the Tenant's Non-Monetary Obligations, Guarantor shall
forthwith pay the Tenant's Monetary Obligations to Landlord and any arrears
thereof, and shall forthwith faithfully and punctually perform and fulfill all
of the Tenant's Non-Monetary Obligations and, in addition thereto, shall
forthwith pay to Landlord all reasonable attorneys' fees and disbursements
incurred by Landlord or caused by any such default or the enforcement of this
Guaranty.
(b) Guarantor covenants that, within one hundred twenty (120) days
after the end of each calendar year, it shall furnish Landlord current,
certified financial statements satisfying the requirements of Paragraph 30.2 of
the Lease.
2. NATURE OF GUARANTY. This Guaranty is an absolute and unconditional
guaranty of payment (and not merely of collection) and of performance of Tenant,
its successors and assigns under or pursuant to the Lease. The liabilities of
Guarantor are primary, irrevocable and co-extensive with that of Tenant and also
joint and several with that of Tenant and one another, and this Guaranty shall
be enforceable against Guarantor without the necessity of any suit or proceeding
on Landlord's part of any kind or nature whatsoever against Tenant and without
the necessity of any notice of non-payment, non-performance or non-observance or
of any notice of acceptance of this Guaranty or of any other notice or demand to
which Guarantor might otherwise be entitled, all of which Guarantor hereby
expressly waives. Guarantor hereby expressly agrees that the validity of this
Guaranty and the obligations of Guarantor hereunder shall in no way be
terminated, affected, diminished or impaired by reason of (a) the assertion of,
or the failure to assert by Landlord, against Tenant any of the rights or
remedies reserved to Landlord pursuant to the terms, covenants and conditions of
the Lease, or (b) any non-liability of Tenant under the Lease, whether by
insolvency, discharge in bankruptcy, or any other defect or defense which may
now or hereafter exist in favor of Tenant.
3. CONTINUING GUARANTY. This Guaranty shall be a continuing guaranty, and
it is expressly agreed that the liability of Guarantor hereunder shall in no way
be affected, modified or diminished by reason of (a) any assignment, renewal,
modification, amendment, extension or waiver of the Lease or any of the terms,
covenants and conditions thereof, even if the effect of such assignment,
renewal, modification, amendment, extension or waiver shall be to increase the
obligations of Guarantor hereunder, or (b) any extension of time that may be
granted by Landlord to Tenant, or (c) any consent, release, indulgence or other
action, inaction or omission under or in respect of the Lease, or (d) any
dealings or transactions or matter or thing occurring between Landlord and
Tenant, or (e) any bankruptcy, insolvency, reorganization, liquidation,
arrangement, assignment for the benefit of creditors, receivership, trusteeship
or similar proceeding affecting Tenant, or (f) any obligation under the Lease
being or becoming unenforceable, whether or not notice of any of the events
described in this paragraph 3 is given to Guarantor.
4. BANKRUPTCY. Should Landlord be obligated by any bankruptcy or other law
to repay to Tenant or to Guarantor or to any trustee, receiver or other
representative of either of
-2-
<PAGE>
them, any amounts previously paid, this Guaranty shall be reinstated in the
amount of such repayments. Landlord shall not be required to litigate or
otherwise dispute any obligation to make such repayments if it in good faith
believes that any such obligation exists.
5. NO WAIVER. No delay on the part of Landlord in exercising any right,
power or privilege under this Guaranty or failure to exercise the same shall
operate as a waiver of or otherwise affect any such right, power or privilege,
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
6. MODIFICATION. No waiver or modification of any provision of this
Guaranty nor any termination of this Guaranty shall be effective unless in
writing and signed by Landlord; nor shall any such waiver be applicable except
in the specific instance for which it is given.
7. REMEDIES. All of Landlord's rights and remedies under the Lease and
under this Guaranty, now or hereafter existing at law or in equity or by statute
or otherwise, are intended to be distinct, separate and cumulative and no
exercise or partial exercise of any such right or remedy therein or herein
mentioned is intended to be in exclusion of or a waiver of any of the others.
8. NO SUBROGATION. No payment or performance by Guarantor pursuant to any
provision hereof or otherwise shall entitle Guarantor, by subrogation or
otherwise, to the rights of Landlord to any payment by Tenant or out of the
property of Tenant, except after payment of all sums and fulfillment of all
covenants, terms, conditions or agreements to be paid or performed by Tenant and
its successors or assigns under the Lease.
9. ESTOPPEL. Guarantor agrees that it will, at any time and from time to
time, within ten (10) days following written request by Landlord, execute,
acknowledge and deliver to Landlord a statement certifying that this Guaranty is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating such
modification). Guarantor agrees that such certificate may be relied on by anyone
holding or proposing to acquire any interest in the "Premises", the "Building"
or the "Land" (as those terms are defined in the Lease) from or through Landlord
or by the holder of any mortgage or prospective holder of any mortgage or of any
interest therein.
10. SPECIFIC PERFORMANCE. Guarantor covenants, warrants and agrees with
Landlord, and is hereby irrevocably estopped from denying, that the subject
matter of this Guaranty is unique, that any failure to perform the covenants,
agreements, conditions and obligations under this Guaranty shall cause
irreparable injury and damage to Landlord, and that, accordingly, in addition to
and without limiting, reducing, altering, or otherwise affecting any of the
rights of Landlord at law or in equity to seek damages or other relief, Landlord
shall have the right to obtain from any court of competent jurisdiction an order
or decree compelling specific performance by Guarantor of this Guaranty and of
all the obligations, undertakings, conditions, agreements, covenants and other
provision of this Guaranty.
-3-
<PAGE>
11. SEVERABILITY. If any provision of this Guaranty shall be declared to
be unenforceable in whole or in part by a court of competent jurisdiction, that
part of this Guaranty found to be unenforceable shall be deemed stricken and
severed and the remaining provisions and portions shall continue in full force
and effect.
12. SUCCESSORS AND ASSIGNS. Guarantor agrees that this Guaranty shall
inure to the benefit of and may be enforced by Landlord and its successors and
assigns, and shall be binding upon and enforceable against Guarantor and its
legal representatives, successors and assigns.
13. GOVERNING LAW. This Guaranty, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the internal laws of the District of
Columbia (and without regard to any conflicts-of-law principles). Should any
provision of this Guaranty require judicial interpretation, it is agreed that
the court interpreting or considering same shall not apply the presumption that
the provisions hereof shall be more strictly construed against a party by reason
of the rule or conclusion that a document should be construed more strictly
against the party who itself or through its agent prepared the same, it being
agreed that all parties hereto have participated in the preparation of this
Guaranty and that each party consulted legal counsel before the execution of
this Guaranty.
14. LANDLORD'S SIGNATURE NOT NECESSARY. This Guaranty may be enforced by
Landlord without the necessity of its signature appearing hereon.
15. NOTICES. Any notice provided, required or permitted to be given by
either party to the other under this Guaranty must be in writing, and may be
served (i) by depositing the same in the United States mail, addressed to the
party to be notified, postage prepaid, and registered or certified, with return
receipt requested; (ii) by hand-delivery with a receipt therefor; (iii) by
nationally recognized overnight delivery service, such as Federal Express,
Purolator or Emery; or (iv) by telecopy or facsimile service. For purposes of
notices, the addresses of the parties shall be as follows:
If to Landlord:
2145 K Street, N.W.
Washington, D.C. 20037
Attn: Mr. Thaddeus A. Lindner
Mr. Sergius Gambal
Facsimile: (202) 778-1656
with copies to:
Mr. Russell C. Lindner
The Forge Company
2145 K Street, N.W.
Washington, D.C. 20037
Facsimile: (202) 778-1656
-4-
<PAGE>
-and-
Jerry R. O'Conor, Esquire
Tucker, Flyer & Lewis, P.C.
1615 L Street, N.W., Suite 400
Washington, D.C. 20036-5612
Facsimile: (202) 429-3231
If to Guarantor:
The New York Restaurant Group, Inc.
1114 First Avenue, 6th Floor
New York, New York 10021
Attn: Mr. James Dunn, President
Facsimile: (212) 758-6027
with copies to:
Joseph E. Porcelli, Esquire
Maloney & Porcelli
225 Broadway, Suite 2812
New York, New York 10007-3065
Facsimile: (212) 227-8795
-and-
The New York Restaurant Group, Inc.
1114 First Avenue, 6th Floor
New York, New York 10021
Attn: Mr. Mark Levine
Facsimile: (212) 758-6027
Either party may, by written notice to the other, designate a new address to
which such notices shall be directed. All notices shall be effective upon
receipt or refusal to accept receipt. If any mortgagee shall notify Tenant that
it is the holder of a mortgage affecting the Premises or any part thereof, no
notice, request or demand thereafter sent by Tenant to Landlord shall be
effective until a copy of same shall be sent to such mortgagee in the manner
prescribed in this Section at such address as such mortgagee shall designate.
16. GUARANTOR'S AUTHORITY. Guarantor shall, concurrently with the signing
of this Guaranty, furnish to Landlord certified copies of the resolutions of its
board of directors authorizing Guarantor to enter into this Guaranty. Moreover,
each individual executing this Guaranty on behalf of Guarantor hereby represents
and warrants that (i) he or she is duly authorized to execute and deliver this
Guaranty, (ii) Guarantor is a duly organized corporation under the laws of the
State of Delaware, is qualified to do business in the District of Columbia, is
in good standing under the laws of the State of Delaware and the laws of the
District of
-5-
<PAGE>
Columbia, and has the power and authority to enter into this Lease, and (iii)
all corporate action requisite to authorize Guarantor to enter into this
Guaranty has been duly taken.
17. REMEDIES CUMULATIVE; NO WAIVER. All rights and remedies given herein
and/or by law or in equity to Landlord are separate, distinct and cumulative,
and none of them, whether exercised by Landlord or not, shall be deemed to be in
exclusion of any other. No failure of Landlord to exercise any power given
Landlord hereunder, and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof. Receipt by Landlord of any Base Rent,
Percentage Rent, or Additional Rent with knowledge of the breach of any
provisions hereof shall not constitute a waiver of such breach and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless made
in writing.
18.1 WAIVER OF JURY TRIAL, ETC. TO INDUCE LANDLORD TO ENTER INTO THE
GUARANTY, GUARANTOR WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY OR ALL ISSUES
ARISING IN ANY ACTION OR PROCEEDING BETWEEN GUARANTOR AND LANDLORD OR ITS
SUCCESSORS OR ASSIGNS, UNDER OR IN CONNECTION WITH THE LEASE, THIS GUARANTY OR
ANY OF ITS PROVISIONS OR ANY OTHER DOCUMENTS RELATING THERETO. IT IS AGREED AND
UNDERSTOOD THAT ANY ACTION, SUIT OR PROCEEDING PERTAINING TO THIS GUARANTY OR
THE LEASE SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY, AND THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS, SUITS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT
PARTIES TO THIS GUARANTY OR THE LEASE. GUARANTOR ACKNOWLEDGES THAT THE PARTIES
WISH TO STREAMLINE AND MINIMIZE THE COST OF THE DISPUTE RESOLUTION PROCESS BY
AGREEING TO WAIVE THE RIGHT TO A JURY TRIAL. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT
NEITHER LANDLORD NOR ANY PERSON ACTING ON BEHALF OF LANDLORD HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. GUARANTOR FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS
DISCUSSED THIS WAIVER WITH COUNSEL. GUARANTOR ACKNOWLEDGES AND AGREES THAT THIS
PROVISION IS A SPECIFIC AND MATERIAL ASPECT OF THE AGREEMENT BETWEEN THE PARTIES
AND THAT LANDLORD WOULD NOT ENTER INTO THE LEASE WITH THE TENANT IF THIS
GUARANTY WERE NOT EXECUTED AND DELIVERED.
18.2 CONSENT TO JURISDICTION. LANDLORD AND GUARANTOR EACH CONSENTS TO AND
SUBMITS TO IN PERSONAM JURISDICTION AND VENUE IN THE DISTRICT OF COLUMBIA, AND
IN THE FEDERAL DISTRICT COURTS WHICH ARE LOCATED IN THE DISTRICT OF COLUMBIA.
LANDLORD AND GUARANTOR EACH ASSERTS THAT IT HAS PURPOSEFULLY AVAILED ITSELF OF
THE BENEFITS OF THE LAWS OF THE DISTRICT OF COLUMBIA AND WAIVES ANY OBJECTION TO
IN
-6-
<PAGE>
Exhibit 10.9
PENNSYLVANIA PLAZA
601 PENNSYLVANIA AVENUE, N.W., NORTH BUILDING,
WASHINGTON, D.C.
LEASE AGREEMENT
BY AND BETWEEN
PENNSYLVANIA PLAZA ASSOCIATES
AND
M.O.C. OF MIAMI, L.L.C.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS ........................................................... 1
ARTICLE 2
PREMISES .............................................................. 2
ARTICLE 3
LEASE TERM ............................................................ 2
ARTICLE 4
BASE RENT ............................................................. 3
ARTICLE 5
REAL ESTATE TAXES ..................................................... 5
ARTICLE 6
USE OF PREMISES ....................................................... 7
ARTICLE 7
ASSIGNMENT AND SUBLETTING ............................................. 11
ARTICLE 8
MAINTENANCE AND REPAIRS ............................................... 14
ARTICLE 9
ALTERATIONS ........................................................... 16
ARTICLE 10
SIGNS ................................................................. 19
ARTICLE 11
[OMITTED] ............................................................. 19
ARTICLE 12
[OMITTED] ............................................................. 19
ARTICLE 13
ENTRY BY LANDLORD ..................................................... 20
ii
<PAGE>
ARTICLE 14
INSURANCE ............................................................. 20
ARTICLE 15
SERVICES AND UTILITIES ................................................ 22
ARTICLE 16
LIABILITY OF LANDLORD ................................................. 25
ARTICLE 17
RULES ................................................................. 27
ARTICLE 18
DAMAGE OR DESTRUCTION ................................................. 27
ARTICLE 19
CONDEMNATION .......................................................... 29
ARTICLE 20
DEFAULT ............................................................... 29
ARTICLE 21
BANKRUPTCY ............................................................ 34
ARTICLE 22
SUBORDINATION ......................................................... 36
ARTICLE 23
HOLDING OVER .......................................................... 38
ARTICLE 24
COVENANTS OF LANDLORD ................................................. 38
ARTICLE 25
[OMITTED] ............................................................. 39
ARTICLE 26
GENERAL PROVISIONS .................................................... 39
ARTICLE 27
OPTIONS TO EXTEND ..................................................... 45
iii
<PAGE>
EXHIBIT A - Premises
EXHIBIT B - Outdoor Seating Area
EXHIBIT C - Rules
EXHIBIT D - Certificate Affirming the Lease Commencement Date
EXHIBIT E - Signage Exhibit
EXHIBIT F - Guaranty
iv
<PAGE>
TABLE OF DEFINED TERMS
Term Section
- ---- -------
ADA ............................................................ 6.12
Adjustment Index ............................................... 4.2(a)
Affiliate ...................................................... 7.5
Alterations .................................................... 9.1
Bankruptcy Code ................................................ 21.1
Beginning Index ................................................ 4.2(a)
Building ....................................................... 1.1(a)
Condemned ...................................................... 19.1
Control ........................................................ 7.5
Default Rate ................................................... 20.6
Event of Bankruptcy ............................................ 21.1
Event of Default ............................................... 20.1
Force Majeure .................................................. 26.60
Guarantor ...................................................... 1.1(k)
Index .......................................................... 4.2(a)
Insolvency Laws ................................................ 21.1
Invitees ....................................................... 8.1
Land ........................................................... 2.1(b)
Landlord ....................................................... Introduction
Laws ........................................................... 6.1
Lease .......................................................... Introduction
Lease Commencement Date ........................................ 3.2
Lease Term ..................................................... 1.1(f)
Lease Year ..................................................... 3.3
Minimum Hours of Operation .... ................................ 1.1(b)
Mortgages ...................................................... 22.1
Notices ........................................................ 26.6
Permitted Person ............................................... 26.27
Premises ....................................................... 1.1(b)
Real Estate Taxes .............................................. 5.1(b)
Rent ........................................................... 26.18
Subject Space .................................................. 7.1(a)
Tenant ......................................................... Introduction
Tenant Address for Notice ...................................... 1.1(g)
Tenant's Proportionate Share ................................... 1.1(e)
Tenant's Trade Names ........................................... 1.1(h)
Transferee ..................................................... 7.1(a)
Transfer Notice ................................................ 7.1(a)
Transfers ...................................................... 7.1(a) and 7.5
Trustee ........................................................ 21.1(a)
v
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LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is dated as of April 7, 1999, by and
between PENNSYLVANIA PLAZA ASSOCIATES, a District of Columbia limited
partnership ("Landlord"), and M.O.C. OF MIAMI, L.L.C., a Delaware limited
liability company ("Tenant").
ARTICLE 1
DEFINITIONS
1.1 (a) Building: an office building located at 601 Pennsylvania Avenue,
N.W., North Building, Washington, D.C. 20004.
(b) Premises: The Premises is illustrated on Exhibit A attached
hereto.
(c) Base Rent: (i) Two Hundred Twenty Thousand Dollars ($220,000)
per Lease Year for the first (1st) through fifth (5th) Lease Years; and (ii) Two
Hundred Forty-Five Thousand Dollars ($245,000) per Lease Year for the sixth
(6th) through tenth (10th) Lease Years.
(d) [Omitted.]
(e) Tenant's Proportionate Share: 3.76%.
(f) Lease Term: one hundred twenty (120) months.
(g) Tenant Address for Notices: 601 Pennsylvania Avenue, N.W., North
Building, Washington, D.C. 20004, with a copy to 1114 First Avenue, New York,
New York 10021, Facsimile No.: (212) 758-6027.
(h) Tenant's Trade Names: Manhattan Ocean Club and/or any other
trade name used to identify first-class, high quality, "white tablecloth"
restaurants operated by The New York Restaurant Group, Inc. as of the Lease
Commencement Date or at any time in the future so long as the standards of
operation of such future restaurants are consistent with the operations of the
Manhattan Ocean Club as of the date first written above.
(i) [Omitted.]
(j) Minimum Hours of Operation: Monday through Friday, 11 a.m. -
2:30 p.m. and 5:30 p.m. - 10:00 p.m., and Saturday, 5:30 p.m. - 10:00 p.m.
(k) Guarantor: The New York Restaurant Group, Inc., a Delaware
corporation
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ARTICLE 2
PREMISES
2.1 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises, for the term and upon the terms, conditions and
covenants set forth herein. The Premises are outlined on Exhibit A, which is
attached hereto for locational purposes only. Tenant's rights to the Premises do
not include the right to use, or access to, the janitorial closet or the fan,
electrical, mechanical or telephone rooms on the floors of the Building. The
term "Land" as used in this Lease shall mean the land upon which the Building
stands and the land surrounding the Building which is designated from time to
time by Landlord as appurtenant to or servicing the Building.
ARTICLE 3
LEASE TERM
3.1 The terms and provisions of this Lease shall be effective as of the
date of this Lease except for the provisions of this Lease relating to the
payment of Base Rent and monthly additional rent pursuant to Article 5 below.
The term of this Lease shall be the Lease Term. The Lease Term shall commence on
the Lease Commencement Date (as defined in Section 3.2) and shall continue for
the period set forth in Section 1.1 (f), unless this Lease is sooner terminated
as hereinafter provided. If the Lease Commencement Date is not the first day of
a month, then the Lease Term shall be the period set forth in Section 1.1(f)
plus the partial month in which the Lease Commencement Date occurs. The Lease
Term shall also include any renewal or extension of the term of this Lease.
3.2 The "Lease Commencement Date" shall be the earlier of (a) September 1,
1999, or (b) the date upon which Tenant commences conduct of its business in the
Premises. As of the date of this Lease, it is anticipated that the Premises will
be delivered to Tenant on or about April 9, 1999; provided, however, if Landlord
does not deliver possession of the Premises to Tenant by such date, Landlord
shall not have any liability whatsoever to Tenant or otherwise, and this Lease
shall not be rendered void or voidable as a result thereof. Landlord will
deliver the Premises to Tenant on or promptly following its receipt of
possession of the Premises free of all rights of the current tenant thereof.
Promptly after the Lease Commencement Date has occurred, Landlord and Tenant
shall execute a certificate substantially in the form of Exhibit D hereto
confirming the Lease Commencement Date and the date upon which the Lease Term
expires.
3.3 As used in this Lease, the term "Lease Year" shall mean a period of
twelve (12) consecutive months, the first such Lease Year to commence on the
Lease Commencement Date, and each successive twelve (12) month period
thereafter; provided, however, if the Lease Commencement Date is not the first
day of a calendar month, then the second Lease Year shall commence on the first
day of the month following the month in which the first anniversary of the Lease
Commencement Date occurs.
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ARTICLE 4
BASE RENT
4.1 During the Lease Term, Tenant shall pay the Base Rent specified in
Section 1.1(c). The Base Rent shall be due and payable in equal monthly
installments, without notice, demand, setoff or deduction, in advance on the
first day of each month during each Lease Year. On or before the Lease
Commencement Date, Tenant shall pay to Landlord an amount equal to one (1)
monthly installment of the Base Rent payable during the first Lease Year, which
amount shall be credited toward the monthly installment of the Base Rent payable
for the first full calendar month of the Lease Term. If the Lease Commencement
Date is not the first day of a month, then the Base Rent from the Lease
Commencement Date until the first day of the following month shall be prorated
on a per diem basis, and Tenant shall pay such prorated installment of the Base
Rent on the Lease Commencement Date. If any rental payment date (including the
Lease Commencement Date) falls on a day other than the first day of a calendar
month or if any rental payment is for a period which is shorter than one (1)
calendar month, the rent for any fractional month shall accrue on a daily basis
at a rate which is equal to the daily rate of rent applicable to the subject
calendar month. All other payments or adjustments required to be made under the
terms of this Lease that require proration on a time-basis shall be prorated on
the same basis.
4.2 Commencing on the first (1st) day of the second (2nd) Lease Year and
on the first (1st) day of every Lease Year thereafter, the Base Rent specified
in Subsection 1.1(c) shall be adjusted to reflect increases in the cost of
living in the following manner:
(a) As used herein, the term "Index" shall mean the Revised Consumer
Price Index for Urban Wage Earners and Clerical Workers (revised CPI-W), All
Items, Baltimore, MD - Washington, D.C., VA, WV CMSA, November, 1996=100, issued
by the Bureau of Labor Statistics of the United States Department of Labor. As
used herein, the term "Adjustment Index" shall mean the Index which is published
for the bimonthly period that includes the month immediately preceding the Lease
Year for which an adjustment is to be made pursuant to this Section 4.2. As used
herein, the term "Beginning Index" shall mean the Index published for the
bimonthly period that includes the month immediately preceding the month in
which the first (1st) day of the first (1st) Lease Year occurs. On the first day
of the second (2nd) Lease Year and on the first day of each Lease Year
thereafter during the Lease Term, the Adjustment Index for the subject Lease
Year shall be compared with the Beginning Index. If the Adjustment Index for the
subject Lease Year has increased over the Beginning Index, then the percentage
increase of the Adjustment Index for the subject Lease Year over the Beginning
Index shall be determined, and shall be that percentage which is equal to the
product of 100 and a fraction, the numerator of which is the Adjustment Index
minus the Beginning Index, and the denominator of which is the Beginning Index.
(b) The Base Rent payable with respect to the subject Lease Year
shall be equal to the sum of (i) the applicable Base Rent for such Lease Year
(i.e., the Base Rent set forth in Subsection 1.1(c)(i) for the second (2nd)
through the fifth (5th) Lease Years and the Base Rent set forth in Subsection
1.1(c)(ii) for the sixth (6th) through the tenth (10th) Lease Years), plus (ii)
the
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product of (x) the applicable Base Rent for such Lease Year as set forth in
Section 1.1(c) above, multiplied by (y) the resulting percentage determined in
Subsection 4.2(a) above.
(c) Notwithstanding anything to the contrary set forth above or
elsewhere in this Lease, in no event shall the Base Rent payable during any
Lease Year be less than the Base Rent payable during the immediately preceding
Lease Year. Further, in no event shall the Base Rent (on a square foot basis)
payable with respect to any Lease Year exceed the product of (i) the Base Rent
(on a square foot basis) specified in Subsection 1.1(c)(i) with respect to the
second (2nd) through fifth (5th) Lease Years and specified in Subsection
1.1(c)(ii) with respect to the sixth (6th) through tenth (10th) Lease Years,
multiplied by (ii) 1.04 raised to a power, which power shall be equal to the
number of years (including fractions thereof) lapsed between the Lease
Commencement Date and the first day of the subject Lease Year.
(d) In the event the Index ceases to use November, 1996=100 as the
basis of calculation or if a change is made either in the method used by the
federal government to determine the Index or in the items used to calculate the
Index, then the Index shall be converted (the "Conversion") to a figure that
would have been calculated (or as close to such figure as shall be practical)
had the manner of calculating the Index in effect as of the date of this Lease
not been altered. The Conversion shall be effectuated pursuant to the conversion
index or factor published by the federal government and the revised Index shall
be deemed to replace the original Index. For purposes of this Subsection, it
shall be deemed a change in the method in which the Index is calculated if the
federal government adjusts the method in which the Index is determined in an
attempt to more accurately reflect changes in the cost-of-living. If the Index
is discontinued or unavailable during the Lease Term or a conversion index or
factor is not published by the federal government, then the Index shall be
replaced by Landlord in order to obtain substantially the same result as would
be obtained if the Index had not been so discontinued or unavailable.
(e) Promptly after the adjustment in the Base Rent is determined for
each Lease Year, Landlord shall submit to Tenant a statement setting forth the
amount of such adjustment and the computations by which it was determined. Since
the actual increase in the Base Rent may not be determined until after the start
of a new Lease Year, until the actual increase in the Base Rent is determined,
Tenant shall make estimated monthly payments of Base Rent in an amount equal to
the monthly installments of Base Rent payable for the prior Lease Year. Promptly
after receipt of a statement from Landlord setting forth the actual increase in
the monthly installments of Base Rent for the subject Lease Year, the difference
between the monthly payments paid by Tenant and the actual amount of Base Rent
determined to be owing for such months shall be determined. If the payments of
Base Rent made by Tenant to date for the subject Lease Year are less than the
actual amount determined to be owing, the deficiency shall be paid by Tenant
together with the next monthly installment of Base Rent due.
4.3 All sums payable by Tenant under this Lease shall be paid to Landlord,
without setoff or deduction, in legal tender of the United States by wire
transfer or by check drawn on a U.S. bank (subject to collection), at the
address to which notices to Landlord are to be given or to such other
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party or such other address as Landlord may designate in writing. Landlord shall
have the right to apply payments received from Tenant pursuant to this Lease,
regardless of Tenant's designation of such payments, to satisfy any obligations
of Tenant hereunder, in such order and amounts as Landlord may elect in its sole
discretion. Landlord's acceptance of rent after it shall have become due and
payable shall not excuse a delay upon any subsequent occasion or constitute a
waiver of any of Landlord's rights.
ARTICLE 5
REAL ESTATE TAXES
5.1 (a) In addition to paying Base Rent, Tenant shall pay to Landlord as
additional rent Tenant's Proportionate Share of Real Estate Taxes (as defined in
Section 5.1(b) below) for each calendar year falling entirely or partly within
the Lease Term.
(b) As used in this Lease, the term "Real Estate Taxes" shall mean
and include: (1) all federal, state and local governmental or municipal taxes,
fees, charges or other impositions of every kind and nature, whether general,
special, ordinary or extraordinary (including, without limitation, real estate
taxes, general and special assessments, transit taxes, leasehold taxes, or taxes
based upon the receipt of rent, including gross receipts or sales taxes
applicable to the receipt of rent unless required to be paid by Tenant, personal
property taxes imposed upon the furniture, machinery, equipment, apparatus,
systems, equipment, appurtenances and other personal property used in connection
with the Building and/or the Land, and so-called business improvement district
or "BID" taxes, assessments or charges), which are imposed upon or payable by
Landlord or assessed against the Building and/or the Land because of or in
connection with the ownership, management, maintenance or operation of the
Building and/or the Land, without regard to any fiscal year used by any
governmental authority which is different from a calendar year; (2) any and all
other present or future taxes or governmental charges that are imposed upon
Landlord or assessed against the Building and/or the Land which are in the
nature of or in substitution for any of the above-referenced items included in
the definition of Real Estate Taxes, including any tax levied on or measured by
the rents payable by tenants of the Building; and (3) all reasonable costs and
expenses incurred or paid in reviewing, protesting, seeking a reduction of, or
otherwise addressing a challenge of Real Estate Taxes. Real Estate Taxes shall
not include (i) any income, franchise, corporate, personal property, capital
levy, capital stock, gross receipts, excess profits, transfer, mortgage,
revenue, estate, inheritance, gift, devolution or succession tax payable by
Landlord, or (ii) any special assessments resulting, in whole or in part, from
capital improvements to any part of the Building other than the Premises. Under
no circumstances shall Tenant initiate or participate in any protest, appeal or
challenge related to the imposition of Real Estate Taxes. Further, under no
circumstances shall Tenant provide any information related to this Lease or the
terms and conditions hereof to any third party who initiates or participates in
any protest, appeal or challenge related to the imposition of Real Estate Taxes.
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5.2 (a) Tenant shall make estimated monthly payments to Landlord in an
amount equal to Tenant's Proportionate Share of the amount of Real Estate Taxes
that are reasonably expected by Landlord to be incurred during each calendar
year. From time to time, Landlord will submit a statement (each, an "Estimate
Statement") to Tenant setting forth Landlord's reasonable estimate of such Real
Estate Taxes and Tenant's Proportionate Share thereof made in good faith on the
basis of available information. Tenant shall pay to Landlord on the first day of
each month following receipt of such Estimate Statement, until Tenant's receipt
of the succeeding Estimate Statement, an amount equal to one-twelfth (1/12) of
such share (estimated on an annual basis without proration pursuant to Section
5.3). From time to time during any calendar year, Landlord may revise Landlord's
estimates of Real Estate Taxes and adjust Tenant's monthly payments made
pursuant to the foregoing to reflect Landlord's revised estimate.
(b) Following the end of each calendar year, Landlord shall deliver
to Tenant a statement (each, a "Year-End Statement") showing (i) the Real Estate
Taxes for the subject calendar year and Tenant's Proportionate Share thereof,
and (ii) the aggregate amount of payments made by Tenant on account of increases
in Real Estate Taxes for such year. If such Year-End Statement indicates that
the aggregate amount of payments made by Tenant on account of increases in Real
Estate Taxes for the subject calendar year exceed Tenant's actual liability for
the same, then Landlord shall, provided Tenant is not in default beyond the
expiration of any cure periods, pay to Tenant an amount equal to the net
overpayment. If such Year-End Statement indicates that the aggregate amount of
payments made by Tenant on account of the subject calendar year is less than
Tenant's actual liability for the same, then Tenant shall pay the amount of such
difference to Landlord within thirty (30) days of receipt of the applicable
Year-End Statement or, if the Lease Term has expired or been earlier terminated,
Tenant shall pay such difference to Landlord upon demand. If such Year-End
Statement indicates that the aggregate amount of payments made by Tenant on the
count of the subject calendar year is more than Tenant's actual liability for
the same, then Landlord shall credit the amount of such difference to the Base
Rent payment(s) next due. If Real Estate Taxes for any period during the Lease
Term (including any extension or renewal thereof) are increased after payment
thereof by Landlord for any reason, including, without limitation, error or
reassessment by applicable governmental authorities, Tenant shall pay to
Landlord upon demand Tenant's Proportionate Share of such increase.
(c) Within forty-five (45) days after Tenant's receipt of a Year-End
Statement, if Tenant disputes the amount of Tenant's obligations set forth
therein, an independent certified public accountant (which accountant is a
member of a nationally recognized accounting firm and which shall not be paid on
a contingency fee basis), designated by Tenant and approved by Landlord acting
in a reasonable manner, may, after reasonable notice to Landlord and at
reasonable times, inspect Landlord's records for Real Estate Taxes for the
subject calendar year. If Tenant still disputes any matter set forth in the
subject Year-End Statement after such inspection, a certification as to the
proper amount owing by Tenant with respect to Real Estate Taxes for the subject
calendar year shall be made at Tenant's expense by an independent certified
public accountant mutually acceptable to Landlord and Tenant (the "Final
Audit"), and the Final Audit shall be final and conclusive. If the Final Audit
shows that Landlord shall have overstated in the subject Year End Statement
Tenant's
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obligation for Real Estate Taxes for the calendar year in question, Landlord
shall credit such overpayment against the next monthly rental payment due
hereunder. If the Final Audit shows that Landlord shall have understated
Tenant's obligation, then Tenant shall pay the amount of any such deficiency to
Landlord with the next monthly rental payment due hereunder. If Tenant does not
have an independent certified public accountant review Landlord's records for
Real Estate Taxes for the subject calendar year within forty-five (45) days
after Tenant's receipt of the Year-End Statement for the same, such Year-End
Statement shall be binding and conclusive upon Tenant.
5.3 If the Lease Term commences or expires on a day other than the first
day or the last day of a calendar year, respectively, then Tenant's liability
for Tenant's Proportionate Share of Real Estate Taxes incurred during such
calendar year shall be apportioned by multiplying the amount of Tenant's
liability therefor for the full calendar year by a fraction, the numerator of
which is the number of days during such calendar year falling within the Lease
Term, and the denominator of which is 365.
ARTICLE 6
USE OF PREMISES
6.1 Tenant shall use the Premises solely for the purpose of operating a
first-class, high quality, "white tablecloth" restaurant, and for no other use
or purpose whatsoever; provided, however, Tenant may sell promotional items
customarily sold in other restaurants operated by The New York Restaurant Group,
Inc. so long as such items are consistent with the character of a first-class,
high quality "white tablecloth" restaurant, and so long as such sales are wholly
incidental to Tenant's operation of its restaurant in the Premises, provided
that Tenant may not use more than two hundred (200) rentable square feet of open
space in the Premises for the sale of such items. In connection therewith,
Tenant shall (x) maintain a decor and physical layout that is consistent with
the first-class, high quality of the Building; (y) serve food of high quality
and attractive appearance; and (z) maintain a high standard of cleanliness and
hygiene throughout the Premises. Tenant shall operate its business in the
Premises under any of Tenant's Trade Names, and under no other name or
designation. Tenant shall, at its expense, procure all governmental licenses and
permits, including, but not limited to a liquor license, required for the
conduct of Tenant's business in the Premises and shall at all times comply with
the requirements of each such license or permit. Tenant shall not use, or suffer
or permit any person or entity to use, the Premises for any unlawful purpose or
in any manner that will constitute waste, nuisance or unreasonable annoyance to
Landlord or any other tenant of the Building. Tenant shall not, nor shall Tenant
permit any other person or entity to, generate, use, store, or dispose of any
materials posing a health or environmental hazard in or about the Premises.
Tenant shall not do anything or suffer anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance, rule,
regulation or requirement of any governmental or quasi-governmental entity
having or asserting jurisdiction which is now in force or which may hereafter be
enacted (collectively, "Laws"), including, without limitation, those concerning
the use, occupancy and condition of the Premises and all improvements,
machinery, equipment and furnishings therein. Landlord represents, to its
knowledge, that there are no Laws which would prohibit the use of the Premises
as a first-class "white tablecloth" restaurant. At its sole cost and expense,
Tenant
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shall promptly comply with all Laws. Tenant shall obtain the initial certificate
of occupancy for the Premises and shall deliver a copy thereof to Landlord
within ten (10) days after Tenant's receipt of the same. Any amended or
substitute certificate of occupancy necessitated by Tenant's use of the Premises
or any Alterations made by Tenant in the Premises shall be obtained by Tenant at
Tenant's sole expense. Tenant shall not at any time use or occupy or allow any
other person or entity to use or occupy the Premises or do or permit anything to
be done or kept in the Premises or perform any other action in any manner which:
(i) violates any agreement relating to the Building of which Tenant is aware or
any certificate of occupancy in force for the Premises or the Building; (ii)
causes or is likely to cause damage to the Premises or the Building or any
equipment, facilities or other systems located therein; (iii) results in
repeated demonstrations, bomb threats or other events which require evacuation
of the Building or otherwise unreasonably disrupt the use, occupancy or quiet
enjoyment of the Building by other tenants and occupants; or (iv) interferes
with the transmission or reception of microwave, television, radio or other
communications signals by antennae located on the roof of the Building or
elsewhere in the Building. Subject to the terms of Article 9 below, Landlord
shall not unreasonably withhold its consent to the same. In the event any such
contractor, servicemen, workmen, material or equipment materially disturbs labor
harmony with the work force or trades engaged in performing other work, labor or
services in or about the Building, Tenant shall discontinue use of the same
immediately upon its receipt of notice from Landlord.
6.2 Tenant shall open for business with the public as promptly as
reasonably possible following the Lease Commencement Date, and shall thereafter
be open every Monday through Saturday for at least the Minimum Hours of
Operation; provided, however, Tenant shall have the right to close the
restaurant during Federal and District of Columbia holidays and for vacation
periods for a maximum of fourteen (14) days each calendar year. Tenant shall
continuously conduct its business in the whole of the Premises in a dignified
and reputable manner in keeping with the highest standards of practice among
quality "white tablecloth" restaurants. Tenant shall not use any portion of the
Premises as a warehouse, nor for the storage of merchandise or supplies in
excess of inventory necessary to keep the restaurant operated at the Premises
continuously stocked in a manner consistent with Tenant's normal and customary
business operations.
6.3 Tenant shall not burn trash or store or permit accumulations of any
trash, garbage, rubbish or other refuse inside or outside of the Premises except
in compactors or other receptacles approved by Landlord. Tenant shall store in a
refrigerated compartment located in the Premises all trash, garbage, rubbish and
other refuse generated within the Premises. Tenant shall comply with all
reasonable rules and regulations established from time to time by Landlord and
delivered to Tenant with respect to the storage and disposal of waste generated
within the Premises. At least once a day no later than 7:00 a.m. (or more
frequently, and at such times directed by Landlord, if Landlord determines that
more frequent removal is required), Tenant shall cause, at its sole expense, all
of the aforementioned waste to be removed from the Premises via the corridors
and entryways designated by Landlord for such purpose. Tenant shall be
responsible for maintaining all of its trash receptacles, including the areas
surrounding such receptacles, and keeping the same reasonably neat, and clean,
vermin free and in good repair at all times. At least weekly, Tenant shall
power-wash the path of travel from the Premises to the trucks of Tenant's trash
removal company.
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6.4 Tenant shall not load or permit the loading or unloading of
merchandise, supplies or other property nor ship or receive outside the loading
dock entrance on 6th Street, N.W., nor permit the parking or standing outside of
said area of trucks, trailers or other vehicles or equipment engaged in such
loading or unloading in a manner to unreasonably interfere with the use of any
area of the Building, the common areas or any public alleys or streets.
6.5 Equipment belonging to Tenant which causes noise or vibration that may
be transmitted to the structure of the Building to such a degree as to be
objectionable to Landlord or reasonably objectionable to any tenant in the
Building shall be installed and maintained by Tenant, at Tenant's expense, on
vibration eliminators or other devices sufficient to reduce such noise and
vibration to a level reasonably satisfactory to Landlord. Tenant shall not use
or operate or permit the use or operation of any coin or token operated vending
machine or similar device for the sale of any goods, wares, merchandise, food,
beverages or services, including, but not limited to, pay lockers, pay toilets,
scales, gaming machines, amusement devices and machines for the sale of
beverages, foods, candy, cigarettes or other commodities, except for a pay
telephone.
6.6 Subject to the provisions of Article 10, Tenant shall not install any
exterior signs, lighting, shades or awnings or any interior or exterior
decorations, carpeting or other floor covering or painting or make any changes
to Tenant's store front or the interior or exterior appearance of the Premises
without Landlord's prior written consent, not to be unreasonably withheld or
delayed, it being understood and agreed that all such items covered by this
Section 6.6 shall always be consistent with first-class "white tablecloth"
restaurant operations and with the first-class nature of the Building.
6.7 Tenant shall keep the inside and outside of its storefront, walkways
adjacent to the Premises, the exterior canopy (including all supports thereof)
and glass in the doors and windows of the Premises clean and in good repair,
promptly replacing any glass that is cracked or broken. Tenant will not place or
maintain any articles of any kind against any glass in the doors and windows of
the Premises, in the vestibule or entry of the Premises, on the walkways
adjacent thereto or elsewhere on the exterior thereof.
6.8 The Premises, including Tenant's display windows and signs, shall be
kept in a first-class neat and clean condition, sanitary, in good order and free
of insects, rodents, vermin and other pests by Tenant, at Tenant's expense.
Tenant shall perform such repair and cleaning work as shall be necessary to
maintain the Premises in good order and in keeping with the general standards of
maintenance and good appearance of the Building. Tenant shall maintain service
contracts upon any mechanical, electrical and fire prevention systems installed
in or servicing the Premises, with contractors reasonably approved by Landlord,
and shall deliver to Landlord copies of any such service contracts. Tenant will
not cause or permit objectionable odors of any kind to emanate from the
Premises.
6.9 Tenant shall, at its expense, clean and maintain on a regular basis
the Building flue and the roof exhaust fan to which the exhaust system in the
Premises is connected, and shall comply
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with such reasonable rules adopted by Landlord with respect to cleaning the
same. Tenant also shall maintain the exhaust system in the Premises. All grease
traps and the hood fire suppression system in the Premises shall be maintained
and cleaned by Tenant, at Tenant's expense, on a regular basis sufficient to
keep the same operating efficiently and safely.
6.10 Tenant shall not permit the use of any portion of the Premises for
gaming, the sale of lottery tickets or similar items, for solicitations or
demonstrations, or for any similar activities; provided, however, Tenant shall
be permitted to use the Premises for wine tasting events, cooking demonstrations
and other similar restaurant promotions consistent with the character of a
first-class, high quality, "white tablecloth" restaurant.
6.11 Tenant shall pay when due any business, rent or other taxes or fees
that are now or hereafter levied, assessed or imposed upon Tenant's use or
occupancy of the Premises, the conduct of Tenant's business in the Premises or
Tenant's equipment, fixtures, furnishings, inventory or personal property. If
any such tax or fee is enacted or altered so that such tax or fee is levied
against Landlord or so that Landlord is responsible for collection or payment
thereof, then Tenant shall promptly pay to Landlord as additional rent the
amount of such tax or fee upon demand.
6.12 To the extent any non-compliance of the common areas of the Building
with Title III of the Americans With Disabilities Act ("ADA") is principally the
result of the use or occupancy of the Premises or any action or inaction of
Tenant or any Invitee, then Tenant shall be obligated, at Tenant's sole cost, to
promptly take all compliance measures necessary to satisfy the requirements of
ADA. Notwithstanding the foregoing, Landlord reserves the right, at its
election, to take the above-referenced compliance measures and, in the event
Landlord so elects, Tenant shall reimburse Landlord upon demand for all costs
incurred in connection therewith. Tenant at its sole cost and expense shall be
solely responsible for taking any and all measures which are required to comply
with the ADA concerning the Premises (including entry doors and related items)
and the business conducted therein. Any alterations made or constructed by
Tenant for the purpose of complying with the ADA or which otherwise require
compliance with the ADA shall be done in accordance with this Lease, provided
that Landlord's consent to such Alterations shall not constitute either
Landlord's assumption, in whole or in part, of Tenant's responsibility for
compliance with the ADA, or representation or confirmation by Landlord that such
alterations comply with the provisions of the ADA.
6.13 Tenant shall have the right to use the area immediately adjacent to
the entrance to the Premises designated on Exhibit B (the "Outdoor Seating
Area") under a license for food and beverage service, subject to the terms and
conditions of this Lease, and all applicable Laws. All provisions of this Lease
governing Tenant's obligations with respect to the Premises and Tenant's use and
occupancy thereof shall apply to the Outdoor Seating Area unless such provision
shall be specifically excluded or alternative provisions applicable to only the
Premises or the Outdoor Seating Area, shall be included. In no event shall the
square footage of the Outdoor Seating Area be included in the square footage of
the Premises for purposes of calculating Base Rent, Additional Rent or any other
sums due hereunder. All landscaping and furnishings, and any change,
replacements or additions
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thereto, located or used on or affixed to the Outdoor Seating Area shall be
subject to Landlord's prior written approval in each instance, which approval
shall not be unreasonably withheld so long as such improvements are not
inconsistent with a first-class "white tablecloth" restaurant operation or with
the first-class nature of the Building. It is understood and agreed that all
such landscaping and furnishings installed on the Outdoor Seating Area shall be
at the sole cost and expense of Tenant. It further is understood and agreed that
Tenant shall clean and maintain the Outdoor Seating Area on a daily basis. In
the event the Outdoor Seating Area is not cleaned and maintained in a manner
consistent with a first-class office building, Landlord shall have the right to
terminate immediately Tenant's license to use the Outdoor Seating Area in
addition to all other rights and remedies available to Landlord hereunder.
Landlord shall cooperate with Tenant, at no cost or expense to Landlord, in
connection with any filings or governmental approvals required for the use of
the Outdoor Seating Area and obtaining a liquor license for the Premises.
6.14 Exclusive Uses. Provided (i) Tenant is not in default (beyond the
expiration of any applicable notice and cure period) under this Lease, and (ii)
Tenant continues to use and operate the Premises as a "white tablecloth"
restaurant which either primarily serves fish or is known as a "chophouse" (or
both) (individually or collectively, an "Exclusive Use"), then Landlord agrees
that it will not, during the Lease Term, lease any other space in the Building
for an Exclusive Use. For purposes of this paragraph, Manhattan Ocean Club is a
restaurant that primarily serves fish and Maloney & Parcelli is a "chophouse."
ARTICLE 7
ASSIGNMENT AND SUBLETTING
7.1 (a) Except as otherwise provided in Sections 7.5 and 7.6 hereof,
Tenant shall not, without the prior consent of Landlord, assign, mortgage,
pledge, hypothecate, encumber or permit any lien to attach to, or otherwise
transfer this Lease or any interest of Tenant under this Lease, sublet the
Premises or any part thereof, or permit the use or occupancy of the Premises or
any part thereof by any person or entity other than Tenant and its employees
(all of the foregoing are hereinafter sometimes referred to collectively as
"Transfers" and any person or entity to whom any Transfer is made or sought to
be made is hereinafter sometimes referred to as a "Transferee"). No Transfer may
be effected by operation of Law without Landlord's prior consent to the same.
Notwithstanding anything to the contrary set forth in this Lease, Tenant may not
sublease any portion of the Premises comprising less than the entire Premises.
If Tenant shall desire to make any Transfer, Tenant shall notify Landlord in
writing, which notice (the "Transfer Notice") shall include: (i) the proposed
effective date of the Transfer, which shall not be less than forty-five (45)
days nor more than one hundred eighty (180) days after the date of delivery of
the Transfer Notice; (ii) a description of the portion of the Premises to be
transferred (the "Subject Space"); (iii) all of the terms of the proposed
Transfer and the consideration therefor; (iv) the name and address of the
proposed Transferee; (v) a copy of all existing and/or proposed documentation
pertaining to the proposed Transfer, including all existing operative documents
to be executed to evidence such Transfer and all agreements incidental or
related to such Transfer; (vi) current financial statements of the proposed
Transferee
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certified by an officer, partner or owner thereof; (vii) any other information
reasonably required by Landlord, which will enable Landlord to determine the
financial responsibility, character and reputation of the proposed Transferee,
nature of such Transferee's business, and proposed use of the Subject Space; and
(viii) such other information as Landlord may reasonably require. Landlord's
right to approve any proposed Transfer shall include the right to approve, which
approval shall not be unreasonably withheld or delayed, all documents
(including, but not limited to, the sublease or assignment instrument) and other
information required to be delivered to Landlord with respect to the same in
accordance with the foregoing. Any Transfer made without Landlord's prior
consent shall, at Landlord's option, be null, void and of no effect, and shall,
at Landlord's option, constitute an Event of Default.
(b) Subject to the provisions of this Article 7 set forth below,
Landlord shall not unreasonably withhold its consent to any proposed assignment
of Tenant's interest in this Lease or a sublease of any portion of the Premises.
Landlord and Tenant hereby agree that it shall be reasonable under this Lease
for Landlord to withhold consent to any proposed assignment of Tenant's interest
in this Lease or a proposed sublease of the Premises if one or more of the
following apply; provided, however, the following shall not limit other
reasonable grounds for withholding consent:
(i) The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Building;
(ii) The Transferee will use the Subject Space for purposes
other than as expressly permitted under this Lease, except that the Transferee
may use a different trade name that has been approved by Landlord;
(iii) The Transfer will result in more than the number
occupants within the Subject Space permitted under the certificate of occupancy
and/or all applicable Laws;
(iv) The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities involved under
the Lease with respect to an assignment and under the proposed sublease with
respect to a sublease as of the date consent is requested;
(v) The Transferee is a governmental or quasi-governmental
entity or agency or instrumentality thereof or any other persons or entity
enjoying sovereign or diplomatic immunity;
(vi) The proposed Transfer would cause Landlord to be in
violation of another lease or agreement to which Landlord is a party, or would
give an occupant of the Building a right to terminate its lease or to reduce the
amount of rent payable by it for its premises;
(vii) Subject to Section 27.1, the terms of the proposed
Transfer will allow the Transferee to exercise a right of renewal, right of
expansion, right of first offer, or other similar right held by Tenant; or
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(viii) Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (x) occupies space in or is a tenant of
the Building at the time of Landlord's receipt of Tenant's request for consent,
or at any time thereafter until Landlord's consent is granted or withheld, (y)
is negotiating with Landlord to lease space in the Building at such time, or (z)
has negotiated with Landlord during the twelve (12)-month period immediately
preceding Landlord's receipt of Tenant's request for consent.
If Landlord consents to any Transfer, Tenant may, within one hundred twenty
(120) days after receiving Landlord's consent but not later than the expiration
of said one hundred twenty (120) day period, enter into such Transfer upon the
same terms and conditions as are set forth in the Transfer Notice furnished by
Tenant to Landlord, provided that if there are any changes in the terms and
conditions for the subject Transfer from those specified in the Transfer Notice
or any other document or other information delivered to Landlord for the same,
Tenant shall again submit the Transfer to Landlord for its approval and all
other action under this Article 7. Notwithstanding the terms of this Article 7,
if consent to any Transfer is required by the holder of any Mortgage (as defined
in Section 22.1 below), no Transfer shall be permitted without the prior written
consent of such holder(s).
(c) Landlord's acceptance or collection of rent from any Transferee
shall not be construed as Landlord's consent to or acceptance of the subject
Transferee or Transfer, nor shall Landlord's consent to any Transfer, or
Landlord's acceptance or collection of rent from any Transferee be construed (i)
as a waiver or release of Tenant or any other party from liability for the
performance of any obligation to be performed under this Lease by Tenant, or
(ii) as relieving Tenant or any Transferee from the obligation of obtaining
Landlord's prior consent to any subsequent Transfer. Tenant hereby assigns to
Landlord any rent due from any Transferee as security for Tenant's performance
of its obligations pursuant to this Lease. Following the occurrence of an Event
of Default, Tenant authorizes each such Transferee to pay such rent directly to
Landlord if such Transferee receives notice from Landlord specifying that such
rent shall be paid directly to Landlord. Each sublease, license or other
agreement for occupancy of any portion of the Premises shall provide that, at
Landlord's election, the subtenant, licensee or other party thereto shall attorn
to Landlord or enter into a direct lease with Landlord on the same terms as
contained in the subject sublease, license or other agreement in the event this
Lease is terminated by reason of an Event of Default or any other reason. All
restrictions and obligations imposed pursuant to this Lease on Tenant shall be
deemed to extend to each Transferee, and Tenant shall cause such persons or
entities to comply with all such restrictions and obligations. Tenant shall pay
or reimburse to Landlord upon demand all costs and expenses (including
attorneys' fees) incurred by or on behalf of Landlord in connection with
Tenant's request for Landlord's consent to a Transfer.
7.2 [Intentionally Omitted.]
7.3 [Intentionally Omitted.]
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7.4 If Landlord consents to a Transfer, (i) the terms and conditions of
this Lease shall in no way be deemed to have been waived or modified, (ii) such
consent shall not be deemed consent to any further Transfer by either Tenant or
a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution,
an original executed copy of all documentation pertaining to the Transfer in
form satisfactory to Landlord, (iv) no Transfer relating to this Lease or
agreement entered into with respect thereto, whether with or without Landlord's
consent, shall relieve Tenant or any guarantor of the Lease from liability under
this Lease, and (v) such Transfer shall at all times be subject and subordinate
to the terms of this Lease.
7.5 For purposes of this Lease, the term "Transfer" shall also include (i)
the merger, consolidation or other reorganization of Tenant, (ii) a transfer of
fifty percent (50%) or more of the beneficial or controlling interest in Tenant,
whether such transfer occurs at one time, or in a series of transactions, and
whether of stock, partnership interests, membership interests or otherwise,
provided that the transfer of stock in a public offering of the capital stock of
Tenant shall not be deemed a Transfer, and (iii) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the
value of the assets of Tenant. Notwithstanding anything to the contrary
contained in this Article 7, an assignment of Tenant's interest in the Lease or
subletting of all or a portion of the Premises to an entity which is controlled
by, controls, or is under common control with, Tenant (each, an "Affiliate"),
shall not be deemed a Transfer, provided (A) Tenant notifies Landlord of any
such assignment or sublease and promptly supplies Landlord with all documents
and other information requested by Landlord regarding such assignment or
sublease, (B) such assignment or sublease is not a subterfuge by Tenant to avoid
its obligations under this Lease, and (C) Tenant is not in default under this
Lease upon the effective date of such assignment or sublease. "Control," as such
term is used above, shall mean the ownership, directly or indirectly, of at
least fifty-one percent (51%) of the voting interests of, or possession of the
right to vote, in the ordinary direction of its affairs, of at least fifty-one
percent (51%) of the voting interest in, a person or entity.
7.6 Notwithstanding anything to the contrary set forth above in this
Article, Tenant may convey to an institutional lender a security interest in all
assets of Tenant including Tenant's interest in this Lease, provided that such
institutional lender shall enter into a written agreement with Landlord, on
terms and conditions reasonably acceptable to Landlord, which agreement shall
set forth the rights and obligations of the lender with respect to this Lease
and Tenant's furniture, fixtures and equipment, and shall include the terms of
Section 20.8(b).
ARTICLE 8
MAINTENANCE AND REPAIRS
8.1 Tenant shall keep and maintain (i) the Premises, (ii) all
improvements, fixtures, systems and equipment located therein, (iii) all
improvements, fixtures, systems and equipment installed outside the Premises by
or on behalf of Tenant for the use or benefit of the Premises (including,
without limitation, all HVAC, electrical, life-safety, fire protection or other
systems or equipment installed by or on behalf of Tenant), (iv) all plate glass
located in the Premises, (v) the store front
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(including metal framing and glass) of the Premises, and (vi) all canopies and
sidewalks in front of or adjacent to the Premises, all in clean, safe and
sanitary condition, shall take good care thereof and make all repairs thereto,
and shall suffer no waste or injury thereto. Notwithstanding the foregoing,
Landlord reserves the right, following notice (which notice may be written or
oral) to Tenant, to maintain (a) all or any of the improvements, fixtures,
systems and equipment installed outside the Premises by or on behalf of Tenant
for the use or benefit of the Premises, following Tenant's failure to timely and
properly maintain the same, (b) all plate glass located in the Premises, (c) the
store front of the Premises, and/or (d) any or all sidewalks located in front of
or adjacent to the Premises. In the event Landlord so elects, Tenant shall
reimburse Landlord for all costs and expenses incurred by Landlord in connection
therewith, within ten (10) days after Tenant's receipt of Landlord's request for
the same. At the expiration or earlier termination of the Lease Term, Tenant
shall surrender the Premises in the same order and condition in which they were
on the Lease Commencement Date, or on the respective date of delivery of
possession with respect to any space in the Building subsequently leased by
Tenant, ordinary wear and tear excepted. Except as otherwise provided in Article
18, all injury, breakage and damage to the Premises and to any other part of the
Building (including the systems and equipment thereof) or the Land caused by any
neglect, act or omission of Tenant, of any other person or entity claiming by,
through or under Tenant, or of any invitee, agent, employee, subtenant,
licensee, assignee, contractor or invitee of any such other person or entity or
of Tenant (collectively, "Invitees") shall be repaired by and at Tenant's
expense, subject to Landlord's approval of all matters relative to the
performance of such repairs, except that Landlord shall have the right at
Landlord's option to make any such repair and to charge Tenant for all costs and
expenses incurred in connection therewith, plus a percentage of such costs to be
uniformly established for the Building for Landlord's overhead and general
conditions. Notwithstanding the foregoing, it is understood and agreed that
Tenant shall not be obligated to repair any injury, breakage or damage to the
Premises or any other part of the Building caused by the neglect, act or
omission of Landlord or any of Landlord's employees, agents or contractors.
8.2 Tenant also shall be responsible for maintaining any HVAC units,
refrigerators, freezers or other similar equipment (including all grease traps
located in or serving the Premises) in compliance with any legal requirements
now or hereafter regulating the use of the same, and Tenant shall furnish
Landlord upon request with proof that (i) such equipment is not defective, (ii)
such equipment has been properly installed, and (iii) Tenant is complying with
all legally-required inspections and maintenance procedures relative thereto. In
the event the repair, modification or removal of such equipment is at any time
required by Law, Landlord shall be permitted (but not obligated) to perform such
repair, modification or removal at Tenant's expense, if Tenant fails to do so
within a reasonable time after notice.
8.3 Landlord shall keep and maintain in good order and repair the
base-building structure and systems of the Building, including the roof,
exterior walls (but excluding the storefront of the Premises, all doors to the
Premises and all plate glass in the Premises), elevators, electrical, plumbing
and HVAC systems serving the common areas of the Building (but excluding any
supplemental HVAC or other systems or equipment installed by or on behalf of
Tenant), and the ground floor lobby
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and other common areas of the Building. Tenant shall maintain the kitchen
exhaust riser servicing the Premises.
ARTICLE 9
ALTERATIONS
9.1 Landlord is under no obligation to make any structural or other
alterations, decorations, additions, installations, improvements or other
changes (collectively "Alterations") in or to the Premises except as otherwise
expressly provided in this Lease. Tenant shall accept the Premises on the Lease
Commencement Date in its "as-is" condition, with the exception of all furniture,
fixtures and equipment located in the Premises as of the date of this Lease. All
furniture, fixtures and equipment in the Premises as of the date of this Lease
are owned by the tenant of the Premises existing as of the date of this Lease
and may be removed by, or under the direction of, such tenant prior to the Lease
Commencement Date.
9.2 (a) Tenant shall not make or permit any other person or entity to make
any Alterations in or to the Premises without Landlord's prior consent.
Landlord's consent shall not be unreasonably withheld with respect to any
proposed Alterations, provided that Landlord may, in its sole and absolute
discretion, withhold its consent to any Alterations that: (i) may affect the
structure of the Building; (ii) may affect the mechanical, electrical, plumbing,
HVAC, life-safety, fire protection or any other system in the Building; (iii)
may be visible from the exterior of the Premises or the Building if such
proposed Alterations would not be consistent with first-class "white tablecloth"
restaurant operations or with the first-class nature of the Building; (iv) may
violate any Law; (v) may materially increase the cost of operating the Building;
(vi) may materially reduce the value or utility of the Building; or (vii) may
materially affect any service required to be furnished by Landlord to Tenant or
any other tenant or occupant of the Building.
(b) Any Alteration made by or on behalf of Tenant shall be made: (i)
in a good, workmanlike, first-class and prompt manner; (ii) using only new
materials selected by Tenant and approved by Landlord, which approval shall not
be unreasonably withheld, (iii) by an experienced, reputable contractor selected
by Tenant and approved by Landlord, which approval shall not be unreasonably
withheld, provided that all Alterations which may affect any of those matters
identified in Subsections 9.2(a)(i) through (iii) shall, at Landlord's election,
be performed by Landlord's designated contractors or subcontractors, at Tenant's
expense; (iv) in accordance with plans and specifications approved by Landlord,
which approval shall not be unreasonably withheld; (v) in accordance with all
applicable Laws; (vi) in accordance with the requirements and standards of the
American Insurance Association and in accordance with the requirements of any
insurance company insuring the Building or portion thereof; (vii) after having
obtained any required consent of the holder of any Mortgage (as defined in
Section 22.1); (viii) after Tenant has obtained public liability, worker's
compensation, Builder's All-Risk, Completed Operations Coverage, and such other
insurance policies reasonably required by Landlord, all in forms, amounts and
issued by companies approved by Landlord consistent with the nature of the
Alterations to be undertaken, which policies shall cover
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every person who will perform work with respect to the Alterations, in such
detail as is reasonably satisfactory to Landlord; (ix) only after Tenant has
obtained and delivered to Landlord unconditional waivers (in form reasonably
satisfactory to Landlord) of mechanics' and materialmen's liens against the
Premises and the Building from all proposed contractors, subcontractors,
laborers and material suppliers for the subject Alterations; (x) after Tenant
has delivered to Landlord a detailed breakdown by trade, of the total amount of
costs to be incurred in connection with the design and construction of the
Alterations; (xi) in accordance with all reasonable rules made by Landlord with
respect to the use of elevators and loading docks, storage of materials,
coordination of work with contractors, subcontractors and workmen of Landlord
and other tenants of the Building, times for performance of work, and any other
matters in connection with the construction of the Alterations; and (xii) after
Tenant has delivered to Landlord a lien and completion bond for the Alterations
naming Landlord as a co-obligee, or some alterative form of security reasonably
satisfactory to Landlord in an amount sufficient to ensure the lien-free
completion of the Alterations.
(c) Tenant and its architect shall be responsible to verify, in the
field, the conditions of the Building, and Landlord shall have no responsibility
in connection therewith. Notwithstanding that any plans and specifications for
Alterations are reviewed by Landlord or any of its agents, and notwithstanding
any advice or assistance which may be rendered to Tenant or any of its agents by
Landlord or any of its agents, Landlord shall have no liability whatsoever in
connection therewith and shall not be responsible for any omissions or errors
contained in plans and specifications for Alterations. If Tenant fails to comply
with the terms of this Article in connection with the construction of
Alterations, Landlord may cause the cessation of construction of the same until
such time as Tenant complies with the terms of this Article. Further, in the
event the subject matter of non-compliance may affect any structural aspect of
the Building, the exterior appearance of the Premises or the Building, or the
mechanical, electrical, plumbing, HVAC or any other system of the Building,
Landlord may, at Tenant's expense, take such action as Landlord deems necessary
to address the subject matter without incurring any liability on Landlord's
part. Upon completion of any Alterations, Tenant shall, at its expense, deliver
to Landlord (1) two sets of mylar reproducible "as-built" drawings and a CAD
disk for such Alterations, (2) certifications executed by Tenant's architects,
engineers and contractors for such Alterations, which certifications shall
certify, to the best of their knowledge, that the "record-set" of as-built
drawings for such Alterations are true and correct, and (3) copies of all
permits, other governmental approvals, warranties, guaranties and operating
manuals relating to the Alterations. In the event Tenant orders any Alterations
or repair work directly from Landlord or from any contractor selected by
Landlord, the charges for such work shall be deemed additional rent, payable
upon demand, either periodically during the construction or upon the substantial
completion of such work, at Landlord's option. Whether or not Tenant orders any
work directly from Landlord, Tenant shall reimburse Landlord upon demand for all
actual and reasonable costs and expenses incurred by Landlord in connection with
Alterations proposed to be made by Tenant to compensate Landlord for services
relative to the coordination of the construction of the subject work with other
activities in the Building.
(d) If Landlord gives its consent to the making of any Alteration,
then such consent shall not be deemed to constitute Landlord's consent to
subject its interest in the Premises,
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the Building or the Land to any mechanic's or materialman's lien which may be
filed in connection therewith. Tenant has no right, authority or power to cause
or permit any lien or encumbrance of any kind whatsoever, whether created by act
of Tenant, operation of Law or otherwise, to attach to or be placed upon the
Premises, the Building and/or the Land, and any and all liens and encumbrances
created by Tenant shall attach to Tenant's interest only. Landlord shall have
the right at all times to post and keep posted on the Premises any notice which
it deems necessary for protection from such liens. Tenant covenants and agrees
not to suffer or permit any lien of mechanics or materialmen or others to be
placed against the Premises, the Building or the Land with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any such lien, Tenant covenants and agrees to cause the same to be
immediately released and removed of record at Tenant's expense. In the event
such lien is not released and removed within sixty (60) days after notice of
such lien is delivered by Landlord to Tenant, Landlord, at its sole option, may
take all action necessary to release and remove such lien (without any duty to
investigate the validity thereof) and all sums, costs and expenses (including
attorneys' fees), incurred or paid by Landlord in connection with such lien
shall be deemed additional rent under this Lease and shall be paid by Tenant to
Landlord upon demand, it being expressly agreed that such discharge by Landlord
shall not be deemed to waive or release Tenant's default in failing to discharge
such lien.
9.3 If any Alteration is made without Landlord's prior consent, then
following notice (which notice may be written or oral) and Tenant's failure to
promptly correct such Alteration, Landlord shall have the right at Tenant's
expense to remove and correct such Alteration and restore the Premises and the
Building to their condition immediately prior thereto or to require Tenant to do
the same. Tenant shall reimburse Landlord upon demand for all costs and expenses
incurred by Landlord in connection with the same. All Alterations made by either
party shall remain upon and be surrendered with the Premises as a part thereof
at the expiration or earlier termination of the Lease Term; provided, however,
that (i) if Tenant is not then in default under this Lease, then Tenant shall
have the right to remove, prior to the expiration or earlier termination of the
Lease Term, all movable furniture, furnishings and equipment installed in the
Premises solely at Tenant's expense, and (ii) Tenant shall, at its expense,
remove all Alterations which Landlord designates in writing for removal at the
time Landlord approves installation of such Alteration. Landlord shall have the
right to repair at Tenant's expense all damage and injury to the Premises or the
Building caused by such removal or to require Tenant to immediately do the same
and repair all damage to the Premises and the Building caused by such removal.
If any of the furniture, furnishing or equipment referenced above is not removed
by Tenant prior to the expiration or earlier termination of the Lease Term,
then, at Landlord's election, the same shall become Landlord's property and
shall be surrendered with the Premises.
9.4 Landlord shall have the right, in a reasonable manner, to prescribe
the weight and position of safes and other heavy equipment and fixtures, which,
if considered necessary by the Landlord, shall be installed in such manner as
Landlord directs in order to distribute their weight adequately. Any
reinforcement of the floors in the Premises required by Landlord to accommodate
the weight of equipment, fixtures or other property which Tenant desires to
install in the Premises
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shall be performed, at Tenant's expense, in accordance with the terms of this
Lease. Any and all damage to the Premises or the Building (including the
Building's systems and equipment) caused by moving the property of Tenant into
or out of the Building, or due to the same being in or upon the Building, shall
be repaired at the sole cost of Tenant (whether repaired by Landlord or Tenant
in accordance with the terms set forth below). Tenant shall reimburse Landlord
upon demand for all actual and reasonable costs and expenses incurred by
Landlord in connection with such repairs. Any such damage to the Premises shall
be repaired by Tenant and any such damage to any other portion of the Building
(including the Building's systems and equipment) shall be repaired by Landlord
or, at Landlord's election, by Tenant. No furniture, equipment or other bulky
matter of any description will be received into the Building or carried in the
elevators except as reasonably approved by Landlord, and all such furniture,
equipment and other bulky matter shall be delivered only through the designated
delivery entrance of the Building and the designated freight elevator. All
moving of furniture, equipment and other materials shall be under the
supervision of Landlord, who shall not, however, be responsible for any damage
to or charges for moving the same.
ARTICLE 10
SIGNS
10.1 No sign, advertisement or notice shall be painted, affixed or
otherwise displayed by Tenant on any part of the exterior or interior of the
Building except in conformance with the requirements of this Article 10;
provided, however, that Tenant may, at its sole expense, install signs in the
interior of the Premises so long as such signs are in keeping with the quality,
design and style of the Building and such signs are not visible from the
exterior of the Premises. Tenant shall not use, install or display any sign,
decoration, fitting or other item visible from the exterior of the Premises
without Landlord's prior approval, which approval may be granted or withheld in
Landlord's sole and absolute discretion. Notwithstanding the foregoing, (i)
Landlord hereby approves the exterior signage, canopy and awning described in
Exhibit E attached hereto; and (ii) Tenant shall have the right to make
modifications to such pre-approved signage, subject to Landlord's prior
reasonable approval, as long as such modifications are consistent with
first-class "white tablecloth" operations and the first-class nature of the
Building. Tenant shall obtain all necessary governmental approvals and permits
for its signage and shall comply with all Laws applicable to such signage. If
any sign or other item visible from the exterior of the Premises is displayed
without Landlord's approval, then Landlord shall have the right to remove such
item at Tenant's expense or to require Tenant to immediately do the same.
ARTICLE 11
[OMITTED]
ARTICLE 12
[OMITTED]
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ARTICLE 13
ENTRY BY LANDLORD
13.1 Landlord reserves the right, and Tenant shall permit Landlord and its
designees, to enter the Premises, at reasonable times following reasonable prior
notice delivered to Tenant (except in the event of an emergency, in which
circumstance Landlord or its designees may enter the Premises at any time
without prior notice), to: (i) inspect them; (ii) show the Premises to
prospective purchasers, mortgagees or ground or underlying lessors and tenants;
(iii) make such alterations, improvements, additions and/or repairs as Landlord
may deem necessary or as may be required to comply with applicable Laws; (iv)
perform services required of Landlord in connection with this Lease; (v) take
possession due to any breach of this Lease in the manner provided herein; and
(vi) perform any covenant or obligation of Tenant under this Lease which Tenant
fails to perform. Landlord may make any such entries without the abatement of
rent and may take such reasonable steps required to accomplish these stated
purposes. Except as otherwise provided in the last sentence of Section 16.1,
Tenant hereby waives any claims for damages or for any inconveniences to or
interferences with Tenant's business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises or any other losses occasioned thereby. For each
of the above purposes, Tenant shall insure that Landlord shall at all times have
keys with which to unlock all doors in the Premises. In an emergency, Landlord
shall have the right to use any means that Landlord may deem proper to open
doors in and to the Premises. Any entry into the Premises by Landlord in the
manner hereinabove described shall not be deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an actual or constructive
eviction of Tenant from any portion of the Premises.
ARTICLE 14
INSURANCE
14.1 Tenant shall not conduct or permit any activity or place any item in
or about the Premises or the Building which may conflict with, invalidate or
increase the premium for any insurance carried by Landlord in connection with
the Building. If any increase in the premium for such insurance is due to any
such activity or item, then (whether or not Landlord has consented to such
activity or item) Tenant shall pay as additional rent hereunder the amount of
such increase upon demand. The statement of any insurance company or insurance
rating organization (or other organization exercising similar functions in
connection with the prevention of fires or the correction of hazardous
conditions) that such an increase is due to any such activity or item shall be
conclusive evidence thereof.
14.2 Throughout the Lease Term, Landlord shall insure the Building (or
shall cause the Building to be insured) against loss due to fire and other
casualties covered by broad form property insurance policies, in such amounts as
Landlord may from time to time determine.
14.3 Throughout the Lease Term, Tenant shall obtain and maintain the
following coverages in the following amounts:
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(a) Commercial general liability insurance, including (i) liquor
liability coverage, (ii) contractual liability coverage insuring the obligations
assumed by Tenant under this Lease (including those set forth in Section 16.3
below), premises and operations coverage, (iii) broad form property damage
coverage (including vandalism and malicious mischief coverage), and (iv)
independent contractors coverage. Such insurance coverage must contain an
endorsement for personal injury, covering the insured and the Premises against
claims for bodily injury, death, personal injury and property damage. The limits
of liability for the above described insurance coverage shall not be less than:
Bodily Injury, Death and $5,000,000 each occurrence
Property Damage Liability $5,000,000 annual aggregate
Personal Injury Liability $5,000,000 each occurrence
$5,000,000 annual aggregate
(b) Physical damage insurance covering (i) all furniture, trade
fixtures, equipment, merchandise and all other items of personal property on the
Premises used or installed by, for, or at the expense of Tenant, and (ii) all
improvements, alterations and additions to the Premises. Such insurance shall be
written on an "all risks" of physical loss or damage basis, for the full
replacement cost value new without deduction for depreciation of the covered
items and in amounts that meet any co-insurance clauses of the policies of
insurance and shall include a vandalism and malicious mischief endorsement and
sprinkler leakage coverage.
(c) Loss of income and extra expense insurance in such amounts as
will reimburse Tenant for direct or indirect loss of earnings attributable to
all perils commonly insured against by prudent tenants or attributable to
prevention of access to the Premises or the Building as a result of such perils.
(d) Worker's compensation insurance covering all of Tenant's
employees in such form and amount as is required by Law.
(e) Employer's liability insurance for a limit of liability
insurance not less than Three Million Dollars ($3,000,000).
(f) Plate glass insurance covering all plate glass in the Premises;
provided, however, Tenant shall have the right to self-insure for plate glass
damage or breakage.
(g) Such other types of insurance coverage in such amounts as may
hereafter reasonably be required by Landlord.
14.4 The minimum limits of policies of insurance required of Tenant under
this Lease shall in no event limit the liability of Tenant under this Lease.
Each of the policies of insurance required to be obtained by Tenant under this
Lease (other than that identified in Subsection 14.3(d) above)
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shall: (i) name Landlord, each party holding an interest in Landlord, each
Mortgagee, and all other persons or entities designated by Landlord, as
additional insureds; (ii) be issued by an insurance company having a rating of
not less than A-X in Best's Insurance Guide or which is otherwise acceptable to
Landlord, and licensed to do business in Washington, D.C.; (iii) be primary
insurance as to all claims thereunder and provide that any insurance carried by
Landlord is excess and is non-contributing with the subject insurance coverage;
and (iv) contain a cross-liability endorsement or severability of interest
clause acceptable to Landlord. No such policy shall contain any deductible
provision of more than $10,000 except as approved by Landlord, which approval
shall not be unreasonably withheld. Each such policy shall initially be for a
term of one (1) year and shall contain an endorsement prohibiting cancellation,
modification or reduction of coverage without first giving Landlord and each
Mortgagee at least thirty (30) days' prior notice of such proposed action. All
premiums and charges for the insurance required to be obtained by Tenant under
this Lease shall be paid by Tenant. If Tenant fails to obtain or maintain such
insurance coverage in accordance with the term of this Lease or Tenant fails to
pay premiums for the same when due, Landlord, following written notice and
Tenant's failure to cure as provided pursuant to Section 20.1(b), may obtain
such insurance coverage or pay such premiums, and all costs incurred and amounts
paid by Landlord in connection therewith shall be reimbursed by Tenant to
Landlord on demand. Tenant shall deliver certificates of all such insurance
coverages and receipts evidencing payment therefor (and, upon request, copies of
all required insurance policies, including endorsements and declarations) to
Landlord on or before the Lease Commencement Date and at least annually
thereafter.
ARTICLE 15
SERVICES AND UTILITIES
15.1 Tenant shall be responsible for obtaining or performing, and paying
the costs and charges incurred as a result of, services and utilities supplied
or installed specifically and exclusively for the benefit of the Premises,
including, but not limited to, the following:
(1) maintenance of a separate electrical meter for the
Premises, which meter shall be installed at Tenant's expense, in order to permit
separate metering of Tenant's electricity service. The charges for electrical
service provided to the Premises measured by Tenant's separate electric meter
shall be paid by Tenant directly to the power company;
(2) maintenance of a separate water meter for the Premises,
which meter shall be installed at Tenant's expense, in order to permit the
separate metering of Tenant's water service. The charges for water service
provided to the Premises measured by Tenant's separate water meter shall be paid
by Tenant directly to the water company. In the event installation of a separate
water meter for the Premises is not possible, then Tenant shall be responsible
for maintenance of a separate water submeter for the Premises, which submeter
shall be installed at Tenant's expense, and Tenant shall make payment to
Landlord for its water usage, as additional rent, within fifteen (15) days of
its receipt of a bill therefor from Landlord;
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(3) maintenance of a separate gas meter for the Premises,
which meter shall be installed at Tenant's expense, in order to permit separate
metering of Tenant's gas service. The charges for gas service provided to the
Premises measured by Tenant's separate gas meter shall be paid by Tenant
directly to the gas company. In the event installation of a separate gas meter
for the Premises is not possible, then Tenant shall be, responsible for
maintenance of a separate gas submeter for the Premises, which submeter shall be
installed at Tenant's expense, and Tenant shall make payment to Landlord for its
gas usage, as additional rent, within fifteen (15) days of its receipt of a bill
therefor from Landlord;
(4) During the Lease Term, Landlord shall furnish condenser
water to the existing supplementary air conditioning, heating and ventilation
system installed in the Premises as of the date of this Lease (the
"Supplementary System"), sufficient for operation of the Supplementary System.
Subject to the terms of this Lease, Landlord shall make such condenser water
available at all times. Tenant shall pay to Landlord, as additional rent, an
hourly charge (the "Condenser Water Charge") for furnishing condenser water to
the Supplementary System. Landlord shall read the elapsed time meter for the
Supplementary System (which meter shall measure only the time of operation of
the compressor(s) of the Supplementary System) from time to time and bill Tenant
an amount equal to the product obtained by multiplying (i) the then-applicable
Condenser Water Charge, by (ii) the number of hours of operation of the
compressor(s) of the Supplementary System since the prior reading of such meter.
Such billing shall be paid by Tenant within thirty (30) days after Tenant's
receipt thereof. If more than one compressor is included in the Supplementary
System, the elapsed time for the same shall be metered, and the amount payable
by Tenant pursuant to this Subsection 4 shall be computed separately with
respect to each such compressor. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall, at its sole cost and expense, maintain
and repair the Supplementary System in good working order and condition at all
times during the Lease Term (including the making and maintaining of
replacements, if any) and shall surrender the same to Landlord in good and
proper working order and condition upon the expiration or earlier termination of
this Lease.
(5) operation, maintenance, repair and replacement of the
heating, ventilating and air-conditioning system for the Premises, and the
electrical, life-safety, fire protection and plumbing systems for the Premises;
(6) installation, operation and maintenance of any security
system installed by or on behalf of Tenant in or for the benefit of the
Premises;
(7) cleaning and char services for the Premises, including
interior and exterior window cleaning;
(8) removal of all garbage, trash and refuse generated in the
Premises via the corridors and entrances designated for such purpose by
Landlord;
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(9) maintenance and cleaning of all sidewalks adjacent to the
Premises and entryways to the Premises;
(10) maintenance, cleaning and inspections of kitchen and
exhaust equipment (including fans on the roof of the Building servicing the
Premises), provided that Landlord shall maintain the kitchen exhaust riser
servicing the Premises in accordance with Section 8.3;
(11) installation and maintenance of restroom facilities as
may be required by applicable codes and regulations of governmental and
quasi-governmental authorities having jurisdiction, including appropriate and
necessary plumbing and equipment to connect the facilities in the Premises to
the wet stacks of the Building; and
(12) jet-washing of all sewer lines serving the Premises at
least once every six (6) months (or more frequently if Landlord determines that
more frequent cleaning is required).
15.2 [Omitted.]
15.3 The parties agree to comply with all mandatory energy, water or other
utility conservation controls and requirements imposed or instituted by
governmental or quasi-governmental authorities having jurisdiction, including,
without limitation, controls on the permitted range of temperature settings and
requirements necessitating curtailment of the volume of energy, water or other
utility consumption or the hours of operation of the Building. Any terms or
conditions of this Lease that conflict or interfere with compliance with such
controls or requirements shall be suspended for the duration of such controls or
requirements. It is further agreed that compliance with such controls or
requirements shall not be considered an eviction, actual or constructive, of
Tenant from the Premises and shall not entitle Tenant to terminate this Lease or
to an abatement of any rent payable hereunder.
15.4 Tenant agrees that Landlord shall not have any liability to Tenant
whatsoever (by abatement of rent or otherwise), for failure to furnish or delay
in furnishing any of the utilities or services required to be furnished by
Landlord hereunder, or for any diminution in the quality or quantity thereof,
when such failure or delay or diminution is occasioned, in whole or in part, by
repairs, replacements or improvements, by any strike, lockout or other labor
trouble, by inability to secure electricity, gas, water or other fuel at the
Building, by any accident or casualty whatsoever, by act or default of Tenant or
other parties, or by any other cause beyond Landlord's reasonable control; and
such failures or delays or diminution shall never be deemed to constitute an
eviction or disturbance of Tenant's use and possession of the Premises or
relieve Tenant from paying rent or performing any of its obligations under this
Lease. Furthermore, Landlord shall not be liable under any circumstances for a
loss of, or injury to, property or for injury to, or interference with, Tenant's
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this Article. Any such failure or
inability to furnish the utilities or services required hereunder shall not be
considered an eviction, actual or constructive, of Tenant from the Premises and
shall not entitle Tenant to
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terminate this Lease or to abate or receive a refund of any rent or other amount
payable under this Lease. Notwithstanding the foregoing terms of this Section,
in the event services required to be provided by Landlord to the Premises
pursuant to this Lease are not provided for a reason within Landlord's
reasonable control and such failure causes the Premises to be untenantable,
Tenant shall deliver written notice thereof to Landlord specifying the subject
failure to provide services (the "Service Failure Notice"). If Landlord has not
cured the subject matter within ten (10) business days after its receipt of the
Service Failure Notice, then Tenant's obligations to pay Base Rent and Tenant's
Proportionate Share of Real Estate Taxes shall abate beginning on the eleventh
(11th) business day following Landlord's receipt of the Service Failure Notice
through the date upon which Landlord restores the subject service to the
Premises, provided Tenant does not conduct business operations in the Premises
at any time during such abatement period. The above-described rent abatement
shall be Tenant's sole and exclusive remedy at law and in equity for Landlord's
failure to provide the subject service.
ARTICLE 16
LIABILITY OF LANDLORD
16.1 Landlord, its partners, members, employees, agents and independent
contractors shall not be liable to Tenant, any Invitee (as defined in Section
8.1 above) or any other person or entity for any damage (including indirect and
consequential damage), injury, loss or claim (including claims for the
interruption of or loss to business) based on or arising out of any cause
whatsoever (except as otherwise expressly provided in this Section), including
without limitation the following: repair to any portion of the Premises, the
Building or the Land; interruption in the use of the Premises or any equipment
therein; any accident or damage resulting from any use or operation (by
Landlord, Tenant or any other person or entity) of elevators or heating,
cooling, electrical, sewerage, plumbing or other equipment or apparatus;
termination of this Lease by reason of damage to the Premises or the Building;
robbery, theft, vandalism, mysterious disappearance, fire or any other casualty;
actions of any other tenant of the Building or of any other person or entity;
failure or inability of Landlord to furnish any utility or service specified in
this Lease; or leakage in any part of the Premises or the Building, or from
water, rain, ice or snow that may leak into, or flow from, any part of the
Premises or the Building, or from drains, pipes or plumbing fixtures in the
Premises or the Building. Any property stored or placed by Tenant or Invitees in
or about the Premises or the Building shall be at the sole risk of Tenant, and
Landlord shall not in any manner be liable for any loss or damage thereto or
theft thereof. If any employee of Landlord receives any package or article
delivered for Tenant, then such employee shall be acting as Tenant's agent for
such purpose and not as Landlord's agent. Notwithstanding the foregoing
provisions of this Section, Landlord shall not be released from liability to
Tenant for any damage caused by Landlord's willful misconduct or gross
negligence, to the extent such damage is not covered by insurance carried by
Tenant or required to be carried by Tenant; provided, however, that in no event
shall Landlord have any liability to Tenant, any Invitee or other person or
entity for (i) lost revenues or profits, or (ii) indirect or consequential
damages.
16.2 [Omitted.]
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16.3 Tenant shall indemnify, protect, defend and hold harmless Landlord,
its partners, members, employees, agents and independent contractors from and
against all costs, damages, claims, liabilities and expenses (including
attorneys' fees) suffered by or claimed against Landlord or any of its partners,
members, employees, agents or independent contractors, directly or indirectly,
based on or arising out of (a) Tenant's use and occupancy of the Premises or the
business conducted therein, (b) the condition of the Premises or any occurrence
or happening in the Premises from any cause whatsoever, (c) any act or omission
of Tenant or any Invitee, (d) any default by Tenant in the observance or
performance of any of the terms, covenants or conditions of this Lease on
Tenant's part to be observed or performed, including failure to surrender the
Premises upon the expiration or earlier termination of the Lease Term, or (e)
any entry by Tenant or any Invitee in the Building or upon the Land prior to the
Lease Commencement Date. Notwithstanding the foregoing, Tenant's indemnification
obligations set forth above shall not extend to any matter resulting solely from
the gross negligence or willful misconduct of Landlord or any of its partners,
members, employees, agents or independent contractors.
16.4 If any landlord hereunder transfers the Building or such landlord's
interest therein, then such landlord shall not be liable for any obligation or
liability under the Lease based on or arising out of any event or condition
occurring on or after the date of such transfer, and Tenant agrees to look
solely to the transferee for the performance of Landlord's obligations hereunder
to the extent arising after the date of such transfer. Within fifteen (15) days
after the transferee's request, Tenant shall attorn to such transferee and
execute, acknowledge and deliver any requisite or appropriate document submitted
to Tenant confirming such attornment. Notwithstanding the foregoing, Tenant
acknowledges that Landlord may assign its interest in this Lease to a mortgage
lender as additional security and agrees that such assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.
16.5 Tenant shall not have the right to offset or deduct the amount
allegedly owed to Tenant pursuant to any claim against Landlord from any rent or
other sum payable to Landlord. Tenant's sole remedy for recovering upon such
claim shall be to institute an independent action against Landlord.
16.6 Notwithstanding anything to the contrary set forth in this Lease, if
Tenant or any Invitee is awarded a judgment or other remedy against Landlord,
then recourse for satisfaction of the same shall be limited to execution against
Landlord's interest in the Building and the Land. No other asset of Landlord,
any partner, member or other person or entity holding an interest in Landlord or
any other person or entity shall be available to satisfy, or be subject to, such
judgment or other remedy, nor shall any such partner, member, person or entity
be held to have any personal liability for satisfaction of any claim or judgment
against Landlord or any partner or member of Landlord. Tenant hereby agrees that
it shall not assert any claim against or seek recovery from a partner, member or
any other person or entity holding an interest in Landlord for performance of
any obligations of Landlord under this Lease or any judgement or other remedy to
which Tenant may be entitled against Landlord. In any claim made by Tenant
against Landlord alleging that Landlord has acted unreasonably where Landlord
had an obligation to act reasonably, Tenant shall have no right
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to recover damages from Landlord and Tenant's sole and exclusive recourse
against Landlord shall be an action seeking specific performance of Landlord's
obligation to act reasonably.
ARTICLE 17
RULES
17.1 Tenant and its Invitees shall at all times abide by, observe and
comply strictly with the rules set forth in Exhibit C. Nothing contained in this
Lease shall be construed as imposing upon Landlord any duty to enforce such
rules or any condition or covenant contained in any other lease against any
other tenant, and Landlord shall not be liable to Tenant for the violation of
such rules by any other tenant or its employees, agents, assignees, subtenants,
licensees or invitees.
ARTICLE 18
DAMAGE OR DESTRUCTION
18.1 If the Premises or the Building are totally or partially damaged or
destroyed by fire or other casualty thereby rendering the Premises totally or
partially inaccessible or unusable, then Landlord shall diligently (subject to
reasonable delays for insurance adjustment or other matters beyond Landlord's
reasonable control and subject to all other terms of this Article 18), repair
and restore the Premises (excluding tenant improvements) and the Building to
substantially the same condition they were in prior to such damage or
destruction, except for (a) modifications required by Laws, (b) modifications
required by the holder of any Mortgage, and (c) any modifications to the common
areas of the Building deemed desirable by Landlord provided access to the
Premises shall not be materially impaired. Further, and notwithstanding anything
to the contrary set forth in this Article 18, Landlord may elect to terminate
this Lease by delivering notice to Tenant if one or more of the following
conditions is present: (i) in Landlord's reasonable judgment, repairs and
restoration cannot be completed within one hundred eighty (180) days after the
occurrence of the subject damage or destruction (taking into account the time
needed for effecting a satisfactory settlement with any insurance company
involved, removal of debris, preparation of plans and specifications, and
issuance of all approvals and permits required by governmental or
quasi-governmental authorities having jurisdiction), when such repairs are made
without the payment of overtime or other premiums; (ii) the cost to repair the
subject damage exceeds twenty-five percent (25%) of the replacement value of the
Building, whether or not the Premises are damaged or destroyed; (iii) the holder
of any Mortgage fails or refuses to make the insurance proceeds available for
repair and restoration of the subject damage or destruction, or any underling
lessor of the Building or the Land shall terminate its lease; (iv) the costs to
repair the subject damage is not fully covered, except for deductible amounts,
by insurance policies carried by Landlord; (v) the Premises and/or the Building
is damaged or destroyed to any substantial extent during the last twenty-four
(24) months of the Lease Term; or (vi) any applicable Law does not permit repair
or restoration of the subject damage. In the event Landlord's so elects to
terminate this Lease, (1) this Lease shall terminate as of the date set forth in
Landlord's notice delivered to Tenant, (2) Tenant shall pay the Base Rent,
Tenant's Proportionate Share of Real
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Estate Taxes and any other amounts due hereunder, apportioned up to such date of
damage, and (3) Landlord and Tenant shall thereafter be freed and discharged of
all further obligations hereunder, except as provided in provisions of this
Lease which by their terms survive the expiration or earlier termination of the
Lease Term.
18.2 If Landlord determines, in its sole but reasonable judgment, that the
repairs and restoration cannot be substantially completed within one hundred
eighty (180) days after the date of such damage or destruction, Landlord shall
promptly notify Tenant of such determination. For a period of thirty (30) days
after receipt of such determination, Tenant shall have the right to terminate
this Lease by providing notice to Landlord. If Tenant does not elect to
terminate this Lease within such thirty (30) day period, and provided Landlord
has not elected to terminate this Lease pursuant to Section 18.1 above, Landlord
shall proceed to repair and restore the Premises and the Building.
Notwithstanding the foregoing, Tenant shall not have the right to terminate this
Lease if the act or omission of Tenant or any of its Invitees shall have caused
the damage or destruction.
18.3 If this Lease is terminated pursuant to Section 18.1 or 18.2 above,
then all rent shall be apportioned (based on the portion of the Premises which
is usable after such damage or destruction, it being agreed that all rent
allocable to the portion of the Premises which is not usable after such damage
or destruction shall be abated through the date of termination) and paid to the
date of damage. If this Lease is not terminated as a result of such damage or
destruction, then until the substantial completion of such repair and
restoration of the Premises which Landlord is obligated to perform, Tenant shall
be required to pay the Base Rent and Tenant's Proportionate Share of Real Estate
Taxes only for the portion of the Premises that is usable while such repair and
restoration are being made. Landlord shall bear the expenses of repairing and
restoring the Premises and the Building; provided, however, that Landlord shall
not be required to repair or restore any Alteration or other tenant improvement
installed in the Premises or any of Tenant's trade fixtures, furniture,
furnishings, equipment or personal property; and provided further that if such
damage or destruction was caused by the act or omission of Tenant or any
Invitee, then Tenant shall pay the amount by which such expenses exceed the
insurance proceeds, if any, actually received by Landlord on account of such
damage or destruction.
18.4 The provisions of this Lease, including this Article 18, constitute
an express agreement between Landlord and Tenant with respect to any and all
damage to, or destruction of, all or any part of the Premises or the Building,
and any statute or regulation of any governmental or quasi-governmental
authority having jurisdiction with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation now or hereafter in effect,
shall have no application to this Lease with respect to any damage or
destruction to all or any portion of the Premises and/or the Building.
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ARTICLE 19
CONDEMNATION
19.1 If the entire Premises shall be permanently taken or condemned by any
governmental or quasi-governmental authority for any public or quasi-public use
or purpose or sold under threat of such a taking or condemnation (collectively,
"condemned"), then this Lease shall terminate on the date title thereto vests in
such authority and rent shall be apportioned as of such date and Tenant shall
have no claim against Landlord with respect thereto. If only a portion of the
Premises is condemned, then this Lease shall continue in full force and effect
as to the part of the Premises not condemned, except that as of the date title
vests in such authority Tenant shall not be required to pay the Base Rent and
Tenant's Proportionate Share of Real Estate Taxes with respect to the part of
the Premises condemned. Notwithstanding anything herein to the contrary, if
twenty-five percent (25%) or more of the Land or the Building is condemned or if
such other portion of the Land or the Building is condemned and in the
reasonable opinion of Landlord the Building cannot be operated in an
economically viable manner, then whether or not any portion of the Premises is
condemned Landlord shall have the right to terminate this Lease as of the date
title vests in such authority.
19.2 All awards, damages and other compensation paid by such authority on
account of such condemnation (partial or total) shall belong to Landlord, and
Tenant assigns to Landlord all rights to such awards, damages and compensation.
Tenant shall not make any claim against Landlord or the authority for any
portion of such award, damages or compensation attributable to damage to the
Premises, value of the unexpired portion of the Lease Term, loss of profits or
goodwill, leasehold improvements or severance damages. Nothing contained herein,
however, shall prevent Tenant from pursuing a separate claim against the
authority for the value of furnishings and trade fixtures installed in the
Premises at Tenant's expense and for relocation expenses, provided that such
claim shall in no way diminish the award, damages or compensation payable to or
recoverable by Landlord in connection with such condemnation.
ARTICLE 20
DEFAULT
20.1 Each of the following events shall constitute, and is hereinafter
referred to as, an "Event of Default":
(a) Tenant's failure to pay any Base Rent, additional rent or any
other sum which it is obligated to pay pursuant to this Lease, when and as due
and payable hereunder; provided, however, no Event of Default shall be deemed to
have occurred unless the subject default continues for a period of five (5)
business days after Landlord delivers notice thereof to Tenant; provided,
however, that no Event of Default shall be deemed to have occurred with respect
to the first such default in any calendar year unless the subject default
continues for a period of twenty (20) days after Landlord delivers notice
thereof to Tenant;
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(b) Tenant's failure to observe and perform any other provision,
term or covenant of this Lease to be observed or performed by Tenant; provided,
however, no Event of Default shall be deemed to have occurred unless the subject
default continues for a period of thirty (30) days after Landlord delivers
notice thereof to Tenant, provided that if (i) the nature of the subject default
is such that the same cannot reasonably be cured within such thirty (30) day
period, and (ii) Tenant begins to cure the subject default promptly after its
receipt of the corresponding notice from Landlord and is pursuing such cure in
good faith and with diligence and continuity, then Tenant shall have such
additional time, up to an additional thirty (30) days, as may be reasonably
necessary to cure the default;
(c) Tenant (i) fails to occupy and assume possession of the Premises
within fifteen (15) business days after the Lease Commencement Date, or (ii)
thereafter vacates or abandons the Premises for more than three (3) consecutive
business days, except for those periods when Tenant is permitted to close the
restaurant at the Premises pursuant to Section 6.2.
20.2 If there shall be an Event of Default, including an Event of Default
prior to the Lease Commencement Date, then Landlord shall have the right, at its
sole option, to terminate this Lease. In addition, with or without terminating
this Lease, Landlord may, without notice to Tenant, re-enter, terminate Tenant's
right of possession and take possession of the Premises. The provisions of this
Article shall operate as a notice to quit, any other notice to quit or of
Landlord's intention to re-enter the Premises being hereby expressly waived by
Tenant. If necessary, Landlord may proceed to recover possession of the Premises
under and by virtue of the Laws of the District of Columbia, or by such other
proceedings, including re-entry and possession, as may be applicable. If
Landlord elects to terminate this Lease and/or elects to terminate Tenant's
right of possession, then everything contained in this Lease to be done and
performed by Landlord shall cease, without prejudice, however, to Landlord's
right to recover from Tenant all rent and other sums accrued through the later
of termination or Landlord's recovery of possession. If Landlord is entitled, or
if Tenant is required, pursuant to any provision of this Lease to take any
action upon the expiration or earlier termination of the Lease Term, then
Landlord shall be entitled and Tenant shall be required, to take such action
also upon the termination of this Lease in accordance with the foregoing. No
re-entry, repossession, repairs, alterations, additions or reletting of the
Premises by Landlord shall be construed as an eviction or ouster of Tenant or an
election on Landlord's part to terminate this Lease, unless notice of such
intention is given to Tenant, nor shall any such re-entry, repossession,
repairs, alterations, additions or reletting operate to release Tenant in whole
or in part from any of Tenant's obligations hereunder. Notwithstanding that
Landlord may have relet the Premises or any portion thereof without terminating
this Lease, Landlord may at any time thereafter elect to terminate this Lease
for any previous Event of Default. Whether or not this Lease and/or Tenant's
right of possession is terminated, Landlord may, but shall not be obligated to,
relet the Premises or any part thereof, alone or together with other premises,
for such rent and upon such terms and conditions (which may include concessions
or free rent and alterations of the Premises) as Landlord, in its sole
discretion, may determine, but Landlord shall not be liable for, nor shall
Tenant's obligations be diminished by reason of, Landlord's failure to relet the
Premises or collect any rent due upon such reletting. Whether or not this Lease
is terminated, Tenant nevertheless shall remain liable for any Base Rent and
monthly
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additional rent and other sums and damages which may be due or sustained prior
to the Event of Default, and all costs, fees and expenses (including without
limitation attorneys' fees, brokerage fees and expenses incurred in placing the
Premises in first-class rentable condition, advertising expense and any
concessions or allowances granted by Landlord in connection with the reletting
of the Premises or any portion thereof) incurred by Landlord in pursuit of its
remedies and in renting the Premises to others from time to time. All of such
costs and expenses shall be payable upon demand, together with interest at the
Default Rate accruing from the date same were incurred by Landlord until paid to
Landlord. Tenant shall also be liable for damages which shall include, without
limitation, damages with respect to the Base Rent and monthly additional rent
payable by Tenant under this Lease for the balance of the Lease Term. At
Landlord's election, the damages payable by Tenant with respect to the Base Rent
and monthly additional rent payable by Tenant under this Lease for the balance
of the Lease Term shall be either:
(a) an amount equal to the Base Rent and monthly additional rent
which would have become due during the period commencing on the date upon which
the subject Event of Default occurred through the remainder of the Lease Term,
less the amount of rental, if any, which Landlord receives during such period
from others to whom the Premises may be rented (other than any additional rent
payable as a result of any failure of such other person to perform any of its
obligations), which damages shall be computed and payable in monthly
installments, in advance, on the first day of each calendar month following the
subject Event of Default and continuing until the date on which the Lease Term
would have expired but for the subject Event of Default. Separate suits may be
brought to collect any such damages for any month(s), and such suits shall not
in any manner prejudice Landlord's right to collect any such damages for any
subsequent month(s), or Landlord may defer any such suit until after the
expiration of the Lease Term, in which event the cause of action shall be deemed
not to have accrued until the expiration of the Lease Term; or
(b) an amount equal to the present value (as of the date of the
termination of this Lease) of the difference between (i) the Base Rent and
monthly additional rent which would have become due during the period commencing
on the date upon which the subject Event of Default occurred through the
remainder of the Lease Term, and (ii) the fair market rental value of the
Premises for the same period (net of all expenses (including attorneys' fees,
brokers' commissions, advertising expenses, expenses incurred in placing the
Premises in first-class rentable condition, and any concessions or allowances
granted by Landlord in connection with the reletting of the Premises or a
portion thereof) and all vacancy periods projected by Landlord to be incurred in
connection with the reletting of the Premises), as determined by Landlord in its
sole and absolute discretion, which damages shall be payable to Landlord in one
lump sum on demand. For purpose of this Subsection, present value shall be
computed by discounting at a rate equal to one (1) whole percentage point above
the discount rate in effect at the Federal Reserve Bank of New York on the date
Landlord elects to obtain payment under this Subsection.
As used in this Section, "monthly additional rent" shall mean Tenant's
obligation for payment of Tenant's Proportionate Share of Real Estate Taxes.
Tenant waives any right of redemption, re-entry
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or restoration of the operation of this Lease under any present or future Law,
including any such right which Tenant would otherwise have if Tenant shall be
dispossessed for any cause.
20.3 [Intentionally Deleted.]
20.4 Landlord's rights and remedies set forth in this Lease are cumulative
and in addition to Landlord's other rights and remedies at law or in equity,
including those available as a result of any anticipatory breach of this Lease.
Landlord's exercise of any such right or remedy shall not prevent the concurrent
or subsequent exercise of any other right or remedy. Landlord's delay or failure
to exercise or enforce any of Landlord's rights or remedies or Tenant's
obligations shall not constitute a waiver of any such rights, remedies or
obligations. Landlord shall not be deemed to have waived any default unless such
waiver expressly is set forth in an instrument signed by Landlord. If Landlord
waives in writing any default, then such waiver shall not be construed as a
waiver of any term, covenant or condition set forth in this Lease except as to
the specific circumstances described in such waiver. Neither Tenant's payment of
a lesser amount than the sum due hereunder nor any endorsement or statement on
any check or letter accompanying such payment shall be deemed an accord and
satisfaction, and Landlord may accept the same without prejudice to Landlord's
right to recover the balance of such sum or to pursue any other remedy available
to Landlord. Landlord's re-entry and acceptance of keys shall not be considered
an acceptance of a surrender of this Lease. Receipt and acceptance by Landlord
of any rent due to Landlord hereunder with knowledge of the existence of any
default or condition which, if left uncured, will constitute a default by Tenant
hereunder, shall not be deemed a waiver of such default.
20.5 If more than one natural person and/or entity shall execute this
Lease as Tenant, then the liability hereunder of each such person or entity
shall be joint and several. Similarly, if Tenant is a general partnership or
other entity the partners or members of which are subject to personal liability,
then the liability of each such partner or member hereunder shall be joint and
several.
20.6 If Tenant fails to make any payment to any third party or to observe
or perform any term, condition or provision of this Lease required to be
observed or performed by Tenant, then following notice (which may be written or
oral) to Tenant, Landlord may, but shall not be required to, make the subject
payment or cause the observance or performance of the subject matter. Landlord's
taking such action shall not be considered a cure of such failure by Tenant or
prevent Landlord from pursuing any remedy to which it is otherwise entitled in
connection with such failure. If Landlord elects to make the subject payment or
cause the observance or performance of the subject matter, then all amounts paid
by Landlord and all expenses incurred by Landlord in connection therewith, plus
interest thereon at a rate per annum (the "Default Rate") which is five (5)
whole percentage points higher than the prime rate announced from time to time
by Chase Manhattan Bank (or its legal successor), from the date paid or incurred
to the date of payment thereof by Tenant, shall constitute additional rent and
shall be paid by Tenant upon its receipt of Landlord's demand for the same.
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20.7 Tenant hereby acknowledges that late payment by Tenant to Landlord of
rent or other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which is extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Landlord by the terms of a
Mortgage. Accordingly, if any installment of rent or any other sum due from
Tenant hereunder shall not be received by Landlord or Landlord's designee within
five (5) days after said amount is due, then Tenant shall pay to Landlord a late
charge equal to five percent (5.0%) of the subject amount. Acceptance of such
late charge by Landlord shall in no event constitute a waiver of Tenant's
default with respect to the subject overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. The late
charge shall be deemed additional rent and the right to require it shall be in
addition to all of Landlord's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord's remedies
in any manner. In addition to the late charge described above, any rent or other
amounts payable by Tenant hereunder which are not received by Landlord when due
shall thereafter bear interest at the Default Rate until paid.
20.8 (a) Subject to the subordination provisions set forth in Section
20.8(b) below, Tenant grants to Landlord a lien upon and a security interest in,
as security for the performance of Tenant's obligations under this Lease,
Tenant's existing or hereafter acquired personal property, inventory, furniture,
fixtures, equipment and other assets (excluding business records), and all
products and proceeds thereof, which are located in the Premises or used in
connection with the business to be conducted in the Premises. Such lien shall be
in addition to all rights of distraint available under applicable Law. Within
fifteen (15) days after Landlord's request, Tenant shall execute, acknowledge
and deliver to Landlord financing statements and any other document submitted to
Tenant evidencing or establishing such lien and security interest. If Tenant
fails to so timely execute and deliver any such document requested by Landlord,
Tenant hereby appoints Landlord as its attorney-in-fact, irrevocably, to
execute, deliver and/or file any such document at Tenant's sole cost and
expense, said power of attorney being coupled with an interest. During any
period Tenant is in default under this Lease, Tenant shall not sell, transfer or
remove from the Premises any of the above-referenced personal property,
inventory, furniture, fixtures, equipment or other assets. All exemption Laws
are hereby waived by Tenant in favor of the above-referenced lien and security
interest benefitting Landlord. Landlord shall have, in addition to all of its
rights under this Lease, all of the rights and remedies of a secured party under
the Uniform Commercial Code of the District of Columbia.
(b) Subject to the terms set forth below in this Section, Landlord
shall subordinate the lien and security interest granted by Tenant pursuant to
Section 20.8(a) to a first position lien and security interest granted by Tenant
in its personal property and equipment located in the Premises (the "Secured
Property") as security for bona fide indebtedness incurred by Tenant for the
purpose of financing the purchase of the same. Any lender to whom Tenant shall
grant such lien and security interest is hereinafter referred to as the "Secured
Lender". In the event the Premises are abandoned or Landlord recovers possession
of the Premises by any means, the Secured Lender shall have the right to remove
the Secured Property from the Premises within fifteen (15) days after its
receipt of
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notice of such abandonment or recovery of possession by Landlord. After said
period, all property remaining in the Premises shall be deemed abandoned and
Landlord shall be entitled to use, sell or otherwise dispose of the same as
Landlord determines in its sole discretion. Any other removal of the Secured
Property from the Premises by the Secured Lender shall take place only after the
delivery of at least fifteen (15) days prior written notice to Landlord. The
Secured Lender shall not cause or permit any disturbance or interference with
other occupants' quiet enjoyment of their space in the Building. In connection
with any foreclosure of its security interest in the Secured Property, the
Secured Lender shall provide Landlord with reasonable advance written notice of
all hearings and sale proceedings in connection therewith, and otherwise as
required by law. The Secured Lender shall indemnify, protect, defend and hold
harmless Landlord, its partners, members, employees, agents and independent
contractors from and against all costs, damages, losses, claims, liabilities and
expenses (including attorneys' fees) incurred or suffered by or claimed against
Landlord or any of its partners, members, employees, agents or independent
contractors, directly or indirectly, based on or arising out of any act or
omission of the Secured Lender or any of its employees, contractors or agents
relative to the Secured Property. All damage to the Premises and any other
portion of the Building which results directly or indirectly from the removal of
all or any of the Secured Property from the Premises by the Secured Lender shall
be repaired by the Secured Lender, at its sole cost and expense, within five (5)
days after the occurrence of the subject damage. If the Secured Lender shall
fail to repair any such damage within such five (5) day period, Landlord may do
so and the Secured Lender shall reimburse Landlord for all costs and expenses
incurred by Landlord in connection therewith. The Secured Lender shall not
permit any condition in the Premises resulting from the removal of all or any of
the Secured Property to be in an unsafe condition or in any condition that could
cause continuing damage. The Secured Lender shall reimburse Landlord on demand
for all costs and expenses incurred by Lender in connection with the removal of
all or any of the Secured Property. The Secured Lender shall advise Landlord in
writing promptly after the obligations secured by the Secured Property have been
satisfied, discharged or released. As a condition to Landlord's subordination of
its lien and security interest described above in this Section to the lien and
security interest granted by Tenant to the Secured Lender, the Secured Lender
shall provide to Landlord its written agreement to the terms and conditions of
this Section.
20.9 The obligations of Tenant under this Article 20 shall survive the
expiration or earlier termination of the Lease Term.
ARTICLE 21
BANKRUPTCY
21.1 As used in this Lease, each of the following events shall constitute,
and is hereafter referred to as, an "Event of Bankruptcy": (a) Tenant's or
Guarantor's becoming insolvent, as that term is defined in Title 11 of the
United States Code (the "Bankruptcy Code"), or under the insolvency, bankruptcy,
reorganization or other similar Laws of any state (the "Insolvency Laws"); (b)
the entry by a court of a decree or order for relief in respect of Tenant or
Guarantor in an involuntary case or proceeding under the Bankruptcy Code or any
Insolvency Laws; (c) the entry by a court of a decree
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or order adjudging Tenant or Guarantor a bankrupt or insolvent, or approving a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of Tenant or Guarantor under the Bankruptcy Code or any Insolvency Laws;
(d) appointment of a receiver, liquidator, trustee, custodian or other similar
official with respect to Tenant or Guarantor, or with respect to any property of
Tenant or Guarantor, or the institution of a foreclosure or attachment action
upon any property of Tenant or Guarantor; (e) filing of a voluntary petition by
Tenant or Guarantor under the provisions of the Bankruptcy Code or Insolvency
Laws; (f) filing of an involuntary petition against Tenant or Guarantor as the
subject debtor under the Bankruptcy Code or Insolvency Laws, which either (i) is
not dismissed within sixty (60) days of filing, or (ii) results in the issuance
of an order for relief against the debtor; or (g) Tenant's or Guarantor's making
or consenting to an assignment for the benefit of creditors or a composition of
creditors.
21.2 (a) Without limiting any provision of Article 20 above or this
Article 21, if pursuant to the Bankruptcy Code Tenant or Tenant's trustee in
bankruptcy ("Trustee") is permitted to assume this Lease or to assign this Lease
in disregard of the terms of Article 7 above, Tenant agrees that prior to any
such assumption or assignment, Tenant shall (1) cure all defaults under this
Lease, (2) compensate Landlord for monetary damages incurred as a result of such
defaults, (3) provide adequate assurance of future performance on the part of
Tenant as debtor in possession or of the assignee of Tenant, and (4) comply with
all other requirements of the Bankruptcy Code. This Lease may be terminated by
Landlord if the foregoing criteria for assumption or assignment are not met, or
if Tenant, Trustee or such assignee defaults under this Lease after such
assumption or assignment.
(b) If Tenant's interest in this Lease is assumed but not assigned,
adequate assurance of future performance, as used in this Section 21.2, shall
include, without limitation, satisfaction of all of the following minimum
criteria: (A) Tenant's gross receipts in the ordinary course of business during
the thirty (30) day period immediately preceding the initiation of the case
under the Bankruptcy Code must be greater than two (2) times the next monthly
installment of the Base Rent and additional rent; (B) both the average and
median of Tenant's monthly gross receipts in the ordinary course of business
during the six (6) month period immediately preceding the initiation of the case
under the Bankruptcy Code must be greater than two (2) times the next monthly
installment of the Base Rent and additional rent; (C) Tenant must pay its
estimated pro rata share of the cost of all services performed or provided by
Landlord (whether directly or through agents or contractors and whether or not
previously included as part of the Base Rent) in advance of the performance or
provision of such services; and (D) Tenant's business shall be conducted in the
Premises in a first-class manner, and that no liquidating sale, auction or other
non-first-class business operation shall be conducted in the Premises.
(c) In all circumstances, adequate assurance of future performance,
as used in this Section 21.2, shall include, without limitation, satisfaction of
all of the following minimum criteria: (i) Tenant, Trustee or the transferee of
Tenant's interest in this Lease shall agree that the use of the Premises as
stated in this Lease shall remain unchanged and that no prohibited use shall be
permitted; (ii) the assumption or assignment of this Lease shall not violate or
affect the rights of other tenants in the Building; (iii) Tenant, Trustee, or
the transferee of Tenant's interest in the Lease shall deposit
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with Landlord, cash in an amount equal to the Base Rent and additional rent paid
or payable under this Lease for the preceding six (6) month period, which amount
shall be held by Landlord, without interest, for the balance of the Lease Term
as security for the full and faithful performance of all of the obligations
under this Lease on the part of Tenant to be performed; (iv) if Tenant receives
or is to receive any valuable consideration for an assignment of its interest in
this Lease, such consideration, after deducting therefrom expenses reasonably
incurred by Tenant for the subject assumption or assignment, shall be and become
the sole and exclusive property of Landlord and shall be paid over to Landlord
directly by the transferee of Tenant's interest in this Lease on the date the
subject assumption or assignment is intended to become effective; (v) Tenant,
Trustee or the transferee of Tenant's interest in this Lease shall have and
shall continue to have unencumbered assets, after the payment of all secured
obligations and administrative expenses with respect to Tenant only, to ensure
Landlord that sufficient funds will be available to fulfill the obligations of
Tenant under this Lease; and (vi) all assurances of future performance specified
in the Bankruptcy Code must be provided.
21.3 If Tenant's interest in this Lease shall be assigned to any person or
entity who shall have made a bona fide offer to accept an assignment of this
Lease on terms acceptable to the court having competent jurisdiction over
Tenant's estate, then notice of such proposed assignment, setting forth (x) the
name and address of such person, (y) all of the terms and conditions of such
offer, and (z) the adequate assurance to be provided Landlord to assure such
person's or entity's future performance under this Lease, including, without
limitation, the assurances referred to in Title 11 U.S.C. ss.365(b)(3), as may
be amended, shall be given to Landlord by Tenant no later than fifteen (15) days
after receipt by Tenant of such offer, but in any event no later than thirty
(30) days prior to the date that Tenant shall make application to the
above-referenced court for authority and approval to enter into such assignment.
ARTICLE 22
SUBORDINATION
22.1 This Lease is subject and subordinate to the lien, provisions,
operation and effect of all mortgages, deeds of trust, underlying leases or
other security instruments which may now or hereafter encumber the Building
and/or the Land or any interest therein, and to all renewals, extensions,
replacements, consolidations, amendments, modifications, recastings or
refinancings thereof (collectively "Mortgages"), said subordination and the
provisions of this Section shall be self-operative and no further instrument of
subordination shall be required. Upon Landlord's request, Tenant shall execute
and deliver a certification or other requisite or appropriate document
confirming the subordination described above. The holder of any Mortgage shall
have the right (subject to any required approval of the holders of any superior
Mortgage) at any time to declare this Lease to be superior to the lien,
provisions, operation and effect of such Mortgage and Tenant shall execute,
acknowledge and deliver all documents required by such holder in confirmation
thereof.
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22.2 Tenant waives the provisions of any Law now or hereafter in effect
which may give or purport to give Tenant any right to terminate or otherwise
adversely affect this Lease or Tenant's obligations in the event any foreclosure
proceeding is prosecuted or completed or in the event the Land, the Building or
Landlord's interest therein is sold at a foreclosure sale or by deed in lieu of
foreclosure. If this Lease is not extinguished upon such sale or by the
purchaser following such sale or by the transferee in the event of a transfer by
deed in lieu of foreclosure, then, at the request of such purchaser or
transferee, Tenant shall attorn to such purchaser or transferee and shall
recognize such purchaser or transferee as the landlord under this Lease. Upon
such attornment such purchaser shall not be (a) bound by any payment of the Base
Rent or additional rent more than one (1) month in advance, (b) bound by any
amendment of this Lease made without the consent of the holder of each Mortgage
existing as of the date of such amendment, (c) liable for damages for any
breach, act or omission of any prior landlord, or (d) subject to any offsets or
defenses which Tenant might have against any prior landlord; provided, however,
that after succeeding to Landlord's interest, such purchaser shall perform in
accordance with the terms of this Lease all obligations of Landlord arising
after the date such purchaser acquires title to the Building. Within fifteen
(15) days after the request of such purchaser, Tenant shall execute, acknowledge
and deliver any requisite or appropriate document submitted to Tenant confirming
such attornment.
22.3 (a) After Tenant receives notice from any person, firm or other
entity that it holds a Mortgage encumbering the Building and/or the Land or any
interest therein, no notice from Tenant to Landlord alleging any default by
Landlord shall be effective unless and until a copy of the same is given to such
holder, provided that Tenant shall have been furnished with the name and address
of such holder. Any such holder shall have thirty (30) days after its receipt of
notice from Tenant of a default by Landlord under this Lease to cure such
default before Tenant may exercise any remedy hereunder. The curing of any of
Landlord's defaults by such holder shall be treated as performance by Landlord.
(b) In the event any lender providing construction, permanent or
other refinancing for the Building requires, as a condition of such financing,
that modifications to this Lease be obtained, and provided that such
modifications (i) do not adversely affect in a material manner Tenant's use of
the Premises as herein permitted; and (ii) do not increase the rent and other
sums to be paid by Tenant hereunder, Landlord may submit to Tenant an amendment
to this Lease incorporating such required changes, and Tenant hereby covenants
and agrees to execute, acknowledge and deliver such amendment to Landlord within
fifteen (15) days of Tenant's receipt thereof.
22.4 Landlord hereby represents to Tenant that owns a fee simple interest
to the Land as of the date of this Lease. Landlord further represents to Tenant
that the only Mortgage that exists as of the date of this Lease is held by
Bankers Trust Company. Following its receipt of Tenant's request, Landlord
agrees to utilize its reasonable efforts to obtain from the holder of any
current or future Mortgage a nondisturbance agreement on such holder's standard
form. In the event that on or before the date which is 60 days following
execution of this Lease by all parties (the "Outside SNDA Date"), Landlord has
not provided to Tenant a non-disturbance agreement from
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Bankers Trust in accordance with the foregoing. Tenant shall have the right to
terminate this Lease by providing written notice to Landlord within ten (10)
days after the Outside SNDA Date. If Tenant fails to deliver such notice, or
Landlord delivers the Bankers Trust Company' non-disturbance agreement, on or
prior to the expiration of such ten (10) day period, then Tenant's right to
terminate the Lease shall be null and void.
ARTICLE 23
HOLDING OVER
23.1 If Tenant does not immediately surrender the Premises to Landlord
upon the expiration or earlier termination of the Lease Term, Landlord and
Tenant agree that Tenant's occupancy of the Premises after the expiration or
earlier termination of the Lease Term shall be upon all the terms and provisions
set forth in this Lease except that Tenant shall pay a use and occupancy charge
for the Premises during its period of holdover in an amount equal to the higher
of (a) the then fair market rent for the Premises, or (b) double the Base Rent,
additional rent and all other sums payable during the last year of the Lease
Term. Such amounts shall be computed on a monthly basis and shall be due and
payable on the first day of such holdover period and on the first day of each
calendar month thereafter during such holdover period until the Premises have
been vacated. If Tenant fails to surrender the Premises upon the expiration or
earlier termination of the Lease Term, in addition to any other liabilities to
Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold
Landlord harmless from and against all losses, costs (including attorneys'
fees), claims, damages and liabilities resulting from such failure, including,
without limitation, any claims made by any succeeding tenant founded upon such
failure to surrender and any lost profits to Landlord resulting therefrom.
Nothing contained in this Article shall (i) be construed as consent by Landlord
to any holding over by Tenant, (ii) be deemed to permit Tenant to retain
possession of the Premises after the expiration or earlier termination of the
Lease Term, or (iii) limit in any manner Landlord's right to regain possession
of the Premises through eviction or otherwise, or any other rights or remedies
of Landlord, including, without limitation, the right to collect damages. No
acceptance by Landlord of payments from Tenant after the expiration or earlier
termination of the Lease Term shall be deemed to be other than on account of the
amount to be paid by Tenant in accordance with the terms of this Article. The
terms of this Article shall survive the expiration or earlier termination of the
Lease Term.
ARTICLE 24
COVENANTS OF LANDLORD
24.1 Landlord covenants that if Tenant shall observe and perform timely
all of the terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be observed and performed, then subject to
the provisions of this Lease Tenant shall during the Lease Term peaceably and
quietly occupy and enjoy the Premises without hindrance by Landlord or any party
claiming through or under Landlord.
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24.2 Landlord reserves the following rights: (a) to change the street
address and name of the Building; (b) make alterations or changes to, and to
change the location or elements of, the common areas of the Building and the
Land; (c) to erect, use and maintain pipes and conduits in and through the
Premises; (d) to grant to anyone the exclusive right to conduct any particular
business in the Building not inconsistent with Tenant's permitted use of the
Premises; (e) to resubdivide the Land and/or combine the Land with other lands;
(f) if Tenant vacates the Premises prior to the expiration of the Lease Term, to
make alterations to or otherwise prepare the Premises for reoccupancy without
relieving Tenant of its obligations to pay all Base Rent, additional rent and
other sums due under this Lease through the expiration of the Lease Term; and
(g) if any excavation or other substructure work shall be made or authorized to
be made upon land adjacent to the Building or the Land, to enter the Premises
for the purpose of doing such work as is required to preserve the walls of the
Building and to preserve the Land from injury or damage and to support such
walls and the Land. Landlord may exercise any or all of the foregoing rights
without being deemed to be guilty of an eviction, actual or constructive, or a
disturbance of Tenant's business or use or occupancy of the Premises. With
respect to pipes and conduits described in Subsection (c) above and erected by
Landlord following the Lease Commencement Date, Landlord shall use its
commercially reasonable efforts to erect the same in such locations as to
minimize disruption to Tenant's business operations in the Premises. With
respect to any excavation or other substructural work described in Subsection
(g) above and performed by Landlord, Landlord agrees to use its commercially
reasonable efforts to perform the same in a manner as to minimize disruption to
Tenant's business operations in the Premises.
ARTICLE 25
[OMITTED]
ARTICLE 26
GENERAL PROVISIONS
26.1 Tenant acknowledges that neither Landlord nor any broker, agent or
employee of Landlord has made any representations or promises with respect to
the Premises or the Building except as herein expressly set forth, and no right,
privilege, easement or license is being acquired by Tenant except as herein
expressly set forth. Landlord acknowledges that neither Tenant nor any broker,
agent or employee of Tenant has made any representations or promises with
respect to the Premises or the Building except as herein expressly set forth.
26.2 Nothing contained in this Lease shall be construed as creating a
partnership, joint venture or any other relationship between Landlord and Tenant
other than that of landlord and tenant.
26.3 Landlord and Tenant each represents and warrants to the other that in
connection with this Lease neither has employed or dealt with any broker, agent
or finder. Landlord shall indemnify and hold Tenant harmless from and against
any and all claims for a commission, fee or other
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compensation by any person or entity who shall claim to have dealt with Landlord
in connection with this Lease and for any and all costs incurred by Tenant in
connection with such claims, including, without limitation, attorneys' fees.
Tenant shall indemnify and hold Landlord harmless from and against any and all
claims for a commission, fee or other compensation by any person or entity who
shall claim to have dealt with Tenant in connection with this Lease and for any
and all costs incurred by Landlord in connection with such claims, including,
without limitation, attorneys' fees. The provisions of this Section 26.3 shall
survive the expiration or earlier termination of the Lease Term.
26.4 Within fifteen (15) days after receipt of Landlord's request, Tenant,
each assignee of Tenant's interest in the Lease, and each subtenant or other
occupant of all or any portion of the Premises shall execute, acknowledge and
deliver to Landlord and/or any other person or entity designated by Landlord, an
estoppel certificate: (a) attaching a copy of this Lease and certifying that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that this Lease is in full force and effect as modified and
attaching thereto and stating the modifications); (b) stating the dates to which
the rent and any other charges have been paid; (c) stating whether or not
Landlord is in default in the performance of any obligation of Landlord
contained in this Lease, and if so, specifying the nature of such default; (d)
stating the address to which notices are to be sent to Tenant; (e) stating
whether there exists any defenses or offsets which Tenant may have to preclude
enforcement of the terms of the Lease by Landlord and, if so, specifying the
nature of such defenses and offsets; (f) confirming that this Lease is subject
and subordinate to all Mortgages; (g) stating the amount of any security deposit
delivered by Tenant to Landlord; and (h) certifying to such other matters as
Landlord may request. Any such statement may be relied upon by any owner of the
Building and/or the Land, any prospective purchaser of the Building and/or the
Land, any holder or prospective holder of a Mortgage, or any other person or
entity designated by Landlord. Tenant acknowledges that time is of the essence
to the delivery of such statements and that Tenant's delay, failure or refusal
to deliver such statements shall be an Event of Default under this Lease and may
cause substantial damages resulting from, for example, delays in obtaining
financing secured by the Building. Upon request, Tenant agrees to furnish
Landlord with current financial statements for Tenant and for Guarantor.
26.5 LANDLORD AND TENANT WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT
HEREUNDER, TENANT'S USE OR OCCUPANCY OF THE PREMISES OR ANY CLAIM OF INJURY OR
DAMAGE. TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY
SUCH ACTION UPON TENANTS REGISTERED AGENT IN THE DISTRICT OF COLUMBIA. AS OF THE
DATE OF THIS LEASE, THE NAME AND ADDRESS OF TENANT'S REGISTERED AGENT IN THE
DISTRICT OF COLUMBIA IS: CT CORPORATION SYSTEM. TENANT SHALL NOTIFY LANDLORD OF
ANY CHANGE IN ITS REGISTERED AGENT OR THE ADDRESS OF ITS REGISTERED AGENT IN THE
DISTRICT OF COLUMBIA PRIOR TO THE EFFECTIVE DATE OF ANY SUCH CHANGE. LANDLORD
AND TENANT WAIVE ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT
SITUATED IN THE
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JURISDICTION IN WHICH THE BUILDING IS LOCATED AND WAIVE ANY RIGHT UNDER THE
DOCTRINE OF FORUM NON CONVENIENS OR OTHERWISE, TO TRANSFER ANY SUCH ACTION FILED
IN ANY SUCH COURT TO ANY OTHER COURT.
26.6 All notices, demands, approvals, consents, statements or other
communications (collectively, "Notices") given or required to be given by either
party to the other hereunder shall be in writing and shall be deemed duly given
when sent by (i) personal delivery; (ii) overnight courier service (provided a
receipt will be obtained); (iii) by certified mail, return receipt requested,
postage prepaid; or (iv) facsimile (provided that proof of complete transmission
of such facsimile is obtained); and sent to the following addresses: (i) if to
Landlord, at c/o Lawrence Ruben Company, Inc., 600 Madison Avenue, 20th Floor,
New York, New York 10022-1654, Attention Mr. Richard G. Ruben, Facsimile No.:
(212)319-5627, with a copy to Rudnick, Wolfe, Epstien & Zeidman, 1201 New York
Avenue, N.W., Penthouse, Washington, D.C. 20005, Attention Frederick L. Klein,
Esq., Facsimile No.: (202) 712-7222; or (y); (ii) if to Tenant, at the Tenant
Address for Notices, with a copy to Tenant at 1114 First Avenue, New York, New
York 10021, Facsimile No.: (212) 758-6027, and with a copy to Maloney &
Porcelli, 225 Broadway, New York, New York 10007, Facsimile No.: (212) 227-8795.
Any Notice delivered in accordance with the foregoing by personal delivery shall
be deemed received on the date sent if transmitted during normal business hours
or when delivery is attempted during normal business hours if rejected. Any
Notice delivered by overnight courier service in connection with the foregoing
shall be deemed received on the first business day following the date sent. Any
Notice delivered by certified mail in accordance with the foregoing shall be
deemed received on the third (3rd) business following the date mailed. Any
Notice delivered by facsimile in accordance with the foregoing shall be deemed
received on the date sent if transmitted during normal business hours, or on the
first business day following the date transmitted if transmitted other than
during normal business hours. Either party may change its address for the giving
of Notices by Notice given in accordance with this Section. If Landlord or the
holder of any Mortgage notifies Tenant that a copy of each Notice to Landlord
shall be sent to such holder at a specified address, then Tenant shall send (in
the manner specified in this Section and at the same time such Notice is sent to
Landlord) a copy of each such Notice to such holder, and no such Notice shall be
considered duly sent to Landlord unless such copy is so sent to such holder.
26.7 Each provision of this Lease shall be valid and enforceable to the
fullest extent permitted by Law. If any provision of this Lease or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, then such provision shall be deemed to be replaced by the
valid and enforceable provision most substantively similar to such invalid or
unenforceable provision, and the remainder of this Lease and the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable shall not be affected thereby.
26.8 Whenever the context of this Lease requires, the singular shall
include the plural, and the masculine, feminine and neuter gender shall include
the others.
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26.9 The provisions of this Lease shall be binding upon and inure to the
benefit of the parties and each of their respective representatives, successors
and assigns, subject to the provisions herein restricting Transfers (as defined
in Section 7.1 above).
26.10 This Lease contains the entire agreement of the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements,
negotiations, letters of intent, proposals, representations, warranties,
understandings and discussions between the parties hereto with respect to the
subject matter hereof. All exhibits attached to this Lease are incorporated
herein by this reference. Any representation, inducement, warranty,
understanding or agreement that is not contained in this Lease shall be of no
force or effect. This Lease may be modified or changed in any manner only by an
instrument duly signed by both parties.
26.11 This Lease shall be governed by and construed in accordance with the
Laws of the District of Columbia, without regard to the application of choice of
law principles.
26.12 Article and section headings are used for convenience only and shall
not be considered when construing this Lease.
26.13 The submission of an unsigned copy of this document to Tenant shall
not constitute an offer or option to lease the Premises. This Lease shall become
effective and binding only upon execution and delivery by both Landlord and
Tenant.
26.14 Subject to the cure periods expressly stated in the Lease, time is
of the essence of each provision of this Lease.
26.15 This Lease may be executed in multiple counterparts, each of which
shall be deemed an original and all of which together constitute one and the
same document. Faxed signatures shall have the same binding effect as original
signatures.
26.16 Neither this Lease nor any memorandum, affidavit or other writing
with respect thereto shall be recorded by Tenant or by anyone acting through,
under or on behalf of Tenant, except, that upon the request of either party, the
parties agree to execute, in recordable form, a short-form memorandum of this
Lease, provided that such memorandum shall not contain any of the specific
rental terms set forth herein. Such memorandum may be recorded in the land
records of the District of Columbia, and the party desiring such recordation
shall pay all recordation costs, taxes and fees payable in connection therewith.
26.17 The square footage figure for the Premises set forth in Section 1.1
hereof has been conclusively accepted and agreed upon by Landlord and Tenant. No
remeasurement of the Premises shall result in any modification of this Lease or
any rent payable hereunder.
26.18 Except as otherwise provided in this Lease, any additional rent or
other sum owed by Tenant to Landlord, and any cost, expense, damage or liability
incurred by Landlord for which Tenant
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is liable, shall be paid by Tenant no later than twenty (20) days after the date
Landlord notifies Tenant of the amount thereof. All amounts payable by Tenant to
Landlord pursuant to this Lease, other than Base Rent and a security deposit,
shall be considered "additional rent". The Base Rent and additional rent are
herein collectively referred to as "rent".
26.19 Except as expressly provided to the contrary in this Lease, Tenant's
liabilities existing as of the expiration or earlier termination of the Lease
Term shall survive such expiration or earlier termination.
26.20 If either Landlord or Tenant is in any way delayed or prevented from
performing any of its obligations under this Lease (other than Tenant's
obligation to make any monetary payment due hereunder) due to fire, other
casualty, act of God, governmental act or failure to act, strike, labor dispute,
inability to procure services or materials, or any other cause beyond such
party's reasonable control (whether similar or dissimilar to the foregoing
events) ("Force Majeure"), then the time for performance of such obligation
shall be excused for the period of such delay or prevention and extended for a
period equal to the period of such delay or prevention.
26.21 The person executing and delivering this Lease on Tenant's behalf
warrants that such person is duly authorized to so act. Simultaneously with the
execution of this Lease, Tenant shall deliver to Landlord certified copies of
any corporate or other resolution or consent necessary to evidence the due
execution of this Lease on Tenant's behalf
26.22 Tenant shall not use the name of the Building for any purpose other
than the address of the business to be conducted by Tenant in the Premises, or
do or permit to be done anything in connection with Tenant's business or
advertising which, in the reasonable judgment of Landlord, may reflect
unfavorably on Landlord or the Building or confuse or mislead the public as to
any apparent connection or relationship between Landlord, the Building and
Tenant.
26.23 There shall be no presumption that this Lease be construed more
strictly against the party who itself or through its agent prepared it, it being
agreed that all parties hereto have participated in the preparation of this
Lease and that each party was represented by legal counsel in connection with
the Lease or had the opportunity to consult legal counsel before execution of
this Lease.
26.24 No custom or practice that may evolve between the parties in the
administration of the terms of this Lease shall be construed to waive Landlord's
right to insist on Tenant's strict performance of the terms of this Lease.
26.25 Upon the expiration or earlier termination of the Lease Term, Tenant
shall deliver to Landlord all keys and security cards to the Premises and the
Building in its possessions or in the possession of its employees or anyone
claiming by or through Tenant, whether such keys were furnished by Landlord or
otherwise procured, and Tenant shall inform Landlord of the combination of each
lock, safe and vault, if any, in the Premises.
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26.26 This Lease shall be construed as though the covenants herein between
Landlord and Tenant are independent and not dependent, and Tenant hereby
expressly waives the benefit of any statute to the contrary. Tenant agrees that
if Landlord fails to perform its obligations set forth herein, Tenant shall not
be entitled to make any repairs or perform any acts hereunder at Landlord's
expense or to any setoff of rent or other amounts owing by Tenant hereunder
against Landlord; provided, however, that the foregoing shall in no way impair
the right of Tenant to commence a separate action against Landlord for any
violation by Landlord of the provisions hereof so long as notice is first given
to Landlord and any holder of a Mortgage of whose address Tenant has theretofore
been notified, and an opportunity is granted to Landlord and such holder to
correct such violations as provided above.
26.27 Tenant and Landlord shall each keep this Lease, and the terms and
conditions hereof and of any dispute hereunder, strictly confidential and shall
not disclose same to any person or entity other than a "Permitted Person" (as
defined below) on a need-to-know basis. The term "Permitted Person" as used in
this Section shall mean the officers, directors, partners, members and other
principals of Tenant and Landlord, the employees of Tenant and Landlord who are
involved in lease administration, certified public accountants of Tenant and
Landlord, lenders and attorneys who have responsibilities related to this Lease,
or any person or entity to whom disclosure is required by applicable
governmental authority. Prior to disclosing same to any Permitted Person, the
disclosing party shall instruct such Permitted Person to abide by this
confidentiality provision.
26.28 Tenant and the person executing and delivering this Lease on
Tenant's behalf each represent and warrant to Landlord that (i) such person is
duly authorized to so act; (ii) Tenant is a limited liability company duly
organized under the Laws of the Delaware; (iii) Tenant is qualified to do
business in the jurisdiction in which the Building is located; (iv) Tenant is in
good standing under the Laws of the state of its organization and the Laws of
the jurisdiction in which the Building is located; (v) Tenant has the power and
authority to enter into this Lease; and (vi) all action required to authorize
Tenant and such person to enter into this Lease has been duly taken. Landlord
and the person executing and delivering this Lease on Landlord's behalf each
represent and warrant to Tenant that (a) such person is duly authorized to so
act; (b) Landlord is a limited partnership organized under the Laws of the
District of Columbia; (c) Landlord is qualified to do business in the
jurisdiction in which the Building is located; (d) Landlord is in good standing
under the Laws of the state of its organization and the Laws of the jurisdiction
in which the Building is located; (e) Landlord has the power and authority to
enter into this Lease; and (f) all action required to authorize Landlord and
such person to enter into this Lease has been duly taken.
26.29 Concurrently with its execution of this Lease, Tenant shall cause
Guarantor to execute and deliver to Landlord a guaranty of Tenant's obligations
under this Lease in the form of Exhibit F attached hereto.
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ARTICLE 27
OPTIONS TO EXTEND
27.1 Option Right. Subject to the terms and conditions set forth in this
Section 27.1, Tenant shall have two (2) options to extend the Lease Term (the
"Options to Extend") for a period of sixty (60) months each (the "Option
Terms"), which options shall, if at all, be exercisable by Tenant's delivery of
notice to Landlord in accordance with Section 27.3 below. Notwithstanding
anything to the contrary contained herein, an Option to Extend shall be
exercisable by Tenant only if (x) Tenant has not subleased twenty percent (20%)
or more of the Premises prior to the commencement of the subject Option Term,
(y) Tenant is not in default under this Lease (which default remains uncured
after the expiration of any applicable grace or cure periods) at any time during
the period beginning on the date of delivery of such notice through the
commencement of the subject Option Term, and (z) this Lease is not terminated
prior to the commencement of the subject Option Term. The Options to Extend
shall be personal to the original named Tenant under this Lease, shall be
nontransferable and shall be exercisable by Tenant only with respect to the
entire Premises; provided, however, an assignee of Tenant's interest in this
Lease which is approved by Landlord pursuant to Article 7 and which operates
"white tablecloth" restaurants nationally may exercise an Option to Extend
provided it is then the Tenant under this Lease. Upon the proper exercise of an
Option to Extend, the then-current Lease Term shall be extended for the subject
Option Term. If Tenant fails to timely and properly exercise an Option to Extend
in accordance with this Section 27.1, such Option to Extend and all future
Options to Extend, if any, shall be of no further force or effect. During each
Option Term, all the terms, conditions, covenants and agreements set forth in
this Lease shall continue to apply and be binding upon Landlord and Tenant,
except that: (1) the Base Rent payable during the subject Option Term shall be
equal to the Option Rent (as defined below) for the same; (2) in no event shall
Tenant have the right to extend the Lease Term beyond the expiration of second
Option Term; and (3) no concessions provided to Tenant by Landlord with respect
to any portion of the Premises previously leased by Tenant shall apply to
Tenant's lease of the Premises during an Option Term.
27.2 Option Rent. The Base Rent payable by Tenant for the Premises during
an Option Term (the "Option Rent") shall be equal to the greater of (A) the Base
Rent that would have been payable by Tenant under this Lease if the rent payable
hereunder had continued to increase using the same formula in effect immediately
prior to commencement of the subject Option Term, and (B) the product of (x)
ninety-five percent (95%) of the "Market Rental Rate" (as hereinafter defined),
multiplied by (y) the number of rentable square feet in the Premises. The term
"Market Rental Rate" as used herein shall mean the annual rate of rent,
including all escalations, at which tenants, as of the commencement of the
subject Option Term, are leasing non-sublease, non-encumbered retail space
comparable in size, location and quality (including quality of improvements) to
the then-current Premises, for a period equal to the subject Option Term
commencing on or about the commencement of the subject Option Term, which
comparable space is located in the Building and in "Comparable Office Buildings"
(as defined below). The Market Rental Rate may include, among other
then-prevailing components of rent, a fixed annual rent (such as Base Rent),
rental payments based on a share of Building real estate taxes, and periodic
increases in rent; provided that in calculating the
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Market Rental Rate, the only concession offered such other tenants which shall
be taken into consideration shall be rental abatement concessions, other than
rent abatement given such tenants to allow time for the construction of
improvements in such comparable space. The term "Comparable Office Buildings" as
used in this Lease, shall mean multi-tenanted, multi-story, first-class office
buildings which (i) are comparable to the Building in terms of quality, level of
services, amenities, age and appearance; (ii) are located between Pennsylvania
Avenue and F Street, N.W., and between 6th Street and 14th Street, N.W., in
Washington, D.C.; and (iii) have law firms, accounting firms, other professional
services organizations and private corporations as their primary office tenants
and include first class "white tablecloth" restaurants as retail tenants.
27.3 Exercise of Option. The right set forth in this Article 27 shall be
exercised by Tenant, if at all, by delivering notice to Landlord not more than
twenty-one (21) months nor less than eighteen (18) months prior to the last day
of the then-current Lease Term. After its receipt of such notice from Tenant,
Landlord shall deliver notice (the "Option Rent Notice") to Tenant not less than
sixteen (16) months prior to the last day of the then-current Lease Term,
setting forth the Option Rent which shall be payable during the subject Option
Term. If the subject Option Rent is to be determined in accordance with clause
(B) of Section 27.2 above and Tenant wishes to object to such determination,
Tenant shall, within ten (10) days after Tenant's receipt of the Option Rent
Notice, deliver to Landlord notice of its objection to the Option Rent as
determined by Landlord. If Tenant fails to timely deliver its notice of
objection to the Option Rent as determined by Landlord, the Option Rent for the
subject Option Term shall be as set forth in the Option Rent Notice delivered by
Landlord. In the event Tenant timely and properly objects to the Option Rent set
forth in the Option Rent Notice, Landlord and Tenant shall attempt to agree upon
the subject Option Rent using their good faith efforts. If Landlord and Tenant
fail to reach agreement by that date which occurs thirty (30) days following
Landlord's receipt of Tenant's notice of objection to the Option Rent set forth
in the Option Rent Notice (the "Tenant Outside Agreement Date"), then the
subject Option Rent shall be determined in accordance with the terms of Section
27.4 below. In the event Landlord fails to timely generate an Option Rent
Notice, then Tenant may commence such negotiations by providing the initial
notice, in which event Landlord shall have thirty (30) days ("Landlord's Review
Period") after its receipt of Tenant's notice of the subject Option Rent within
which to accept such Option Rent for the subject Option Term or to object
thereto in writing. In the event Landlord so objects or fails to respond to
Tenant within Landlord's Review Period, Landlord and Tenant shall attempt to
agree upon the subject Option Rent using their good faith efforts. If Landlord
and Tenant fail to reach agreement by that date which occurs fifteen (15) days
following Landlord's Review Period (the "Landlord Outside Agreement Date"), then
the subject Option Rent shall be determined in accordance with the terms of
Section 27.4 below.
27.4 Determination of Option Rent. Landlord and Tenant shall each make a
separate determination of the subject Option Rent and deliver notice thereof to
the other within ten (10) business days after the Tenant Outside Agreement Date
or the Landlord Outside Agreement Date, as the case may be. In the event the
subject Option Rent submitted by Landlord is less than or equal to one hundred
five percent (105%) of the subject Option Rent submitted by Tenant, the subject
Option Rent shall be the average of the two such determinations. In all other
cases, such
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determinations shall be submitted for final determination in accordance with
this Section 27.4 below. The failure of Tenant to make a determination and
submittal of the Option Rent within such ten (10) business day period shall
conclusively be deemed Tenant's approval of the subject Option Rent as
determined by Landlord.
(A) Landlord and Tenant shall each appoint one real estate broker
from an established brokerage firm in Washington, D.C., with not less than ten
(10) licensed office leasing brokers, which appointed broker shall have been
active over the ten (10) year period ending on the date of such appointment in
the leasing of retail space in commercial properties in Washington, D.C.,
provided that such broker shall not have been engaged or employed by the party
appointing the same within such ten (10) year period (not including the
engagement or compensation of a broker by Landlord in such broker's capacity as
an outside tenant broker). The determination of the brokers shall be limited
solely to the selection of either Landlord's or Tenant's submitted Option Rent
for the subject Option Term, taking into account the requirements of this
Article 27. Each such broker shall be appointed within fifteen (15) days after
the subject Tenant Outside Agreement Date or the subject Landlord Outside
Agreement Date, as the case may be.
(B) The two (2) brokers so appointed shall, within ten (10) days of
the date of the appointment of the last appointed broker, agree upon and appoint
a third broker who shall be qualified under the same criteria set forth above
for qualification of the initial two (2) brokers.
(C) The three (3) brokers shall, within thirty (30) days of the
appointment of the third broker, reach a decision as to whether the parties
shall use Landlord's or Tenant's submitted subject Option Rent and shall notify
Landlord and Tenant thereof.
(D) The decision of the majority of the three (3) brokers shall be
binding upon Landlord and Tenant.
(E) If either Landlord or Tenant fails to appoint a broker within
fifteen (15) days after the subject Tenant Outside Agreement Date or the subject
Landlord Outside Agreement Date, as the case may be, the broker appointed by the
other shall reach a decision, notify Landlord and Tenant thereof, and such
broker's decision shall be binding upon Landlord and Tenant.
(F) If the two (2) brokers timely appointed by Landlord and Tenant
fail to timely agree upon and appoint a third broker, then the appointment of
the third broker shall be submitted to arbitration under the provisions of the
American Arbitration Association, but subject to the instructions set forth in
this Article 27
(G) Landlord and Tenant shall each pay the cost of the broker
appointed by it and one-half (1/2) of the cost of the third broker.
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27.5 If Tenant timely and properly exercises an Option to Extend in
accordance with this Article 27, Landlord and Tenant shall execute an amendment
to this Lease evidencing the extension of the then-current Lease Term promptly
following the determination of the subject Option Rent.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
WITNESS: LANDLORD:
PENNSYLVANIA PLAZA ASSOCIATES,
a District of Columbia limited partnership
By: Yorkington Limited Partnership
Its General Partner
By: Lawrich Capital Corporation
Its general partner
/s/ ILLEGIBLE By: /s/ Harvey E. Rothenberg (SEAL)
- ----------------------------- -------------------------
Print Name: Harvey E. Rothenberg
Title: Vice - pres.
WITNESS: TENANT:
M.O.C. OF MIAMI, L.L.C.,
a Delaware Limited Liability Company
/s/ ILLEGIBLE By: /s/ James Dunn (SEAL)
- ----------------------------- ----------------------------------
Print Name: JAMES DUNN
Title: PRESIDENT
<PAGE>
EXHIBIT A
PREMISES
TO BE ADDED BY LANDLORD
Exhibit A-1 -- Page 1
<PAGE>
EXHIBIT B
OUTDOOR SEATING AREA
This Exhibit and Exhibit E are the same.
Exhibit B -- Page 1
<PAGE>
[GRAPHIC OMITTED]
EXHIBIT B AND EXHIBIT E
<PAGE>
EXHIBIT C
RULES
1. Tenant shall not obstruct or encumber or use for any purpose
other than ingress and egress to and from the Premises any sidewalk, entrance,
alley, passage, court, elevator, vestibule, stairway, corridor, hall or other
part of the Building not exclusively occupied by Tenant. Landlord shall have the
right to control and operate the public portions of the Building and the
facilities furnished for common use of the tenants, in such manner as Landlord
deems best for the benefit of the tenants generally. Tenant shall not permit the
visit to the Premises of persons in such numbers or under such conditions as to
interfere with the use and enjoyment of the entrances, corridors, elevators and
other public portions or facilities of the Building by other tenants. Tenant
shall coordinate in advance with Landlord's property management department all
deliveries to the Building so that arrangements can be made to minimize such
interference.
2. Tenant shall not attach, hang or use in connection with any
window or door of the Premises any drape, blind, shade or screen, without
Landlord's prior consent. All awnings, projections, curtains, blinds, shades,
screens and other fixtures shall be of a quality, type, design and color, and
attached in a manner, approved in writing by Landlord.
3. Tenant shall not place any showcase, mat or other article in any
part of the exterior of the Premises.
4. Tenant shall not use the water and wash closets and other
plumbing fixtures for any purpose other than those for which they were
constructed, and Tenant shall not place any debris, rubbish, rag or other
substance therein.
5. Tenant shall not construct, maintain, use or operate within the
Premises any electrical device, wiring or apparatus in connection with a loud
speaker system or other sound system without Landlord's prior consent. Tenant
shall not construct, maintain, use or operate any such loud speaker or sound
system outside of the Premises.
6. Tenant shall not bring any bicycle, vehicle, animal, bird or pet
of any kind into the Building. Tenant shall not cause or permit any unusual or
objectionable odor to be produced upon or permeate from the Premises.
7. Tenant shall not make any unseemly or disturbing noise or disturb
or interfere with occupants of the Building.
8. Tenant shall not place additional locks or bolts of any kind on
any of the doors or windows, and shall not make any change in any existing lock
or locking mechanism therein,
Exhibit C -- Page 1
<PAGE>
without Landlord's prior approval. Tenant shall keep doors leading to a corridor
or main hall closed during business hours except as such doors may be used for
ingress or egress. Tenant shall, upon the termination of its tenancy, restore to
Landlord all keys of stores, offices, storage and toilet rooms either furnished
to, or otherwise procured by, Tenant, and in the event of the loss of any keys
so furnished, Tenant shall pay the replacement cost thereof. Tenant's key system
shall be separate from that for the rest of the Building.
9. Landlord reserves the right to exclude from the Building at all
times any person who does not properly identify himself to the Building
management or watchman on duty. Landlord may require all persons admitted to or
leaving the Building to register.
10. Tenant shall not use the Premises for lodging or sleeping or for
any immoral or illegal purpose.
11. Tenant shall not request Landlord's employees to perform any
work or do anything outside of such employees' regular duties without Landlord's
prior consent. Tenant's special requirements will be considered only upon
application to Landlord, and any such special requirements shall be billed to
Tenant in accordance with the schedule of charges maintained by Landlord from
time to time or as is agreed upon in writing in advance by Landlord and Tenant.
Tenant shall not employ any of Landlord's employees for any purpose whatsoever
without Landlord's prior consent.
12. Canvassing, soliciting and peddling in or around the Building
are prohibited and Tenant shall cooperate to prevent the same.
13. There shall not be used in any space, or in the common areas of
the Building, either by any tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards. Tenant shall be responsible for any loss or damage resulting
from any deliveries made to and any pick-ups from Tenant.
14. Blinds (whether installed by Landlord or Tenant) which are
visible from the exterior of the Building, shall be cleaned by Tenant at least
once a year, without notice from Landlord, at Tenant's own expense.
15. Tenant shall comply with any and all requirements relating to
the segregation of glass, paper, metal or other materials in Tenant's refuse
implemented pursuant to the terms of the Solid Waste Management and
Multi-Material Recycling Act of 1988.
16. Landlord may, upon request of Tenant, waive Tenant's compliance
with any of the rules, provided that (a) no waiver shall be effective unless
signed by Landlord, (b) no waiver shall relieve Tenant from the obligation to
comply with such rule in the future unless otherwise agreed in writing by
Landlord, (c) no waiver granted to any tenant shall relieve any other tenant
from the obligation of complying with these rules and regulations, and (d) no
waiver shall relieve Tenant from any liability for any loss or damage resulting
from Tenant's failure to comply with any rule.
Exhibit C -- Page 2
<PAGE>
EXHIBIT D
CERTIFICATE AFFIRMING THE LEASE COMMENCEMENT DATE
This Certificate is being provided pursuant to Section 3.2 of that
certain Lease Agreement dated as of April 7, 1999 (the "Lease"), between
PENNSYLVANIA PLAZA ASSOCIATES ("Landlord") and M.O.C. OF MIAMI, L.L.C.
("Tenant"). The parties to the Lease desire to confirm the following:
1. The Lease Commencement Date is ___________________, 1999.
2. The initial term of the Lease shall expire on _______________,
2009.
Attached to this Certificate is evidence of payment of premiums for
all insurance required pursuant to Section 14.3 of the Lease.
WITNESS: LANDLORD:
PENNSYLVANIA PLAZA ASSOCIATES,
a District of Columbia limited partnership
By: Yorkington Limited Partnership
Its General Partner
By: Lawrich Capital Corporation
Its general partner
______________________________ By:_______________________ (SEAL)
Print Name:______________________
Title: __________________________
WITNESS: TENANT:
M.O.C. OF MIAMI, L.L.C.,
a Delaware limited liability company
______________________________ By:_______________________________________
Print Name:_______________________________
Title: ___________________________________
Exhibit D -- Page 1
<PAGE>
EXHIBIT E
SIGNAGE
This Exhibit and Exhibit B are the same.
Exhibit E - Page 1
<PAGE>
EXHIBIT F
GUARANTY OF LEASE
THIS GUARANTY OF LEASE (this "Guaranty") is made as of April 7, 1999, by
THE NEW YORK RESTAURANT GROUP, INC., a Delaware corporation ("Guarantor"),
having an address at 1114 First Avenue, New York, New York 10021, to
PENNSYLVANIA PLAZA ASSOCIATES ("Landlord"), having an address at 600 Madison
Avenue, 20th Floor, New York, New York 10022.
WHEREAS, Landlord has leased to M.O.C. OF MIAMI, L.L.C., a Delaware
limited liability company ("Tenant"), certain space (the "Premises") located in
the building known as Pennsylvania Plaza, which is located at 601 Pennsylvania
Avenue, N.W., North Building, Washington, D.C. 20004, pursuant to that certain
Lease Agreement by and between Landlord and Tenant dated as of April 7, 1999
(the "Lease");
WHEREAS, Guarantor is materially benefitted by the Lease, and Guarantor's
executing this Guaranty is a material inducement to Landlord to enter into the
Lease.
NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor agrees with Landlord as follows:
I. Guarantor unconditionally and irrevocably guarantees that all sums
stated in the Lease to be payable by Tenant for the period beginning on the
Lease Commencement Date (as defined in the Lease) and ending on the last day of
the twenty-fourth (24th) full calendar month following the date on which Tenant
has opened for business at the Premises in accordance with the requirements of
Section 6.1 of the Lease (the "Guaranty Period"), shall be promptly paid in full
when due in accordance with the Lease and that Tenant shall perform and observe
its covenants thereunder. During the Guaranty Period, if any such sum or
covenant is not timely paid, performed or observed, then Guarantor shall,
promptly after notice thereof and prior to the expiration of any applicable
grace period specified in the Lease, pay the same regardless of (a) any defense
or right of offset or counterclaim which Tenant or Guarantor may have or assert
against Landlord, (b) whether Landlord shall have taken any steps to enforce any
rights against Tenant or any other person, (c) termination of the Lease as a
result of Tenant's default, or (d) any other condition or contingency. Guarantor
shall also pay all expenses of collecting such sum or any part thereof or of
otherwise enforcing this Guaranty, including without limitation reasonable
attorneys' fees. This Guaranty is irrevocable, unconditional and absolute.
2. Guarantor's obligations and covenants under this Guaranty shall in no
way be affected or impaired by reason of the happening from time to time of any
of the following, whether or not Guarantor has been notified thereof or
consented thereto: (i) Landlord's waiver of the performance
Exhibit F -- Page 1
<PAGE>
or observance by Tenant, Guarantor or any other party of any covenant or
condition contained in the Lease or this Guaranty; (ii) any extension, in whole
or in part, of the time for payment by Tenant or Guarantor of any sums owing or
payable under the Lease or this Guaranty, or of any other sums or obligations
under or arising out of or on account of the Lease or this Guaranty, or the
renewal of the Lease or this Guaranty; (iii) any assignment of the Lease or
subletting of the Premises or any part thereof; (iv) any modification or
amendment (whether material or otherwise) of any of the obligations of Tenant or
Guarantor under the Lease or this Guaranty; (v) the doing or the omission of any
act referred to in the Lease or this Guaranty (including the giving of any
consent referred to in the Lease or this Guaranty); (vi) Landlord's failure or
delay to exercise any right or remedy available to Landlord or any action on the
part of Landlord granting indulgence or extension in any form whatsoever; (vii)
the voluntary or involuntary liquidation, dissolution, sale of any or all of the
assets, marshaling of assets and liabilities, receivership, conservatorship,
insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
affecting, Tenant or Guarantor or any of Tenant's or Guarantor's assets; or
(viii) the release of Tenant or Guarantor from the performance or observation of
any covenant or condition contained in the Lease or this Guaranty by operation
of law.
3. To the extent not prohibited by law, Guarantor hereby expressly waives
(a) any right Guarantor may now or hereafter have to any hearing prior to the
attachment of any real or personal property to satisfy Guarantor's obligations
hereunder, and (b) the benefits of any present or future constitution, statute
or rule of law which exempts property from liability for debt. Guarantor
expressly waives any right Guarantor may now or hereafter have against Tenant
(and/or any other guarantor of Tenant's obligations under the Lease) with
respect to this Guaranty (including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification or
similar right, and any right to participate in any claim, right or remedy of
Landlord against Tenant or any security which Landlord now or hereafter has with
respect to the Lease), whether such right arises under an express or implied
contract, by operation of law, or otherwise. Guarantor shall be deemed not to be
a "creditor" (as defined in Section 101 of the Bankruptcy Code (as defined in
the Lease)) of Tenant by reason of the existence of this Guaranty in the event
that Tenant becomes a debtor in any proceeding under the Bankruptcy Code.
4. If the Lease is rejected or disaffirmed by Tenant or Tenant's trustee
in bankruptcy pursuant to bankruptcy law or any other law affecting creditors'
rights, then Guarantor shall, and does hereby (without the necessity of any
further agreement or act) assume all obligations and liabilities of Tenant under
the Lease during the Guaranty Period to the same extent as if (a) Guarantor were
originally named Tenant under the Lease, and (b) there had been no such
rejection or disaffirmance. Guarantor shall upon Landlord's request promptly
confirm in writing such assumption.
5. Notice of acceptance of this Guaranty and notice of any obligations or
liabilities contracted or incurred by Tenant are hereby waived by Guarantor.
Guarantor hereby waives presentment, notice of dishonor, protest and notice of
non-payment or non-performance.
Exhibit F -- Page 2
<PAGE>
6. This Guaranty shall be construed in accordance with the laws of the
jurisdiction in which the Premises are located. Guarantor consents to personal
jurisdiction in any court in the District of Columbia and waives any objection
to the venue of any action filed in any such court.
7. This Guaranty may not be modified or amended except by a written
agreement duly executed by Guarantor and Landlord.
8. Guarantor's liability shall be primary and joint and several with that
of Tenant. Landlord may proceed against Guarantor under this Guaranty without
initiating or exhausting any remedy against Tenant, and may proceed against
Tenant and Guarantor separately or concurrently. If more than one natural person
and/or entity shall constitute Guarantor, then the liability of each such person
and/or entity shall be joint and several.
9. Within fifteen (15) days after Landlord's written request, Guarantor
shall execute and deliver to Landlord a written statement certifying any matter
concerning this Guaranty or the Lease as Landlord may request.
10. Any notice which Landlord may elect to send shall be binding upon
Guarantor if mailed to Guarantor at the address set forth above or Guarantor's
last address known to Landlord, by United States certified or registered mail,
return receipt requested.
11. This Guaranty shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
12. Notwithstanding anything to the contrary contained herein, provided
that as of the last day of the Guaranty Period (i) no Event of Default (as
defined in the Lease) remains outstanding and uncured, and (ii) no event exists,
which event with notice and/or the passage of time, would constitute an Event of
Default if not cured within the applicable cure period, if any, this Guaranty
shall terminate automatically on the first calendar day following the last day
of the Guaranty Period. Notwithstanding the foregoing, in the event that either
of the conditions specified in the immediately preceding sentence are not
satisfied on the last day of the Guaranty Period, this Guaranty shall remain in
full force and effect until Landlord has collected from Guarantor all sums that
are due and payable pursuant to Paragraph 1 of this Guaranty, whereupon this
Guaranty shall terminate.
Exhibit F -- Page 3
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
under seal as of the date first above written.
WITNESS: GUARANTOR:
THE NEW YORK RESTAURANT GROUP, INC., a
Delaware corporation
/s/ ILLEGIBLE By: /s/ James Dunn (SEAL)
- ----------------------------------- ------------------------------
Print Name: JAMES DUNN
Title: PRESIDENT
Exhibit F -- Page 4
<PAGE>
PENNSYLVANIA PLAZA ASSOCIATES
c/o Lawrence Ruben Company, Inc.
600 Madison Avenue
New York, New York 10022
Tel: (212) 980-0910
Fax: (212) 319-5627
April 7, 1999
The New York Restaurant Group, Inc.
1114 First Avenue
New York, NY 10021
Attn: Jim Dunn
Re: Lease at 601 Pennsylvania Avenue, N.W., North Building,
Washington, D.C.
Dear Jim:
In connection with the execution and delivery of that certain Lease
Agreement (the "Lease") for restaurant space at 601 Pennsylvania Avenue, N.W.,
North Building, Pennsylvania Plaza Associates ("Landlord") and M.O.C. of Miami,
LLC ("Tenant") have agreed that Tenant shall have the right to terminate the
Lease by written notice to Landlord not later than 5:00 p.m. on April 16, 1999
in the event Tenant reasonably determines that the costs associated with
repairing and/or replacing the electrical, mechanical, or HVAC systems in the
demised premises will exceed $75,000 in the aggregate.
If Tenant desires to exercise the aforesaid right of termination, it shall
provide to Landlord, together with its termination notice, copies of any and all
reports and studies commissioned by Tenant in connection therewith. Landlord
shall have the right, at its sole option and notwithstanding anything set forth
above, to reinstate the Lease in full by written notice to Tenant within five
days after Landlord's receipt of Tenant's termination notice, and in such event,
Landlord shall either (i) perform the work necessary to repair and/or replace
the aforesaid systems (with the costs to be paid by Tenant, up to the first
$75,000, and the remaining costs to be paid by Landlord), or (ii) pay the costs
associated with repairing and/or replacing the aforesaid systems, but only to
the extent such costs actually exceed $75,000 in the aggregate.
<PAGE>
Please countersign this letter to evidence your agreement with the
foregoing.
Sincerely,
PENNSYLVANIA PLAZA ASSOCIATES
By: /s/ Harvey E. Rothenberg
------------------------------
AGREED:
M.O.C. OF MIAMI, L.L.C.
By: /s/ James Dunn
-----------------------------
-2-
<PAGE>
Exhibit 10.10
RESTAURANT MANAGEMENT AGREEMENT made as of the 18th day of April, 1996 by
and between 37 EAST 50TH STREET CORPORATION, a domestic corporation with offices
at 37 East 50th Street, New York, New York ("NEWCO") and RESTAURANT GROUP
MANAGEMENT SERVICES, L.L.C., a domestic limited liability company with offices
at 1114 First Avenue, New York, New York ("MANAGEMENT COMPANY").
WITNESSETH
WHEREAS, NEWCO is the owner of the Restaurant located at 37 East 50th
Street, New York, New York, and doing business as GLOUCESTER CAFE ("the
Restaurant"); and,
WHEREAS, the MANAGEMENT COMPANY is a New York Limited Liability Company
the principals of which are experienced in the business of Restaurant design and
administration and,
WHEREAS, upon the terms and conditions herein set forth, NEWCO wishes to
retain the MANAGEMENT COMPANY to provide administrative, managerial and
operating services in connection with the operation of the Restaurant and,
WHEREAS, the parties wish to set forth their agreement with respect to
such retention,
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is agreed as follows:
1. HIRING OF THE MANAGEMENT COMPANY. NEWCO hereby retains the MANAGEMENT
COMPANY to provide new restaurant concept design, construction, administrative,
managerial and operating services in connection with the operation of the
Restaurant, and in connection with operation of banquet services at the
Restaurant, and off the premises. The MANAGEMENT COMPANY shall render such
services upon the terms and conditions hereafter set forth. NEWCO acknowledges
that the MANAGEMENT COMPANY renders similar services to other Restaurants, which
Restaurants may be competitive with the Restaurant, and agrees that, except as
hereinafter provided in Section 9, it may continue to render such services to
those entities and accept similar employment with other entities. The MANAGEMENT
COMPANY acknowledges that it is the essence of this agreement that the
Restaurant will be constructed and operated as a first-class Manhattan
Restaurant, with white tablecloth service during the term of this agreement.
MANAGEMENT COMPANY acknowledges and agrees that, while all business decisions
will be made in its sole discretion, NEWCO has entered into this agreement in
reliance on the belief that the MANAGEMENT COMPANY will make business decisions
and exercise business judgment in good faith and without personal bias or
conflict of interest between the objectives of MANAGEMENT COMPANY and its
principals on the one hand, and NEWCO, its principals and shareholders on the
other.
2
<PAGE>
2. ADDITIONAL SERVICES BY THE MANAGEMENT CO. The administrative
services rendered by the MANAGEMENT COMPANY shall include the maintenance of
all bookkeeping and accounting records as are necessary to prepare and file
timely all tax withholding forms for all Restaurant employees and all sales
and tax records and returns for the Restaurant and pay timely to the
appropriate tax authorities all taxes required to be reported on such forms
or returns. In addition, the MANAGEMENT COMPANY shall perform at the expense
of the NEWCO, the following: comply with all governmental health and safety
regulations, including the maintenance of all necessary business, food and
beverage licenses; maintain all reasonably required fire, theft, accident and
other insurance policies and renewals thereof; purchase all supplies and
equipment, food, food products and beverages to be used in the operation of
the Restaurant; supervise, manage, hire and discharge Restaurant personnel,
all of whom shall be deemed to be employees of NEWCO; supervise the making of
all necessary repairs, decorations and alterations to the Restaurant;
implement promotional and advertising programs; provide menu and wine list
content and pricing; manage collections, cash receipts and deposit
arrangements and make payments for those items chargeable under this
Agreement out of the account referred to in, and as otherwise provided, in
Section 5 hereof; prepare financial budgets and information; generally act as
liaison between NEWCO and the employees of the Restaurant, and continue such
operating policies so as to maintain the Restaurant as a first-class
Manhattan Restaurant. The MANAGEMENT COMPANY will make all discount and bulk
purchase arrangements which it has with third parties available to the
Restaurant on the same basis and furnish the Restaurant with appropriate
vouchers and backup information to support the charges to NEWCO. These
discount and bulk purchase arrangements shall include advertising and public
relations. NEWCO acknowledges that the MANAGEMENT COMPANY shall be
3
<PAGE>
permitted to advertise the Restaurant, and utilize public relations with the
Restaurant in joint campaigns with other Restaurants with which the MANAGEMENT
COMPANY is involved, or shall become involved.
Without limiting the generality of the foregoing, the MANAGEMENT COMPANY
shall:
a. Within thirty (30) business days after the end of each calendar
month commencing with the effective date of this agreement, furnish to NEWCO a
monthly report of income, sales, expenses, cash flow, and balance sheet changes,
including inventory. Comparable quarterly reports will be delivered within
thirty (30) business days of the end of each calendar quarter. A weekly sales
report will also be furnished within seven (7) business days after the end of
each week.
b. Furnish to NEWCO an annual financial statement of Restaurant
operations prepared (at the sole cost and expense of NEWCO) by a firm of
certified public accountants chosen by the MANAGEMENT COMPANY. The entire cost
of all expenses of the business of NEWCO (other than salaries of the MANAGEMENT
COMPANY employees) including, without limitation, the cost of business licenses,
taxes, insurance premiums, food, beverages, payroll servicing, salaries of
employees at the Restaurant, office supplies, advertising, and legal and outside
accounting fees for services rendered to NEWCO shall be paid by NEWCO.
3. COMPENSATION.
a. As partial compensation for the MANAGEMENT COMPANY'S services
hereunder, in addition to the compensation set forth in Section 4 hereof, NEWCO
shall pay to the
4
<PAGE>
MANAGEMENT COMPANY an amount equal to three (3) per cent of all Restaurant
Sales (as hereinafter defined) with respect to each month (or portion hereof at
the beginning and end of the term of this Agreement). Such amount shall be paid
within seven (7) days after the end of each calendar month and, until adjusted
by the parties as hereafter provided, the amount paid shall equal three (3) per
cent of the Restaurant Sales for the immediately preceding month.
b. If at the close of any calendar year (but not later than 90 days
thereafter) it is determined that the aggregate of the monthly payments for the
fiscal year has either exceeded or fallen short of three (3) per cent of
Restaurant Sales for such fiscal year, then the MANAGEMENT COMPANY and the NEWCO
shall promptly adjust the amount owing not later than 90 days after such
calendar year.
c. For the purposes of this paragraph, the parties shall be bound by the
certified financial statement of the certified public accountants retained by
the MANAGEMENT COMPANY as accountants for the Restaurant.
d. The term "Restaurant Sales" shall mean all monies received by NEWCO or
for their account from the operation of the Restaurant, including, but not
limited to, banquet services, on and off premises catering, and sale of
merchandise in the ordinary course of business, in cash, by credit card or
otherwise, but less, as to all the foregoing, bona fide refunds to customers,
uncollected amounts, gratuities and tips in fact paid out by the Restaurant to
employees of the Restaurant, and taxes imposed and paid by the Restaurant on
customer checks.
5
<PAGE>
e. NEWCO agrees to provide to MANAGEMENT COMPANY copies of NEWCO federal
and state tax returns, on an annual basis and NEWCO agrees to indemnify and hold
MANAGEMENT COMPANY harmless with respect to any liability to the MANAGEMENT
COMPANY based on errors and omissions in such returns.
4. ADDITIONAL COMPENSATION.
a. As additional compensation for its management services hereunder,
MANAGEMENT COMPANY shall be paid by NEWCO a sum equal to the lessor of (i)50% of
the operating cash flow of NEWCO and (ii) cash flow of NEWCO minus the sums
retained by NEWCO from operating cash flow under Article 4(b). Said additional
compensation shall be payable quarterly, but adjusted on an annualized basis.
For the purposes of this Article 4, any difference between the compensation paid
to the MANAGEMENT COMPANY under this Article 4(a), in any calendar year prior to
2001 and 50% of the operating cash flow for said year shall be defined as
"Shortfall".
b. MANAGEMENT COMPANY guarantees that, during the periods below set
forth, and notwithstanding whether or not, for any such period, NEWCO has
realized a positive operating cash flow sufficient to do so, NEWCO will receive
or retain the greater of 50% of operating cash flow, or the amounts set forth
below, such payments to be paid, pro-rata, on a monthly basis before the tenth
(10th) day of each month.:
Calendar 1996 50% of operating cash flow,
but not less than zero
Calendar 1997 $144,000
Calendar 1998 $240,000
Calendar 1999 $300,000
6
<PAGE>
Calendar 2000 $360,000
Calendar 2001 $360,000
Calendar 2002 $360,000
Calendar 2003 $360,000
Calendar 2004 $480,000
To end of term
of this agreement $480,000
In any year that Restaurant sales reach $7,000,000, the guaranteed
payments shall be in the amount of the greater of $300,000 or the amounts set
forth above.
c. For the purposes of this article, operating cash flow shall equal
Restaurant Sales, minus cost of goods sold, compensation paid under Article 3(a)
hereof, and actual operating expenses as calculated and prepared for reporting
purposes under generally accepted accounting principles and as adjusted to
exclude the following:
1. The initial cash paid by the MANAGEMENT COMPANY under
Article 9(a), (b) and (c) hereof.
2. Any additional cash infusions by the MANAGEMENT COMPANY or
by NEWCO.
3. The principal amount of any debt financing for any other
cash flow items outside the normal course of business (e.g., insurance proceeds
other than business interruption). The intention of the parties for calculation
of operating cash flow is set forth on the document entitled "GLOUCESTER HOUSE
ILLUSTRATIVE INCOME STATEMENT" attached hereto and Schedule "A".
7
<PAGE>
d. In any calendar year prior to 2001 for which (1) the operating
cash flow of NEWCO exceeds twice the guaranteed payments for such year as
specified in Article 4(6), above, and (2) there is an outstanding Shortfall for
any prior year or years of this Agreement, whether the year immediately or
otherwise, said excess amount shall be applied first toward satisfaction of such
Shortfall, and any balance thereafter remaining shall be shared by NEWCO and
MANAGEMENT COMPANY as otherwise provided in this article 4.
5. BANK ACCOUNTS. NEWCO shall establish a bank account at a bank of their
choice. One (1) person designated by the MANAGEMENT COMPANY and one (1)
designated by NEWCO who might be changed from time to time by the MANAGEMENT
COMPANY and NEWCO, shall be the authorized signatories for the account. Persons
designated as signatories by the MANAGEMENT COMPANY and NEWCO shall not have the
authority to sign a check for an amount in excess of $20,000; rather, same
shall only be authorized by Peter Skeadas, for NEWCO, and Mark Levine, for the
MANAGEMENT COMPANY. All monies received from the operation of the Restaurant,
and any and all expenses paid by the MANAGEMENT COMPANY on account of the
operation of the Restaurant, shall pass through this account. NEWCO agrees to
sign all checks presented to it by the MANAGEMENT COMPANY within forty-eight
(48) hours of receipt of same.
6. INSURANCE. The MANAGEMENT COMPANY shall seek insurance coverage for
fire, public liability, automobile, theft, casualty and property damage,
comprehensive dishonesty, disappearance and destruction, and workmen's
compensation insurance, as required by the lease for the premises, and as
reasonably necessary in the sole discretion of the MANAGEMENT COMPANY.
MANAGEMENT COMPANY shall arrange for NEWCO coverage during the term
8
<PAGE>
of this Agreement naming NEWCO and the MANAGEMENT COMPANY as insureds as their
interests shall appear under such policies. MANAGEMENT COMPANY shall not be
required to arrange for coverage which cannot be generally obtained at
commercially reasonable rates unless required by the lease for the premises. The
MANAGEMENT COMPANY shall advise and assist in the review and renewal of such
insurance and, to the extent possible, make available to NEWCO bulk rates for
such insurance coverage as are available to the MANAGEMENT COMPANY.
7. INDEMNITY. NEWCO agrees:
A. To the extent an insurance carrier does not assume the defense in
respect of any claim, action or proceeding against the MANAGEMENT COMPANY or
NEWCO for actions allegedly within the scope of this Agreement, to defend
promptly and diligently, at the expense of NEWCO any claim, action or proceeding
brought against the MANAGEMENT COMPANY, or its employees or agents, or NEWCO
jointly or severally arising out of or connected with any of the foregoing, and
to hold harmless and fully indemnify the MANAGEMENT COMPANY, its employees or
agents, from any judgment, loss or settlement on account thereof to the extent
not covered by insurance, regardless of the jurisdiction in which any such
claims, actions or proceedings may be brought, and whether brought against the
MANAGEMENT COMPANY alone or the MANAGEMENT COMPANY and NEWCO.
B. To the extent not covered by insurance, to indemnify and hold the
MANAGEMENT COMPANY, its employees and agents, free and harmless from any
liability finally determined pursuant to paragraph (A) above for injury to
persons or damage to property
9
<PAGE>
by reason of any cause whatsoever, either in and about the Restaurant, as a
result of the performance of this Agreement by the MANAGEMENT COMPANY, its
agents or employees, irrespective of whether negligence on the part of the
MANAGEMENT COMPANY is alleged.
C. Notwithstanding the foregoing, NEWCO shall not be liable to
indemnify and hold the MANAGEMENT COMPANY harmless, and the MANAGEMENT COMPANY
hereby indemnifies and holds NEWCO free and harmless, from any liability which
results from the gross negligence, fraud, or willful misconduct of the
MANAGEMENT COMPANY, its agents or employees.
D. If, as part of this indemnification, it shall be necessary for
the MANAGEMENT COMPANY to retain counsel, same shall be at the expense of NEWCO.
E. This indemnification shall be unlimited, and shall include
attorneys' fees and related costs and expenses.
8. STATE LIQUOR AUTHORITY.
a. NEWCO and MANAGEMENT COMPANY agree to cooperate in notifying the
New York State Liquor Authority ("NYSLA") of the arrangement entered into
herein. Additionally, the parties agree, at the expense of NEWCO, if required by
the New York State Liquor Authority, to make any application as may be required
by the New York State Liquor Authority as a result of the NYSLA's having been
notified of the terms of this agreement.
b. The parties acknowledge that it may be necessary, in connection
with the addition of the banquet area to the premises, to file an application
with the New York State
10
<PAGE>
Liquor Authority for permission to make alterations. The parties each agree to
cooperate with such application.
9. PURCHASE OF RIGHT TO MANAGE. In consideration of NEWCO granting to
MANAGEMENT COMPANY the within managing agreement, the MANAGEMENT COMPANY shall
make payments to NEWCO as follows:
a. Upon the execution of this agreement, the sum of $250,000; to be
held in escrow by Sargent & Sargent, the attorneys for NEWCO subject to the
terms hereinafter set forth;
b. The sum of $750,000, on and after the Commencement Date (as
defined in Article 10) and before the Restaurant is opened to the public by the
MANAGEMENT COMPANY, in such installments and amounts as are reasonably needed to
meet the objectives of this Agreement.
c. The sum of no more than $500,000, at any time during the term of
the agreement, if, in the reasonable judgment of the MANAGEMENT COMPANY, such
additional sum is required to accomplish the objectives set forth in
subparagraph (d) and (e) hereof.
d. The sums set forth in paragraphs (a), (b), and (c), above shall
be utilized, in the reasonable discretion of the MANAGEMENT COMPANY, for the
renovation of the premises; as an infusion of operating capital; and for the
creation of a wine inventory, of a value on the commencement date of no more
than $200,000, it being the intent of the parties that the premises be open to
the public on or about August 1, 1996 as a steak and seafood American
Restaurant. Ambiance, decor, menu style, wine list and naming of the Restaurant
shall be in the sole discretion
11
<PAGE>
of the MANAGEMENT COMPANY, subject only to its exercise of its exercise of its
reasonable business judgment. NEWCO acknowledges that any name used in the
operation of the Restaurant shall remain the sole and exclusive property of the
MANAGEMENT COMPANY but that the MANAGEMENT COMPANY and its affiliates and
related companies will not use the name, during the time this agreement is in
effect, in any other Restaurant in the five boroughs of New York City or within
a circle having a five mile radius and a center of the Restaurant. NEWCO agrees
to seek all consents necessary under its leases to permit the name chosen by the
MANAGEMENT COMPANY to be utilized. If such consent cannot be obtained, this
agreement may be canceled at any time prior to the commencement date and all
monies paid hereunder refunded to the MANAGEMENT COMPANY.
Subject to the foregoing paragraph, the MANAGEMENT COMPANY shall
have the right to use the name or names utilized at the Restaurant elsewhere
without liability to NEWCO, and NEWCO acknowledges that it has no rights
whatsoever to the name or names.
e. The sums deposited in escrow pursuant to subparagraph (a) hereof,
shall be released into the regular account of NEWCO, to be utilized as operation
capital upon written notice by the attorneys and the accountants for the
MANAGEMENT COMPANY, upon their review of the books and records of NEWCO, and
upon their review of any other relevant documentation, all of which NEWCO agrees
to make available to the attorneys and accountants for the MANAGEMENT COMPANY,
that:
1. The lease to the premises has been assigned to NEWCO, with
landlord's consent.
12
<PAGE>
2. NEWCO is a newly formed corporation, in existence only
since April 10, 1996, at the earliest, and formed solely for the purposes of the
Agreement;
3. NEWCO has no debts whatsoever to any third party including,
but not limited to, the landlord at the premises, except for commitments to
David Anton, Media Resources International, Ltd., and The Guest Informant. Such
agreements do not include obligations of either more than $100,000 in cash or
more than $200,000 in "in kind" payments, all of which involve future work to
be done by these entities or persons, and not work done in the past;
4. The Restaurant, and the furniture, fixtures and equipment
at the premises, are free and clear of liens, encumbrances and chattel mortgages
of any kind or description;
5. The premises are in compliance with all rules, regulations
and licensing requirements of all state, federal and local authorities including
obtaining a temporary retail permit from the New York State Liquor Authority, if
necessary;
6. They have received certification by NEWCO that, in its
reasonable opinion, the premises have been opened to the public by the
MANAGEMENT COMPANY;
7. NEWCO represents and warrants that the statements set forth
in Article 9(e), 1, 2, 3, 4, and 5, are true as of the date of this Agreement,
shall be true as of the commencement date, as defined in Article 10 hereof; and
shall deliver, on the commencement date, an opinion letter of its attorneys with
respect to the truth of Paragraphs 1, 2, and 4,; and of its accountants with
respect to Paragraph 3.
f. NEWCO represents and warrants that items (1), (2), and (3) of
paragraph (e) shall be true as of May 1, 1996. If these representations and
warranties are not true, in the
13
<PAGE>
reasonable opinion of the attorneys and accountants for the MANAGEMENT COMPANY,
and after ten (10) days notice to NEWCO any condition complained of has not been
cured, the MANAGEMENT COMPANY shall have the right to cancel this agreement; the
deposit under subparagraph (a) hereof shall be released to it, and the parties
shall have no further rights each to the other.
g. Nothing herein contained shall be construed to give any ownership
rights in the Restaurant to the MANAGEMENT COMPANY All assets of the Restaurant
shall remain the property of NEWCO.
10. TERM.
A. The management of the Restaurant by the MANAGEMENT COMPANY shall
commence the date NEWCO closes the premises to the public (the "Commencement
Date"), and shall continue so long as NEWCO occupies the premises for the
operation of a Restaurant. NEWCO represents that the operating lease to the
premises expires on 2011; that the ground lease expires in 2015; and that upon
the expiration of the fixed term of the operating lease, it will make best
efforts further to renew its lease for the Restaurant premises. MANAGEMENT
COMPANY acknowledges that it has received and reviewed a copy of the operating
lease. NEWCO represents that it will continue to operate the Restaurant unless
MANAGEMENT COMPANY consents to a cessation of restaurant operations.
The parties acknowledge that it is their intention that the following
transpire:
14
<PAGE>
a. That NEWCO close the premises to the public within 20 days of the
date of this agreement, and book no banquets from the date of this agreement, to
take place more than 20 days hence;
b. That from the date NEWCO closes to the public, the MANAGEMENT
COMPANY shall assume the management of the premises, and begin the process of
capitalizing, designing, building and staffing the Restaurant, the parties
intending that the Restaurant re-open within 90 days of the Commencement Date.
During the period following the Commencement Date but prior to re-opening,
MANAGEMENT COMPANY will provide NEWCO with reasonable reports on its progress
including, but not limited to, providing proof of disbursement of funds toward
the opening of the Restaurant, that is toward designing, constructing,
furnishing the Restaurant and providing inventory.
Should the MANAGEMENT COMPANY not reopen the Restaurant to the
public within 180 days of the Commencement Date, unless because of forces beyond
its control, the sums held in escrow under Article 9 (a) together with all other
property situated at the Restaurant will be released to NEWCO as liquidated
damages hereunder; MANAGEMENT COMPANY shall surrender the premises and its
contents; all sums expended through such time by the MANAGEMENT COMPANY will be
forfeited and, except for the provisions of subsection B.a.5 of this Article 10,
which shall survive as if termination had occurred in accordance with that
section, this Agreement shall become null and void.
15
<PAGE>
B. Except as provided for in subsection A of this Article 10 and in
Articles 12 and 13, this agreement may only be terminated as follows:
a. At the election of NEWCO, upon thirty (30) days notice to the
MANAGEMENT COMPANY of default, which default remains uncured, and which the
MANAGEMENT COMPANY does not commence diligent effort to cure, or "for cause",
which shall be limited to the following grounds:
1. The repeated failure or refusal by the MANAGEMENT COMPANY,
after written notice thereof, substantially to perform its duties and
responsibilities under this agreement.
2. Any willful or gross negligent act which materially injures
the reputation, business or any business relationship of the Restaurant, or of
NEWCO, or of any principals of NEWCO.
3. Any act of moral turpitude or violation of law which
materially effect the reputation of the Restaurant, NEWCO, or any principals of
NEWCO.
4. Any act of willful malfeasance, fraud, bad faith or
reckless disregard of the interests of NEWCO or its shareholders.
5. The failure of the MANAGEMENT COMPANY to make the
guaranteed payments under Article 4 hereof.
Upon any such termination under this Article B.a., the
MANAGEMENT COMPANY, shall immediately return control of the premises to NEWCO,
and guarantee that on such date of surrender, the Restaurant:
16
<PAGE>
i. Shall have no debts whatsoever to any third party,
including, but not limited to, the landlord at the premises;
ii. And the furniture, fixtures and equipment at the premises
will be free and clear of liens, encumbrances and chattel mortgages of any kind
and description;
iii. Will be in compliance with all rules, regulations and
licensing requirements of all state, federal and local authorities.
b. At the election of the MANAGEMENT COMPANY, upon the following
grounds:
(i) Upon 60 days notice, provided that at the end of the
notice period the MANAGEMENT COMPANY will have managed the Restaurant open to
the public for no less than 3 years, so long as no uninsurable cataclysmic
physical disaster of a level that would justify lease termination, or
extraordinary financial disaster of a magnitude equivalent to the stock market
crash of 1929, shall have occurred during such three year period in such a
manner as to directly affect NEWCO, MANAGEMENT COMPANY or any GUARANTOR
hereunder to such a degree as would reasonably render such guarantee impossible
to perform, and expended, pursuant to Article 9, no less than $1,500,000, it
being understood and agreed that upon the MANAGEMENT COMPANY electing to so
terminate, it will forthwith return control of the premises to NEWCO and, on
such date the Restaurant:
1. Will have no debts whatsoever to any third party, including, but
not limited to, the landlord at the premises and the furniture, fixtures and
equipment at the premises will be free and clear of liens, encumbrances and
chattel mortgages of any kind or description.
17
<PAGE>
2. Will be in compliance with all rules, regulations and licensing
requirements of all state, federal and local authorities.
MANAGEMENT COMPANY hereby agrees to indemnify, defend and hold NEWCO
and its principals and guarantors, if any, harmless from any liability for any
of the foregoing, including costs of defense.
(ii) Upon the election of the MANAGEMENT COMPANY to terminate
the agreement as set forth in the foregoing paragraph (i), all wine inventory on
the premises on the date of control is returned to NEWCO shall become the
property of MANAGEMENT COMPANY. The parties agree to cooperate with all filings
required by all relevant agencies to effectuate the intent of this subparagraph.
Notwithstanding the foregoing, if the wine inventory shall have a value in
excess of $200,000, utilizing prices paid for such wine when purchased by NEWCO,
only $200,000 of such wine shall become the MANAGEMENT COMPANY property, the
identity of such wines being at the sole discretion of the MANAGEMENT COMPANY.
Upon any termination of this agreement as set forth in
subparagraph B of Article 10, all wine inventory on the premises on the date
control is returned to NEWCO shall become the property of MANAGEMENT COMPANY.
The parties agree to cooperate with all filings required by all relevant
agencies to effectuate the intent of this subparagraph. If the wine inventory
shall have a value in excess of $200,000, utilizing prices paid for such wine
when purchased by NEWCO, only $200,000 of such wine shall become the MANAGEMENT
COMPANY'S property, the identity of such wines being at the sole discretion of
the MANAGEMENT COMPANY, the balance of such wine to be divided 50/50 between the
parties.
18
<PAGE>
11. Guarantee. For good and valuable consideration, sufficiency of which
is hereby acknowledged by the NEW YORK RESTAURANT GROUP, L.L.C., (the
"RESTAURANT GROUP"), the RESTAURANT GROUP hereby guarantees the performance by
the MANAGEMENT COMPANY of the provisions of this agreement in all respects.
For good and valuable consideration sufficiency of which is hereby
acknowledged, LOFT INTERNATIONAL RESTAURANT CORP., Peter Skeadas and Louis
Pappas hereby guarantee the performance by NEWCO of the provisions of this
Agreement in all respects, provided, however, that the guarantees of PETER
SKEADAS, and LOUIS PAPPAS shall be guarantees of collection, and not of payment,
and subject, without limitation, to the prior exhaustion of all remedies against
the following parties in the following order of priority: (1) The proceeds of
any applicable insurance, either of NEWCO, LOFT INTERNATIONAL RESTAURANT CORP.,
or of any joint obligor's applicable insurance; (2) any and all assets of any
joint obligor; (3) any and all assets of NEWCO, including the lease; and (4) any
and all assets of LOFT INTERNATIONAL RESTAURANT CORP. The Guarantee of Peter
Skeadas and Louis Pappas shall expire three years from the Commencement Date.
In any event the guarantee of NEWCO's guarantors hereunder, as qualified
above, shall be limited in gross amount to the lesser of the amount of any
applicable claim, or the aggregate amounts actually expended by MANAGEMENT
COMPANY pursuant to Article 9.
To evidence the obligations of NEWCO under this agreement, NEWCO shall
deliver to MANAGEMENT COMPANY, prior to the Commencement Date:
1. UCC-l Franchising Statements, covering all fixtures and equipment at
the premises, and all replacement fixtures.
19
<PAGE>
2. An assignment of the lease to the premises to MANAGEMENT COMPANY, in
recordable form. Same will be held in escrow by the attorneys for the Management
Company pursuant to an escrow receipt consistent with this agreement.
12. Sale of the Premises.
a. Should NEWCO receive a bona fide offer to sell the Restaurant, or
to sell all of the outstanding shares of stock of NEWCO or to sublet the
premises or sell a majority interest in itself; the following shall transpire:
i. NEWCO shall give MANAGEMENT COMPANY written notice of the
terms of any such offer.
ii. The MANAGEMENT COMPANY shall have a sixty (60) day period
within which to purchase the Restaurant or sublet the Restaurant or purchase the
majority interest upon the same terms and conditions as set forth in the
third-party offer.
iii. If the MANAGEMENT COMPANY decides not to purchase the
Restaurant or sublet the premises or sell the majority interest, or does not
reply to NEWCO'S notice, NEWCO shall be free to sell the Restaurant, except that
any sale shall include an obligation on the part of the purchaser to assume the
obligations under this Agreement.
iv. Any internal share transfers among Louis Pappas, Peter
Skeadas, Gus Karayiannis and their families shall not be considered bona-fide
offers to sell for the purpose of this paragraph.
13. Option to Purchase. MANAGEMENT COMPANY shall have an option to
purchase all of the assets of NEWCO, subject to the following terms, conditions,
and counter-option of NEWCO:
20
<PAGE>
a. Price.
Date of Exercise Price in Cash
---------------- -------------
7/1/97-6/30/2001 $ 7,500,000
7/1/01 - 6/30/02 $ 8,500,000
7/1/02 - 6/30/03 $ 9,500,000
7/1/03 - 6/30/04 $10,500,000
b. Method of Exercise. Should the MANAGEMENT COMPANY desire to exercise
its purchase option hereunder, it shall present to NEWCO at any time on or
before 6/30/2004, a written notice of election to purchase the assets of NEWCO
pursuant to the provisions of this Article 13 together with an earnest money
deposit by way of a cashier's or certified check, or other good funds, for an
amount equal to 10% of the applicable purchase price as set forth in
subparagraph (a).
c. Upon receipt of such notice and earnest money deposit NEWCO shall have
a period of sixty (60) days to preempt MANAGEMENT COMPANY'S purchase option by
presenting to MANAGEMENT COMPANY a written notice of election to repurchase
MANAGEMENT COMPANY'S right to manage under this Agreement, and a cashier's or
certified check or other good funds in the amount of 20% of the applicable
purchase price (based upon the date of the notice of exercise presented by a
MANAGEMENT COMPANY), said amount to constitute a refund of MANAGEMENT COMPANY'S
deposit together with a 10% earnest money deposit of NEWCO.
d. Closing. A closing shall take place within ninety (90) calendar days
following the later of (1) the expiration of the period set forth in subsection
(c), above, if NEWCO shall not have exercised its counter-option as therein set
forth, or (2) sixty (60) days following the
21
<PAGE>
presentation by NEWCO of a notice of exercise of its counter-option pursuant to
subsection (c), above.
At the closing the purchaser shall remit by cashier's or certified check
or other good funds the balance of the purchase price, and the Seller shall
deliver, (i) if NEWCO, a Bill of Sale and such other documents reasonably
necessary and sufficient to duly convey and transfer title to all of the assets
of NEWCO (excluding any cash amounts on hand representing NEWCO's share of
operating cash flow or excluded from operating cash flow by definition) or, (ii)
if MANAGEMENT COMPANY, a general and specific release of all claims referencing
this agreement and the right to manage provided for herein, together with such
other document or documents as may reasonably be required to extinguish the
contractual relationship among NEWCO, MANAGEMENT COMPANY and all guarantors
hereunder.
e. Upon closing and the payment of the consideration provided for
hereunder, subject to collection, this contract shall become null and void and
neither party shall thereafter have any claim or cause of action based upon the
provisions of this contract against the other, or against any guarantor of
either party.
f. In the event that it should reasonably become necessary at any time
hereafter for any party hereto, including any guarantor, to execute any further
document or instrument to effectuate the purposes of this Article 13, then such
party agrees promptly to do so upon request. This provision shall survive the
closing of any sale under this Article 13.
14. Liens and Encumbrances. During the term of this agreement, neither
NEWCO nor the MANAGEMENT COMPANY will create any debt for NEWCO; place any liens
and
22
<PAGE>
encumbrances on NEWCO or on the assets of the Restaurant; or create any other
diminution of the value or operating cash flow of the Restaurant without a prior
consent of the other party.
15. Loans to NEWCO. The MANAGEMENT COMPANY may, but shall not be required
to, make available to NEWCO additional funds, in the nature of loans to the
corporation, upon terms as may be agreed upon by the parties, but in any event
only after expending the sums required to be invested in pursuant to Article 9.
16. House Account. On the Commencement Date, the MANAGEMENT COMPANY shall
establish a house account entitled "Louis Pappas, Peter Skeadas and Gus
Karayiannis". MANAGEMENT COMPANY shall grant to Pappas, Skeadas and Karayiannis
an annual credit on such house account in the amount of $10,000.00. Any amounts
over $10,000.00 shall carry a 50% discount.
17. Applicable Law. This Agreement shall be interpreted according to the
laws of New York State.
18. Notices. Notices provided for hereunder shall be deemed given when
either hand-delivered or mailed by certified mail, return receipt requested,
duly marked "Deliver to Addressee Only" to the parties and addresses as set
forth below (or to such other revised addresses and addresses as either party
may furnish by a like notice, similarly given):
23
<PAGE>
As to NEWCO:
Peter Skeadas
c/o Sargent & Sargent
830 Post Road East
Westport, CT 06880
As to MANAGEMENT COMPANY:
Restaurant Management Group
c/o Maloney & Porcelli
225 Broadway
New York, NY 10007
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year first above written.
37 EAST 50TH STREET CORPORATION
BY: /s/ [ILLEGIBLE]
--------------------------------
RESTAURANT GROUP
MANAGEMENT SERVICES, L.L.C.
BY: /s/ [ILLEGIBLE]
--------------------------------
NEW YORK RESTAURANT GROUP, L.L.C.
BY: /s/ [ILLEGIBLE]
--------------------------------
LOFT INTERNATIONAL REST. CORP.
BY: /s/ [ILLEGIBLE]
--------------------------------
24
<PAGE>
/s/ Louis Pappas
--------------------------------
LOUIS PAPPAS
/s/ Peter Skeadas
--------------------------------
PETER SKEADAS
25
<PAGE>
-----------------------------
SCHEDULE A GLOUCESTER HOUSE -----------------
ILLUSTRATIVE INCOME STATEMENT AVERAGE 300 SEATS
----------------------------- -----------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL SALES 5,457,500 100.00% 6,495,425 100.00% 6,994,800 100.00% 8,460,478 120.95%
COST OF SALES 1,746,400 32.00% 1,948,628 30.00% 1,993,518 28.50% 2,411,236 34.47%
-------------------------------------------------------------------------------------------
GROSS PROFIT 3,711,100 68.00% 4,546,798 70.00% 5,001,282 71.50% 6,049,242 86.48%
MISCELLANEOUS INCOME 15,000 0.27% 20,000 0.31% 25,000 0.36% 25,000 0.36%
-------------------------------------------------------------------------------------------
OPERATING INCOME 3,726,100 68.27% 4,566,798 70.31% 5,016,282 71.86% 6,074,242 86.84%
-------------------------------------------------------------------------------------------
PAYROLL 1,900,000 34.81% 2,180,000 33.56% 2,289,000 32.72% 2,403,450 34.36%
PAYROLL TAXES 204,250 3.74% 234,350 3.61% 246,068 3.52% 258,371 3.69%
EMPLOYEE BENEFITS 261,000 6.61% 414,200 6.38% 434,910 6.22% 456,656 6.53%
MANAGEMENT FEE @ 3% 163,725 3.00% 194,863 3.00% 209,844 3.00% 253,814 3.63%
-------------------------------------------------------------------------------------------
TOTAL SALES 2,628,975 48.17% 3,023,413 46.55% 3,179,822 45.46% 3,372,291 48.21%
-------------------------------------------------------------------------------------------
OTHER EXPENSES:
RENT 281,000 5.15% 292,000 4.50% 304,000 4.35% 304,000 4.35%
WATER 35,000 0.64% 36,050 0.56% 37,132 0.53% 38,245 0.55%
HEAT, LIGHT AND POWER 142,000 2.60% 146,260 2.25% 150,648 2.15% 155,167 2.22%
TELEPHONE 20,000 0.37% 20,600 0.32% 21,218 0.30% 21,855 0.31%
[ILLEGIBLE] 54,000 0.99% 55,620 0.86% 57,289 0.82% 59,007 0.84%
OFFICE EXPENSES 50,000 0.92% 65,000 1.00% 66,950 0.96% 68,959 0.99%
[ILLEGIBLE] 5,000 0.09% 6,000 0.09% 6,180 0.09% 6,365 0.09%
TRAVEL AND ENTERTAINMENT 30,000 0.55% 35,000 0.54% 35,000 0.50% 35,000 0.50%
[ILLEGIBLE] 1,000 0.02% 1,500 0.02% 1,500 0.02% 1,500 0.02%
[ILLEGIBLE] - MACH. $ EQUIPMENT 35,000 0.64% 35,000 0.54% 35,000 0.50% 35,000 0.50%
PROFESSIONAL FEES 25,000 0.45% 25,000 0.38% 25,000 0.36% 25,000 0.36%
SECURITY 3,000 0.05% 3,090 0.05% 3,183 0.05% 3,278 0.05%
CONSULTANTS FEES 10,000 0.18% 10,000 0.15% 10,000 0.14% 10,000 0.14%
MISCELLANEOUS INCOME 7,500 0.14% 7,500 0.12% 75,000 0.11% 7,500 0.11%
OPERATING SUPPLIES 218,300 4.00% 259,817 4.00% 279,792 4.00% 338,419 4.84%
DECORATING 30,000 0.55% 40,000 0.62% 41,200 0.59% 42,436 0.61%
PUBLIC RELATIONS 111,000 2.03% 123,000 1.89% 128,640 1.84% 151,800 2.17%
INSURANCE 100,000 1.83% 115,000 1.77% 120,000 1.72% 120,000 1.72%
EXPENSES 10,000 0.18% 10,000 0.15% 10,000 0.14% 10,000 0.14%
REPAIRS AND MAINTENANCE 75,000 1.37% 125,000 1.92% 128,750 1.84% 132,613 1.90%
ADVERTISING 250,000 4.58% 250,000 3.85% 250,000 3.57% 250,000 3.57%
FEES & SUBSCRIPTIONS 1,500 0.03% 1,500 0.02% 1,500 0.02% 1,500 0.02%
REAL ESTATE TAXES 92,000 1.69% 97,000 1.49% 102,000 1.46% 102,000 1.46%
CREDIT CARD CHARGES 147,353 2.70% 175,376 2.70% 188,860 2.70% 228,433 3.27%
COMMERCIAL RENT TAX 18,265 0.33% 18,980 0.29% 19,760 0.28% 19,760 0.28%
-------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSES 1,751,918 32.10% 1,954,293 30.09% 2,031,100 29.04% 2,167,837 30.99%
-------------------------------------------------------------------------------------------
TOTAL EXPENSES 4,380,893 80.27% 4,977,706 76.63% 5,210,922 74.50% 5,540,128 79.20%
-------------------------------------------------------------------------------------------
NET INCOME BEFORE DEPRECIATION,
BANQUET PROFITS & TAXES (654,793) (12.00%) (410,909) (6.33%) (184,640) (2.64%) 534,114 7.64%
BANQUET PROFITS 260,000 4.76% 300,000 4.62% 400,000 5.72% 400,000 5.72%
-------------------------------------------------------------------------------------------
NET INCOME BEFORE DEPRECIATION,
TAXES (394,793) (7.23%) (110,909) (1.71%) 215,360 3.08% 934,114 13.35%
DEPRECIATION (100,000) (1.83%) (100,000) (1.54%) (100,000) (1.43%) (100,000) (1.43%)
-------------------------------------------------------------------------------------------
INCOME BEFORE TAXES (494,793) (9.07%) (210,909) (3.25%) 115,360 1.65% 834,114 11.92%
-------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
------------------------------
STATEMENT OF CASH FLOW
(PREPARED IN ACCORDANCE GAAP)
------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ----------------------------------------------
NET INCOME--FROM SCHEDULE A (494,793) (210,909) 115,360 834,000
- ----------------------------------------------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
- ----------------------------------------------
DEPRECIATION AND AMORTIZATION 100,000 100,000 100,000 100,000
CHANGES IN OPERATING ASSETS AND LIABILITIES: 2,000
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE 10,000 (5,000) 2,000 (24,000)
(INCREASE) DECREASE IN INVENTORY (15,000) (20,000) 28,000 (2,000)
(INCREASE) DECREASE IN PREPAID EXPENSES (25,000) 5,000 8,500 [ILLEGIBLE]
(INCREASE) DECREASE IN OTHER ASSETS 793 (1,091) 1,140 [ILLEGIBLE]
INCREASE (DECREASE) IN ACCOUNTS PAYABLE
AND ACCRUED EXPENSES 50,000 25,000 (5,000) [ILLEGIBLE]
------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES (374,000) (107,000) 250,000 890,000
CASH USED TO PURCHASE PROPERTY & EQUIPMENT 0 (25,000) (20,000) (25,000)
------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN CASH -- GAAP (374,000) (132,000) 230,000 865,000
------------------------------------------------------------------------
- ----------------------------------------------
OTHER CASH CHANGES
- ----------------------------------------------
GUARANTEED PAYMENT 0 (144,000) (240,000) (300,000)
------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AFTER
GUARANTEED PAYMENT (374,000) (276,000) (10,000) 565,000
MANAGEMENT COMPANY LOAN 0 150,000
MANAGEMENT COMPANY ADDITIONAL FUNDING 374,000 126,000
------------------------------------------------------------------------
CASH BALANCE 0 0 (10,000) 565,000
------------------------------------------------------------------------
- ----------------------------------------------
CASH AVAILABLE FOR DISTRIBUTION
- ----------------------------------------------
NET INCREASE (DECREASE)
IN CASH -- GAAP (374,000) (132,000) 230,000 865,000
------------------------------------------------------------------------
CASH TO NEWCO 0 144,000 240,000 300,000
CASH TO MANAGEMENT COMPANY 0 0 0 300,000
PAYMENT OF LOAN TO MANAGEMENT COMPANY 0 0 0 150,000
PAYMENT OF SHORTFALL 0 0 0 115,000
SHORTFALL 0 0 115,000
</TABLE>
<PAGE>
Exhibit 10.11
SALE AND LICENSE AGREEMENT
THIS AGREEMENT, made on August 16, 1996, by and between ST. JAMES
ASSOCIATES ("Licensor"), a New York limited partnership, having its principal
office at 797 Third Avenue, New York, New York 10022 and THE NEW YORK RESTAURANT
GROUP, LLC ("Licensee"), a New York limited liability company, having its
principal office at 1114 First Avenue, New York, New York 10021.
W I T N E S S E T H:
WHEREAS, Licensor is the owner of the restaurants/bars currently
located at 797 Third Avenue, New York, New York which are operated under the
marks "Smith & Wollensky" and "Wollensky's Grill", respectively (collectively,
the "NY Restaurant");
WHEREAS, Licensor is the owner of the marks "Smith & Wollensky" and
"Wollensky's Grill," the good will associated therewith, and all associated
service marks, trademarks, trade names and trade dress utilized in conjunction
with the marks and/or with the operation of the NY Restaurant;
WHEREAS, Licensee has requested Licensor to grant to Licensee the
right to use said marks and the rights associated therewith throughout the
United States and the world (exclusive of the Reserved Territory, as hereinafter
defined) (the "Territory") in connection with the sale of goods bearing the
marks and the
<PAGE>
opening and operation of additional restaurant/bars which are substantially
similar to the NY Restaurant, all upon the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual covenants and
undertakings hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the respective
meanings provided below:
a. "Marks" shall mean "Smith & Wollensky" or any variations thereof
heretofore, currently or hereafter utilized by Licensor, and specifically
including the Registrations as well as any other trademarks and service marks
pertaining to said marks currently or hereafter owned by Licensor in any
jurisdiction (the "Registrations" mean the marks listed on Schedule A annexed
hereto and made a part hereof and any other mark which is registered with the
United States Patent Office or the appropriate office in any foreign country).
b. "Associated Rights" shall mean the goodwill associated with the
Marks and all associated trade names, trade dress, decor, menus, concepts or
other marketing devices heretofore, currently or hereafter utilized in
conjunction with the
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Marks and/or the operation of the NY Restaurant, including, without limitation,
"Wollensky's Grill";
c. "Reserved Territory" shall mean the area encompassed by a circle
with the present location of the NY Restaurant at its center and extending for a
radius of 100 miles, but excluding the area located within ten (10) miles of
City Hall in Philadelphia, Pennsylvania. "Restricted Area" shall mean the
Reserved Territory exclusive of the area encompassed by a circle with the
present location of the NY Restaurant at its center and extending for a radius
of 25 miles.
d. "Affiliate" shall mean any limited liability company, corporation
or other entity which now or in the future shall (i) control, (ii) be under the
control of, or (iii) be under common control with, Licensee. The term "control"
as used herein shall be deemed to mean ownership of more than fifty (50%)
percent of the outstanding voting stock of a corporation, or majority equity and
control interest of a limited liability company or other entity. The term
"Affiliate" shall also include any limited liability company, corporation or
other entity which Alan N. Stillman ("Stillman") "controls", that is (x) in the
case of a corporation, where Stillman possesses the power to direct the
management of the entity through ownership of a majority of the
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voting securities, by voting trust agreement or otherwise, and (y) in the case
of a partnership or limited liability company where Stillman or any Affiliate of
his is designated as managing general partner or manager, as the case may be.
e. "Restaurant" shall mean any restaurant or bar operating under the
Marks which is owned by Licensee or any Sublicensee (as hereinafter defined);
provided, however, that in no event shall the NY Restaurant be considered a
"Restaurant."
f. "Restaurant Sales" shall mean all monies (whether paid in cash,
by credit card or otherwise) received as operating revenues in the ordinary
course of business and derived from the sale of food and beverages at
Restaurants or from off-premises catering originating from Restaurants and the
fair market value of any goods or services received in exchange for such food,
beverage or catering, less bona fide refunds to customers, gratuities and tips
in fact paid out to employees, the value of beverages and/or meals served by
Licensee to employees or for courtesy or promotional purposes, taxes imposed and
paid on customer checks and credit card fees. Restaurant Sales shall include any
proceeds received by any Restaurant from business interruption insurance carried
thereby.
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g. "Non-Restaurant Sales" shall mean all monies (whether paid in
cash, by credit card or otherwise) received as operating revenues in the
ordinary course of business and derived from the sale of all goods, services,
merchandise or other products which utilize the Marks (other than such sales
which constitute Restaurant Sales) whether sold from the Restaurants or
otherwise, and any proceeds received by any Restaurant from business
interruption insurance carried thereby (to the extent not included in Restaurant
Sales) less bona fide refunds to customers, the value of products given to
employees or for courtesy or promotional purposes, taxes imposed and paid on
customer sales and credit card fees. Non-Restaurant Sales shall exclude,
however, any income from the sale of goods bearing the mark of other restaurants
that are owned and/or managed by Licensee or any Affiliate thereof, such as
Manhattan Ocean Club, Cite or Post House, notwithstanding the fact that such
goods are sold from Restaurants, the NY Restaurant or elsewhere.
h. "Consumer Price Index" shall mean the Consumer Price Index for
all Urban Consumers (1982-4 = 100), U.S. City Average, issued monthly by the
Bureau of Labor Statistics of the United States Department of Labor, or any
other successor or substitute index appropriately adjusted.
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2. LICENSE AND GRANT
Licensor hereby grants to Licensee, upon the terms and conditions of
this Agreement, the exclusive right and license to use the Marks and Associated
Rights throughout the Territory (the "License") Licensor hereby reserves unto
itself the exclusive right to utilize the Marks and Associated Rights within the
Reserved Territory, provided, however, that without obtaining Licensee's prior
written consent (which Licensee may withhold in its sole and absolute
discretion), Licensor shall not have the right to open any restaurants within
the Restricted Area utilizing the Marks or Associated Rights or grant any
sublicenses or other rights to the Marks or Associated Rights for use therein.
Nothing herein is intended to preclude or limit Licensor from relocating the NY
Restaurant within the Reserved Territory (but outside of the Restricted Area) or
from opening additional restaurants outside of the Restricted Area but within
the Reserved Territory, which for purposes of this Agreement will not be deemed
to be "Restaurants." Licensor specifically relinquishes any right to use the
Marks and Associated Rights outside of the Reserved Territory.
3. TERM
The License granted herein shall commence upon the execution of this
Agreement (the "License Commencement Date") and
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shall be irrevocable and perpetual unless terminated in accordance with the
terms of this Agreement.
4. LICENSE FEES
In consideration of the grant of the License and the rights granted
pursuant to this Agreement, Licensee agrees to make the following payments:
a. License Purchase Price. Within three (3) business days following
the execution and delivery of this Agreement (time being of the essence),
Licensee shall pay to Licensor the sum of Two Million Five Hundred Thousand
($2,500,000) Dollars by certified or bank check or wire transfer of immediately
available funds to Licensor's bank account.
b. Additional Sale Price Payment. As additional consideration for
the sale and License granted hereby, Licensee shall make a one-time payment to
Licensor upon the opening of each new Restaurant (or conversion of a restaurant
into a Restaurant) (the "Additional Sale Price Payment"). The Additional Sale
Price Payment shall be payable to Licensor within three (3) business days
following the date on which each such new Restaurant shall open for business to
the general public and be calculated as follows:
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(i) From the License Commencement Date to and including
December 31, 1998, the Additional Sale Price Payment shall be Two Hundred
Thousand ($200,000.00) Dollars.
(ii) For calendar year 1999 and each subsequent calendar year,
the Additional Sale Price Payment shall be an amount equal to the Additional
Sale Price Payment applicable for the immediately preceding year, increased by
an amount equal to the percentage amount by which the Consumer Price Index has
increased from January 1st of the immediately preceding year to and including
December 31st of such immediately preceding year; provided, however, that in no
event shall the Additional Sale Price Payment for a given year be more than 105%
of the Additional Sale Price Payment for the immediately preceding year. For
example, if the Consumer Price Index in effect as of December 31, 1998 were 7%
higher than that in effect as of January 1, 1998, then the Additional Sale Price
Payment applicable for calendar year 1999 would be $210,000 and not $214,000.
Notwithstanding the foregoing, no Additional Sale Price Payment
shall be due or payable for a new Restaurant if such Restaurant is located
within a five (5) mile radius of a Restaurant which has closed within the two
(2) year period immediately
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preceding the day such new Restaurant shall open for business to the general
public.
5. Royalties
a. Except as provided in subparagraph 5(b) below, Licensee shall pay
to Licensor an annual royalty (the "Percentage Royalty") of two (2%) percent of
the amount of Restaurant Sales and Non-Restaurant Sales made during the calendar
year for which the Percentage Royalty is being calculated. As a credit against
the Percentage Royalty, Licensee shall pay to Licensor a guaranteed minimum
royalty ("the Minimum Royalty") in the amounts set forth below regardless of the
number of Restaurants that may be in operation during such year:
Prior to January 1, 1998 No Minimum
Calendar Year 1998 $200,000
Calendar Year 1999 $300,000
Calendar Year 2000 $400,000
Calendar Year 2001 $500,000
Calendar Year 2002 $600,000
Calendar Year 2003 $700,000
Calendar Year 2004 and
each calendar year thereafter $800,000
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b. If Licensee or any Affiliate thereof shall hereafter (i) be
engaged as the manager of a new restaurant commonly identified or considered by
the public as a steakhouse (hereinafter referred to as a "Manager" or
"Management"), or (ii) purchase the right to utilize any steakhouse name such as
Sparks, The Palm, Morton's or Outback and thereafter shall open new
steakhouse(s) utilizing such name, then only such new steakhouse(s) as are
thereafter opened and such new steakhouse(s) as come under such Management
described in (i) above in this paragraph 5(b) shall be considered "Restaurants"
solely for purposes of this subparagraph (b) and an annual Percentage Royalty of
one (1%) percent (instead of two (2%) percent) shall be payable on the
Restaurant Sales and Non-Restaurant Sales of such new restaurant(s); provided,
however, that no Percentage Royalty or fee or other compensation shall be
payable by Licensee to Licensor in respect of any such steakhouse restaurant(s)
as are in existence at the time of such acquisition or at the commencement of
such Management by Licensee or any Affiliate thereof so long as such restaurants
do not utilize the Marks. By way of example, if Licensee or any Affiliate
hereafter shall acquire or Manage Sparks or all or any portion of the Morton's
Steakhouse chain, no Percentage Royalty would be payable by Licensee to Licensor
with
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respect to restaurants which are acquired or Managed by Licensee or any
Affiliate utilizing such other steakhouse's name which are in operation as of
the date of the acquisition or commencement of Management; only new restaurants
thereafter opened or which thereafter became subject to Management by Licensee
or any Affiliate as steakhouses would be considered "Restaurants" hereunder
entitling Licensor to a one (1%) percent Percentage Royalty in respect to the
Sales thereof.
6. PAYMENT OF PERCENTAGE ROYALTIES: STATEMENTS
a. Within forty-five (45) days after the end of each calendar
quarter, Licensee will pay to Licensor the greater of twenty-five percent (25%)
of the Minimum Royalty for the applicable calendar year or the Percentage
Royalty for such quarter. Such payment shall be accompanied by a written
statement, of the manager or chief financial officer of Licensee, setting forth
for such quarter in reasonable detail, by Restaurant, the computation of the
Restaurant Sales, the Non-Restaurant Sales and the amount of Percentage
Royalties, if any, payable hereunder; provided, however, that if the Percentage
Royalty for any quarter in question, when added to the previously paid quarterly
payments for such year, equal or exceed the accrued, cumulative Minimum Royalty
and Percentage Royalty payments due through the end of such quarter,
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<PAGE>
then that quarterly payment shall be reduced to the amount required to satisfy
the Minimum Royalty due through the end of such quarter. Within one hundred five
(105) days after the close of each calendar year, Licensee will deliver to
Licensor a true and complete audited special report, setting forth in reasonable
detail, by Restaurant, the computation of the Restaurant Sales, the
Non-Restaurant Sales and the amount of Percentage Royalties, if any, payable
hereunder for the preceding calendar year. All such annual statements will be
prepared and certified by the firm of certified public accountants regularly
employed by Licensee, in accordance with generally accepted accounting
principles, consistently applied. When rendering such annual statements,
Licensee will pay an amount, if any, equal to the difference between the total
royalties paid during the calendar year and the total royalties due to Licensee
for such calendar year based on the audited statement of Restaurant Sales and
Non-Restaurant Sales, together with interest on such balance, if any, from the
close of such calendar year at the prime rate of interest as then charged by
Chase Manhattan Bank, New York (the "Prime Rate"). Similarly, Licensee will be
entitled to a credit against the first royalty fees due Licensor in the next
succeeding calendar year for any overpayment of royalties made with
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respect to a calendar year based on the audited year end statement plus interest
thereon as computed above.
b. Licensee shall keep and maintain complete and accurate books and
records with respect to all transactions relating to the License granted herein.
Such books and records shall be open to the inspection of Licensor or its
representatives or agents during normal business hours upon reasonable advance
notice, and Licensor's representatives or agents shall be entitled, not more
than once annually, to conduct an audit at its own expense for the purpose of
verifying the accuracy of the figures reported in any statement furnished to
Licensor hereunder. If Licensor shall claim that Licensee underpaid any amount
due hereunder and Licensee shall deny such claim, then such claim shall be
submitted to arbitration in accordance with subparagraph 19(d) hereof and no
Event of Default (as hereinafter defined) shall be deemed to have occurred
hereunder unless and until such arbitration shall have been determined adverse
to Licensee, a final order or judgment confirming such award has been entered in
a court of competent jurisdiction and Licensee shall have failed to pay any
award to Licensor within ten (10) days of such entry. Licensee shall preserve
and keep available all such books and records for at least three (3) years after
the year to which they relate.
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c. Upon the opening of any Restaurant using the Marks, Licensee
shall provide Licensor with a copy of the relevant Sublicense agreement, if
applicable, and with written notice to Licensor of the name and address of the
owner and manager and the seating capacity of the Restaurant.
d. Unless otherwise so directed by Licensor in writing, all payments
which are due Licensor pursuant to this Agreement shall be paid to Licensor at
its address set forth in subparagraph 18(e) below.
e. Provided that any item of expense which is shared among Licensor
and other restaurants owned or managed by Licensee or its Affiliates amounts to
a share to be borne by Licensor of at least $2,500.00 in any quarter, Licensee
shall furnish Licensor with a written report for such quarter identifying, by
item, the cost paid by Licensor and each of the other restaurants owned or
managed by Licensee or its Affiliates and the basis of such allocations.
7. SUBLICENSES
Except as expressly permitted hereby, Licensee shall not have the
right to sublicense all or any portion of the License granted hereby without
obtaining Licensor's prior written consent. Notwithstanding the foregoing,
Licensee shall have the right,
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without obtaining Licensor's consent, to grant sublicenses of any or all rights
granted to Licensee by Licensor hereunder to (i) Affiliates, or (ii) any other
entity so long as Licensee shall exercise and maintain managerial control over
all Restaurants owned by such entity substantially in the manner that Licensee
currently exercises managerial control over the NY Restaurant (each such
sublicensee being herein referred to as a "Sublicensee"). Each sublicense will
contain the provisions set out in this Agreement as the last sentence of this
paragraph, subparagraph 6(b), subparagraphs 15(e) through (k) below and
provisions (a) confirming Licensor's ownership of the Marks and Associated
Rights which are the subject of the sublicense, (b) declaring that the
sublicense will be deemed automatically assigned by Licensee to Licensor upon
any lawful termination of this Agreement (provided, however, that Licensor shall
have the option, to be exercised within fifteen (15) days of such termination,
to reject such sublicense by notice to the Sublicensee), (c) requiring the
Sublicensee to comply with the applicable terms and conditions of this Agreement
and to maintain the operating and quality standards prescribed herein, (d)
giving Licensor the right to determine directly whether or not such operating
and quality standards are being maintained, and (e) prohibiting further
sublicensing of the rights granted under the
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sublicense except in compliance with the terms and provisions of this paragraph.
Licensee will take all appropriate steps to exercise quality control over the
goods and services provided by each Sublicensee in order to ensure that the
operating and quality standards required by this Agreement are being maintained.
Notwithstanding anything to the contrary contained herein, Licensor shall not
have the right to terminate this Agreement or the License granted hereby for any
default which may arise hereunder by reason of the acts or omissions of any
Sublicensee so long as (i) Licensee shall use its best efforts to cause such
Sublicensee to comply with the applicable terms and conditions of this Agreement
and to maintain the operating and quality standards prescribed herein, and (ii)
if such efforts fail to cause the Sublicensee to comply with such terms and
conditions or maintain such standards within a reasonable time period not to
exceed ninety days, Licensee shall immediately terminate or cause to be
terminated the applicable sublicense.
8. ASSIGNMENTS
a. Except as expressly permitted hereby, Licensee shall not assign
all or any portion of its rights granted hereunder without obtaining Licensor's
prior written consent. Notwithstanding the foregoing, this Agreement and all
rights and
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obligations hereunder may be assigned or transferred by Licensee, without
Licensor's consent, only upon Licensee's compliance with subparagraph (b) below
and upon the condition that the assignee agrees in writing to be bound by the
terms and provisions of this Agreement and such assignee (or the manager of the
Restaurant(s) to be owned by such assignee) is either (i) an Affiliate, (ii) a
reputable restaurant operator that has managed high quality, fine dining
restaurants continuously during the five (5) year period immediately preceding
the effective date of such assignment, or an entity controlled by a manager
having such experience, or (iii) a nationally known reputable company active in
the food service or hospitality business such as, but not limited to, Restaurant
Associates or the Hilton or Marriot companies. Licensee shall not have the right
to assign its rights hereunder to any entity that, on the effective date of such
assignment, either is in bankruptcy or has lawsuits pending against it which, if
determined adversely to the assignee, would have a material adverse impact on
the financial condition of such assignee. If the assignee is not an experienced
restaurant operator as described above, but instead utilizes a third party
satisfying the requirements of subparagraphs (ii) or (iii) above to manage its
Restaurant(s), then such third party manager must be engaged by the assignee as
manager of the
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Restaurant(s) for not less than five (5) years. If such manager is not succeeded
by a like experienced manager, then Licensee shall be deemed in default
hereunder.
b. Licensee may, without Licensor's consent, assign its interest in
this License (i) to any corporation or other entity which is a successor to
Licensee either by merger or consolidation, or (ii) to a purchaser of all or
substantially all of Licensee's assets (provided such purchaser shall have also
assumed all of Licensee's obligations hereunder). Licensee shall, within ten
(10) days after execution thereof, deliver (a) a duplicate instrument of
assignment duly executed by Licensee and (b) an instrument duly executed by the
assignee, in which such assignee shall assume observance and performance of, and
agree to be bound by, all of the terms, covenants and conditions of this License
on Licensee's part to be observed and performed. Except as set forth above,
either a transfer of a controlling interest in Licensee (if Licensee is a
limited liability company or partnership) or a transfer of a controlling
interest in the shares of Licensee (if Licensee is a corporation) at any one
time or over a period of time through a series of transfers shall be deemed an
assignment of this License and shall be subject to all of the provisions of this
paragraph 8. For purposes of this paragraph 8, the sale, transfer or issuance of
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shares on or through the "over-the-counter market" or any other recognized stock
exchange or in connection with any employee stock ownership plan shall not be
considered an assignment or transfer of this License and shall not require
Licensor's consent. In furtherance thereof, Licensor's consent shall not be
required in connection with a public offering of shares or other ownership
interests by either Licensee or any Affiliate thereof. Any transfer of shares or
interests by and among the existing members or shareholders of Licensee or
occurring by reason of the death or incapacity of any member or shareholder of
Licensee shall not be deemed an assignment hereunder. In the event of an
assignment, as permitted pursuant to this paragraph, Licensee shall remain
jointly and severally liable with the assignee, for the assignee's due
performance of each and every obligation of Licensee pursuant to this Agreement,
provided, however, that if Licensee shall sell or otherwise transfer its entire
business (as opposed to merely its rights under this Agreement), whether
simultaneously or subsequent to any assignment permitted hereby, then this
Agreement and all rights of the Licensee hereunder shall terminate
simultaneously with such sale unless prior thereto, Licensee or its assignee
shall (i) furnish to Licensor then current financial statements demonstrating
that such assignee has a net worth of not less than
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$20 Million (determined in accordance with generally accepted accounting
principles and after giving effect to the assignment but excluding the value of
the assets acquired from Licensee), and (ii) delivers to Licensor a letter of
credit naming Licensor as beneficiary thereunder to secure the payment to
Licensor of all moneys payable to it hereunder and the performance of all
obligations on Licensee's part to be performed hereunder. Such letter of credit
shall be in form and issued by a bank that is acceptable to Licensor in its
reasonable discretion and be in an amount equal to $2 Million for the first year
following such sale, $3 Million for the second year following such sale, $4
Million for the third year following such sale and $5 Million for the fifth and
each subsequent year following such sale, provided, however, that if the sum of
Percentage Royalty payments and Additional Sale Price Payments for the two (2)
year period preceding the applicable year shall amount to more than the letter
of credit amount herein specified for such year, then the letter of credit for
such year shall be increased to such greater amount.
9. OPERATING AND QUALITY STANDARDS
a. All Restaurants shall be first class operations which offer food
and/or beverage services and provide decor and an ambiance that is substantially
similar to the NY Restaurant. In
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particular: (i) the quality of meat and seafood sold at a Restaurant shall be at
least as high as that served at the NY Restaurant, (ii) the decor and employee
uniforms of the Restaurants shall be substantially similar to that encompassed
within and utilized at the NY Restaurant, (iii) Restaurants shall maintain
sophisticated wine lists and provide service of the type provided at the NY
Restaurant, (iv) Restaurants shall be maintained in a clean, orderly and
sanitary condition at all times, and (v) Restaurants shall utilize steak knives,
chalkboards and other trade dress substantially similar to that utilized at the
NY Restaurant.
b. Notwithstanding the foregoing, Licensee may modify the aforesaid
requirements including, but not limited to (and by way of example only), menu
items and decor, to accommodate local variations in tastes, customs and attire
upon notice to and consent by Licensor, which consent shall not be unreasonably
withheld or delayed. If Licensee does not receive notice of disapproval from
Licensor (specifying Licensor's reason(s) for such disapproval) within twenty
(20) days after receipt by Licensor of written notice of such proposed
modification, then the proposed modification shall be deemed approved. In
addition, in no event shall Licensee be limited to locating Restaurants in
buildings similar to that in which the NY Restaurant is located, it being
understood that
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Licensee may open Restaurants in any location it deems appropriate outside of
the Reserved Territory, including, but not limited to, office buildings,
shopping centers and single user facilities. Licensor hereby acknowledges that
owing to local market conditions Licensee may adopt a pricing structure for any
Restaurant that differs from that of the NY Restaurant.
c. Licensor shall have the right to change, modify or add to the
operating and quality standards specified herein provided such changes,
modifications or additions are reasonably necessary to protect or enhance
standards of quality and service of the business and provided further that such
operating and quality standards are adopted and employed at the NY Restaurant.
d. All goods, merchandise or other products which utilize the Marks
shall be of high standard and of such style, appearance and quality as to be
consistent with the image projected by the NY Restaurant.
e. Licensor's representatives shall have the right to inspect any
Restaurant or other facility maintained for the sale of goods, merchandise or
other products utilizing the Marks at reasonable times and upon reasonable
advance notice, for purposes of examining such Restaurant, conferring with
Licensee, its agents and employees and inspecting and checking food quality,
merchan-
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dise, decor and operating methods, provided such inspection shall be conducted
in such manner as will not unreasonably interfere with Licensee's business
operation.
10. MARKINGS
a. Licensee will cause the Registrations, Marks and Associated
Rights to be displayed only in such form or manner as may be used by Licensor,
or in such other form and manner as may be approved by Licensor, provided, that,
with respect to the Marks (excluding the Registrations) and Associated Rights,
such approval shall not be unreasonably withheld or delayed. Licensee shall have
the right to modify the Marks (excluding the Registrations) and Associated
Rights so that they conform to or are appropriate for use in other geographic
locations, subject to the prior written approval of Licensor which shall not be
unreasonably withheld or delayed. If Licensee does not receive notice of
disapproval from Licensor (specifying Licensor's reason(s) for such disapproval)
within twenty (20) days after receipt by Licensor of written notice of such
proposed variation or modification, then the proposed variation or modification
shall be deemed approved. Notwithstanding anything to the contrary contained
herein, Licensee, without the consent of Licensor (i) may modify the Marks by
replacing the picture of the NY Restaurant contained in the logo
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with a picture of another Restaurant and/or including a location designation
such as "Smith & Wollensky - Chicago", and (ii) may not use or sublicense the
use of any Registration in any form other than as registered and shall at all
times use each Registration with proper indicia of registration (i.e. (R)).
b. Licensee shall use the Marks and Associated Rights in accordance
with all applicable legal requirements. Licensee shall cause to appear on all
materials in connection with which the Marks are used, such legends, markings,
indications and notices necessary to give notice of any trademark, trade name,
copyright or other rights owned by Licensor pertaining thereto.
11. ADVERTISING AND PROMOTION
The parties acknowledge that it may be mutually advantageous to
simultaneously advertise or promote the NY Restaurant, the Restaurants and/or
other restaurants that may be owned or operated by Licensee or its Affiliates
including without limitation Maloney & Porcelli. Any expenses incurred by
Licensee or its Affiliates for advertising or promoting the Marks and other
restaurants owned or managed by Licensee and its Affiliates shall be apportioned
between Licensor and Licensee, based upon the number of restaurants owned by
each party depicted or referred to in the advertisement or promotion, provided,
however, that if any such
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advertisement or promotion shall depict or refer to any Restaurant, then the
entire cost thereof shall be paid by Licensee.
12. DEFAULT; TERMINATION
a. Each of the following events shall be an "Event of Default"
hereunder:
(i) if Licensee shall default in the payment when due of any
Additional Sale Price Payment or Percentage Royalty payment hereunder and
Licensee shall fail to remedy such default within fifteen (15) days after
Licensee shall have received written notice of such default;
(ii) (aa) if Licensee shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or
(bb) if Licensee shall commence or institute any case,
proceeding or other action (x) seeking relief on its behalf as debtor, or to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, or (y) seeking appointment of
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a receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its property; or
(cc) if Licensee shall make a general assignment for the
benefit of creditors; or
(dd) if any case, proceeding or other action shall be
commenced or instituted against Licensee (x) seeking to have an order for relief
entered against it as debtor or to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debt under
any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, or (y) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its property, which either (i) results in
any such entry of an order for relief, adjudication of bankruptcy or insolvency
or such an appointment or the issuance or entry of any other order having a
similar effect or (ii) remains undismissed for a period of sixty (60) days; or
(ee) If any case, proceeding or other action shall be
commenced or instituted against Licensee seeking issuance of a warrant of
attachment, execution, distraint or similar process
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against all or any substantial part of its property which results in the entry
of an order for any such relief which shall not have been vacated, discharged,
or stayed or bonded pending appeal within sixty (60) days from the entry
thereof; or
(ff) if Licensee shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clauses (bb), (cc), (dd) or (ee) above.
(iii) if Licensee shall default in the observance or performance of
any other term, covenant or condition of this License on Licensee's part to be
observed or performed and Licensee shall fail to remedy such default within
thirty (30) days after written notice by Licensor to Licensee of such default;
provided, however, that if such default is of such a nature that it cannot be
completely remedied within said thirty (30) day period, no Event of Default
shall be deemed to have occurred hereunder if Licensee shall make good faith
efforts to remedy such default within such thirty (30) day period and shall
thereafter take all steps necessary to diligently prosecute same to completion.
(iv) if either Licensee or Stillman or any Affiliate of Stillman
shall hereafter open and own or manage any new steakhouses not utilizing the
Marks, provided, however, that it shall not be an
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Event of Default hereunder if (x) Licensee or its Affiliates shall own or manage
new restaurants which sell steak incidentally (offering not more than four (4)
steak items at each such restaurant, without limitation as to the number of meat
items) and are not commonly identified as steakhouses, (y) either Licensee or
any Affiliate thereof shall purchase steakhouse(s), such as, but not limited to,
Sparks, The Palm, Morton's or Outback which will continue to be operated under
their names or open additional restaurant(s) outside of the Reserved Territory
utilizing the name of such steakhouse(s) or (z) Licensee or any Affiliate shall
hereafter be engaged in Management of steakhouse(s) outside of the Reserved
Territory.
(v) if Licensee shall fail to timely pay the License Purchase Price
called for in paragraph 4 (a)
If an Event of Default shall have occurred and thereafter Licensor
shall give written notice to Licensee stating that this License shall expire and
terminate on the date specified in such notice, which date shall not be less
than ten (10) days after the giving of such notice, then this License and the
term hereof and all rights of Licensee under this License shall expire and
terminate as of the termination date specified in Licensor's notice. In the
event of such termination:
28
<PAGE>
(aa) the rights and license granted to Licensee herein shall
forthwith terminate and automatically revert to Licensor;
(bb) Licensee shall discontinue the use of the Marks and Associated
Rights or any variant thereof at all of the Restaurants, change the decor and
design and discontinue the use of all signs, emblems, marks and color schemes
indicative of "Smith & Wollensky" at such Restaurants;
(cc) Licensee shall notify each Sublicensee of such termination and
of Licensor's right to terminate such Sublicensee's sublicense; and
(dd) all Percentage Royalties and any other accrued payments due
Licensor to the date of expiration or termination plus the $2 Million
Termination Fee referred to in the next paragraph shall become immediately due
and payable.
Licensee shall have the unilateral right to terminate this Agreement
and the License granted hereby for any reason whatsoever or for no reason by
giving not less than thirty (30) days' prior notice thereof to Licensor,
provided such termination shall not be deemed effective unless and until
Licensee shall have complied with subsections (aa) through (dd) above and paid
to Licensor the Termination Fee (as hereafter defined) . For purposes hereof,
the "Termination Fee" shall be an amount equal to Two
29
<PAGE>
Million ($2,000,000) Dollars if Licensee. shall pay such amount to Licensor by
the termination date, provided, however, that Licensee shall have the right to
pay the Termination Fee in installments over a four (4) year period and if it
shall so elect to pay the Termination Fee in installments, then (x) the
Termination Fee shall be an amount equal to Two Million Five Hundred Thousand
($2,500,000) Dollars, (y) Licensee shall notify Licensor of such election in
Licensee's termination notice, and (z) the Termination Fee shall be payable by
Licensee to Licensor as follows: $156,250.00 by the termination date and the
balance in fifteen (15) equal consecutive quarter-annual payments of principal
each with interest at the Prime Rate in effect at the date of payment on the
then unpaid principal balance. If Licensee shall elect to pay the Termination
Fee in installments it shall furnish annual audited financial statements to
Licensor and if its net worth thereafter shall decrease below $1 Million, then
the balance of the Termination Fee and any accrued interest shall become
immediately due and payable to Licensor.
Unless the termination is pursuant to this subsection (iv), Licensee
shall not be liable to Licensor for any damages, consequential or otherwise, or
other payments in the event of any termination of this License.
30
<PAGE>
13. RESTAURANT CLOSURES
Notwithstanding anything to the contrary contained herein, upon
prior written notice to Licensor, Licensee shall have the right in its sole
discretion to close any Restaurant without liability to Licensor. Additionally,
at any time upon prior written notice to Licensor, Licensee shall have the right
without liability to Licensor to convert any Restaurant to another restaurant
(other than to a restaurant commonly identified or considered by the public as a
"steakhouse" unless otherwise permitted hereby) utilizing a name other than the
Marks. If Licensee shall elect to close a Restaurant or convert a Restaurant
from a Smith & Wollensky steakhouse, then as to such Restaurant only, Licensee
shall (i) discontinue the use of the Marks and Associated Rights or any variant
thereof at such Restaurant, (ii) change the decor and design and discontinue the
use of all signs, emblems, marks and color schemes indicative of "Smith &
Wollensky" at such Restaurant, and (iii) not be required to make any further
Percentage Royalty or other payments in respect thereof.
14. REPRESENTATIONS AND WARRANTIES.
a. Licensor represents and warrants to Licensee as follows:
31
<PAGE>
(i) Licensor has the legal power, authority and capacity to execute,
deliver and perform this Agreement and this Agreement and the transaction
contemplated hereby have been fully approved by all requisite partnership
action; and
(ii) This Agreement has been duly executed and delivered and
constitutes a valid and binding obligation legally enforceable against Licensor
in accordance with its terms. The execution and delivery of this Agreement by
Licensor and the performance of its obligations hereunder are not in violation
of, and do not conflict with or constitute a default under, any of the terms or
provisions of Licensor's Agreement of Limited Partnership.
b. Licensee represents and warrants to Licensor as follows:
(i) Licensee has the legal right, power, authority and capacity to
execute, deliver and perform this Agreement;
(ii) this Agreement constitutes the legal, valid and binding
obligation of Licensee, enforceable in accordance with its terms;
(iii) Licensee has (or will have) the financial capability to comply
with the terms and provisions of the Agreement and to perform its obligations
hereunder; and
32
<PAGE>
(iv) this Agreement has been duly executed and delivered and
constitutes a valid and binding obligation legally enforceable against Licensee
in accordance with its terms. The execution and delivery of this Agreement by
Licensee and the performance of its obligations hereunder are not in violation
of, and do not conflict with or constitute a default under, any of the terms or
provisions of Licensee's Articles of Organization or any agreement, indenture or
instrument to which it is bound, or any law, regulation, order, decree, judgment
or award to which it is subject.
15. COVENANTS OF LICENSOR AND LICENSEE
a. From and after the date hereof and for so long as this Agreement
shall be in force and effect and the NY Restaurant shall be open, Licensor shall
continue to operate the NY Restaurant in the same manner as heretofore operated
and shall use its best efforts to preserve the goodwill of the business and
protect and defend the Marks and Associated Rights. In furtherance thereof,
Licensor, at its cost and expense, shall take all reasonable actions to renew
the Registrations when required and to make such further filings and
registrations to protect and defend the Registrations, Marks and Associated
Rights, including bringing suit against any infringement thereof.
33
<PAGE>
b. Licensor shall not encumber, mortgage or grant any security
interest or lien in the Marks and/or the Associated Rights.
c. Licensor shall not open additional Smith & Wollensky restaurants
outside of the Reserved Territory or within the Restricted Area nor shall
Licensor grant any third party a license to utilize the Marks or Associated
Rights outside of the Reserved Territory or within the Restricted Area.
d. Licensor shall not be precluded from selling or closing the NY
Restaurant and the Additional Sale Price Payments and Percentage Royalty
payments required hereby shall continue notwithstanding any such sale or closure
unless and until the Registrations shall be terminated or abandoned, provided,
that the foregoing is not intended to permit Licensor to voluntarily abandon or
terminate the Registrations or otherwise affect Licensor's obligations under
paragraphs 16 and 17 below.
e. Licensee shall not denigrate or cause the denigration of any of
the Marks or Associated Rights, and shall not take, or permit any of the
Sublicensees to take, any other action that is in Licensor's judgment (which
judgment shall not be unreasonably exercised) harmful (or potentially harmful)
to or
34
<PAGE>
which disparages or demeans, directly or indirectly, the goodwill and reputation
of licensor, the Marks or the Associated Rights.
f. At such time as Licensee is operating a Restaurant or marketing
any merchandise which would constitute Non-Restaurant Sales, Licensee shall, at
its sole cost and expense, procure and maintain policies of insurance with a
nationally recognized insurance carrier with the following types and amount of
coverage:
(i) Liquor Liability: Not less than $1 Million per occurrence.
(ii) Worker's Compensation: In compliance with statutory
requirements of each state in which Licensee is required to provide worker's
compensation coverage.
(iii) Comprehensive Business Liability: Not less than $1 Million per
occurrence.
(iv) Advertising: Not less than $1 Million per occurrence.
The foregoing policies, and any other insurance policies that insure Licensee or
its property, shall name Licensor as an additional insured, shall state that the
policies will not be changed or terminated without at least twenty days' prior
written notice to Licensor, and shall state that the insurer has waived its
subrogation rights against Licensor. Upon Licensor's request,
35
<PAGE>
Licensee shall deliver to Licensor a certificate of insurance indicating that
the coverage required by this subparagraph (f) is in full force and effect.
g. Licensee shall comply in all material respects with all Federal,
state, local or foreign laws, ordinances, regulations and orders applicable to
its business, including all health, sanitary and safety codes, rules and
regulations.
h. Licensee will obtain and maintain all licenses, permits and
consents required to operate the Restaurants and market the merchandise which
would result in Non-Restaurant sales.
i. Licensee shall implement regulations in each Restaurant that
prohibit patrons or employees from using drugs, the possession and use of which
are illegal in the jurisdiction in which the Restaurant is located, from
participating in prostitution and from engaging in activities involving
pornography or violence.
j. Licensee shall not mortgage, encumber or otherwise subject this
Agreement to any security interest or lien, except that, without obtaining the
consent of Licensor, (i) Licensee shall have the right to grant a security
interest in its rights hereunder to any institutional lender having assets in
excess of $500 Million, provided, however, that any assignee of this Agreement
must satisfy the requirements of paragraph 8 hereof, and, (ii) a
36
<PAGE>
security interest in this Agreement may be granted to Licensee in connection
with any purchase money financing which Licensee gives in connection with an
assignment or other transfer of Licensee's rights hereunder.
k. Licensee shall not use any trade names or trademarks which are
confusingly similar to the Marks. Notwithstanding anything to the contrary
contained herein, Licensee shall have the right to engage in cooperative
advertising and cooperative promotional activities using other trademarks and
tradenames in conjunction with the Marks and Associated Rights.
l. Each of the foregoing covenants (e) through (k) shall, in
substance, be included in any Sublicense; provided, however, that Licensee in
its discretion may increase the minimum insurance required by it from its
Sublicensees.
16. OWNERSHIP
a. During the term of this Agreement, Licensor shall file, at its
sole cost and expense, all applications and documents necessary to maintain its
exclusive ownership of the Registrations, including any modifications made in
conformance with this Agreement in the United States and those countries listed
on Schedule A annexed hereto. All applications, registrations and renewals of
the Registrations shall be in the name of Licensor. Licensee, at
37
<PAGE>
its sole cost and expense, shall have the right, but not the obligation, to
register the Marks and/or Associated Rights in the name of Licensor in
jurisdictions outside of the United States in which Licensor shall not have
previously filed for registration. Before seeking to register any of the Marks
in any jurisdiction outside of the United States, Licensee shall give Licensor
notice of its intention to register, which notice shall identify the Mark to be
registered and the intended country of registration. Licensor shall have the
right, on notice to Licensee, to pursue such registration instead of Licensee,
provided it shall give Licensee notice thereof within twenty (20) days of its
receipt of Licensee's notice. If Licensee shall pursue registration of a Mark
outside of the United States, then it shall provide Licensor (or its designated
counsel) with copies of all applications and other documents to be filed with
the applicable authorities at least twenty (20) days before filing the same.
Licensee shall make such amendments, changes or supplements to any such
applications as Licensor, or its counsel, shall reasonably require.
b. All trademarks, copyrights, patents, trade dress, design patents,
and other proprietary rights relating to any design element, shape, or style on
or with all products, packaging, labels, names and logos used in connection with
the Restaurants or
38
<PAGE>
on or with respect to any products or services bearing the Marks shall belong to
Licensor and all applications and registrations thereof shall be filed in the
name of Licensor; provided however that Licensee may seek or obtain protection,
including registration (in the name of Licensor), of the Marks and Associated
Rights with the prior written consent of Licensor (which shall not be
unreasonably withheld or delayed) or if Licensor fails to seek or obtain the
requisite protection. If Licensee does not receive notice of disapproval from
Licensor (specifying Licensor's reason(s) for such disapproval) within twenty
(20) days after receipt by Licensor of such proposed registration, then Licensor
shall be deemed to have consented to Licensee proceeding with the proposed
registration.
c. Licensee acknowledges that as between Licensor and Licensee,
except for the rights expressly granted to Licensee herein, Licensor is the
holder of all right, title and interest in and to the Marks. Licensee recognizes
the value of the goodwill associated with the Marks and acknowledges that the
Marks and Associated Rights have acquired a secondary meaning in the mind of the
public. All use by Licensee of the Marks and the Associated Rights shall be
deemed to have been made by Licensee for the
39
<PAGE>
benefit of Licensor and all goodwill thereunder shall inure to the benefit of
Licensor.
d. Licensee shall not challenge Licensor's right to, or the validity
of, the Marks and Associated Rights, or any application by Licensor for
registration or renewal thereof during the term of this Agreement.
e. Licensee shall, at Licensor's request, execute any documents
reasonably required by Licensor to confirm its ownership of all rights in and to
the Marks and Associated Rights and the respective rights of the parties
pursuant to this Agreement. Licensee shall, at Licensor's expense, cooperate
with Licensor in connection with the filing and prosecution of applications by
Licensor to register or renew the Marks and Associated Rights and the
maintenance of such registrations.
f. In the event Licensor's ownership and right to the existing U.S.
Trademark for "Smith & Wollensky" are terminated for any reason whatsoever, this
Agreement shall terminate as of the date of such expiration or termination,
without either party incurring any liability thereby and thereafter Licensee
shall not be obligated to pay the Termination Fee to Licensor or make further
Additional Sale Price Payment, Percentage Royalty or other payments to Licensor.
40
<PAGE>
g. All rights in the Marks and Associated Rights, other than those
specifically granted herein are reserved by Licensor for its own use and
benefit.
17. INFRINGEMENTS
If Licensee learns of any use by any person of a trademark or trade
name similar to the Marks or Associated Rights, then Licensee shall as soon as
practicable notify Licensor. Licensor shall take all reasonable and prudent
actions to stop any activity which constitutes an infringement of the Marks or
Associated Rights and/or the rights granted to Licensee hereunder and shall do
so at Licensor's sole cost and expense; provided, however, that Licensor shall
not be obligated to enjoin any infringement occurring outside of the United
States. Licensee agrees to cooperate fully with the prosecution of any action
brought by Licensor in connection with any such claim of infringement. If
Licensor shall not take appropriate steps to stop an infringement of the rights
granted to Licensee or an infringement of the Marks or Associated Rights
occurring within the United States within thirty (30) days of receiving written
notice thereof from Licensee, then Licensee, at Licensee's sole cost and
expense, may take such actions as Licensee in its reasonable discretion deems
advisable, including hiring attorneys and suing
41
<PAGE>
for infringement, provided, however, that if Licensee's actions shall pertain to
an infringement that commences following the date of this Agreement, then
Licensor shall be obligated to reimburse Licensee within thirty (30) days of
demand therefor for any expenses, including reasonable attorneys' fees, incurred
in connection with enjoining such infringement. If Licensee shall bring any
action to enjoin an infringement of the Marks or Associated Rights or the rights
granted to Licensee hereunder (whether in the United States following Licensor's
failure to do so or outside of the United States), then Licensee shall be
entitled to retain any award or damages received in connection therewith. Any
such action brought by Licensee in connection with an alleged infringement may
be brought in the name of Licensor, Licensee or any Affiliate or Sublicensee, or
any combination thereof, as Licensee deems reasonably appropriate. Licensee
shall have the right to select counsel for any such infringement action that it
elects to commence, subject to the prior approval of Licensor which shall not be
unreasonably withheld or delayed. If Licensee does not receive notice of
disapproval from Licensor (specifying Licensor's reason(s) for such disapproval)
within twenty (20) days after receipt by Licensor of Licensee's counsel
selection, then
42
<PAGE>
Licensor shall be deemed to have consented to Licensee utilizing such counsel.
18. MISCELLANEOUS
a. This Agreement is not to be construed as a franchise agreement,
nor shall the parties hereto be considered partners or joint venturers, in any
way, manner or form, at any time or for any purpose. Nothing herein contained
shall create or be deemed to create any agency between the parties hereto, and
Licensee shall have no power or authority to obligate or bind Licensor in any
manner whatsoever.
b. The parties hereto agree that the representations and warranties
contained in this Agreement shall survive the execution and delivery of this
Agreement.
c. Each of the parties shall execute and deliver or cause to be
executed and delivered to the other and shall do or make or cause to be done or
made, from time to time, all instruments, consents, assignments, documents,
actions and things which may be necessary or advisable to consummate and make
effective the transactions contemplated by, or to carry out the terms of, this
Agreement, including, without limitation, subject to the provisions of paragraph
16 hereof, to maintain and enforce applications and registrations with respect
to the Marks and
43
<PAGE>
Associated Rights and any modifications thereof. The parties hereto agree to
execute such other documents or agreements as may be necessary or desirable for
the implementation of this Agreement and the consummation of the transactions
contemplated hereby.
d. Except as provided below, any controversy or claim arising out of
or relating to this Agreement or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgement on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, either party may bring an action in any court of
competent jurisdiction where such party seeks equitable relief enjoining the use
of the Registrations, Marks or Associated Rights. Either general partner of
Licensor, without the consent of the other, may enforce Licensor's rights
pursuant to this Agreement.
e. All notices, approvals, requests or consents permitted or
required under this Agreement shall be in writing and shall be deemed to have
been duly given when sent by certified or overnight mail or nationally
recognized overnight delivery service with return receipt requested or
acknowledged receipt or delivered personally, to the parties at their respective
addresses set forth as follows:
44
<PAGE>
In the case of Licensee:
c/o The New York Restaurant Group, LLC
1114 First Avenue
New York, New York 10021
In the case of Licensor:
St. James Associates
797 Third Avenue
New York, New York 10022
both parties shall send copies of all notices
to:
Thomas J. Malmud, Esq.
Warshaw Burstein Cohen Schlesinger & Kuh
555 Fifth Avenue
New York, New York 10017
or to such other person or address as any party hereto shall specify hereunder.
Notices shall be deemed received on the earlier of actual receipt or five (5)
business days following the date such notice shall have been duly sent. Either
party may change the address hereunder or the person to whom any notice or
delivery shall be directed by a notice sent in conformance with the terms of
this paragraph. Payments by Licensee to Licensor hereunder shall be made to
Licensor at the following address unless otherwise notified in writing by
Licensor:
c/o The New York Restaurant Group, LLC
1114 First Avenue
New York, New York 10021
45
<PAGE>
f. Licensor hereby acknowledges that Licensee, Stillman and their
Affiliates are currently engaged in other business ventures and activities which
could be considered to be competitive with the NY Restaurant and any other
Restaurants which may hereafter be opened. Subject to the specific limitations
contained herein, Licensee, Stillman and their Affiliates may engage in other
business ventures of every nature and description, independently or with others,
including without limitation restaurant businesses in all its phases, even if
the same compete with the NY Restaurant or any Restaurants, and except as
expressly provided herein, neither Licensor nor any partner thereof shall have
any rights in or claims with respect to said ventures, or the income or profits
derived therefrom. Licensor hereby acknowledges that Affiliates of Stillman
manage both Licensor and Licensee and have ownership interests therein. Stillman
has fully disclosed such conflict of interests to Licensor and Licensor has
elected to utilize separate and independent counsel in the negotiation of this
License Agreement.
g. This Agreement represents the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof and can be
amended, supplemented or changed, and any provisions hereof can be waived only
by written instrument
46
<PAGE>
making specific reference to this Agreement and signed by the party to be
charged. This Agreement may be executed in more than one counterpart, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
h. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns.
i. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
j. If at any time subsequent to the date hereof, any provision of
this Agreement shall be held by any arbitration panel or court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
k. This Agreement shall be deemed to have been entered into in the
State of New York, and shall be construed and interpreted in accordance with the
laws of the State applicable to agreements made and to be performed in the State
of New York
47
<PAGE>
(without reference to principles of conflicts of laws or the location of
Restaurants), except that any and all disputes, controversies and claims arising
out of or relating to the ownership, registration or application for
registration of the Marks shall be determined under the United States federal
trademark law.
l. The failure of either party to claim or assert a right under this
Agreement will not be deemed a waiver thereof unless a time limit is provided in
this Agreement for the exercise of such rights. Any waiver, whether express or
implied of any provision of this Agreement shall not constitute a continuing
waiver of such provision or of any other provision of this Agreement. All
remedies specified herein or otherwise available shall be cumulative and in
addition to any and every other remedy provided herein or now or hereafter
available.
m. Licensee shall bear all of its own expenses incurred in
connection with its use of the Marks and Associated Rights, including the
payment of all applicable taxes (national, state, local and foreign). Licensor
shall pay all of its own taxes on royalty payments received by it, but shall not
be responsible for any portion of Licensee's taxes on Restaurant Sales or
Non-Restaurant Sales.
48
<PAGE>
n. The provisions and covenants set forth in this Agreement are made
solely for the benefit of the parties to this Agreement and their permitted
successors and assigns and not for the benefit of any other person, and no other
person shall have any right to enforce these provisions and covenants against
any party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and year first above written.
ST. JAMES ASSOCIATES (Licensor)
By: Chamblair Realty, Inc. and
Smith & Wollensky Operating Corp.,
general partners
By: /s/ Thomas J. Malmud
----------------------------------------
Name: Thomas J. Malmud
Title: President, Chamblair
Realty Corp.
By: /s/ Alan N. Stillman
----------------------------------------
Name: Alan N. Stillman
Title: President, Smith &
Wollensky Operating Corp.
THE NEW YORK RESTAURANT GROUP, LLC
(Licensee)
By: LaCite, Inc., its manager
By: /s/ Alan N. Stillman
----------------------------------------
Name: Alan N. Stillman
Title: President
49
<PAGE>
SCHEDULE A
Registrations
<PAGE>
Doc F-1 of Set #1
SMITH & WOLLENSKY
Status: REGISTERED
Gds/Svcs: Int'l. Cl.: 42 (U.S. Cl.: 100)
RESTAURANT SERVICES.
First Use: 09/1977 In Commerce: 09/1977
Reg. No.: 1,271,216 Registered: 03/20/1984
Serial No.: 73-411479 Filed: 01/31/1983 Published: 12/27/1983
Affidavits: 8 & 15 09/06/1989
Corresp.: ALAN H. LEVINE
FIDDLER & LEVINE
350 5TH AVE.
NEW YORK NY 10118
Registrant: ST. JAMES ASSOCIATES, PARTNERSHIP COMPOSED OF ALLAN N. STILLMAN
(UNITED STATES CITIZEN) AND CHAMBLAIR REALTY, INC. (NEW YORK
CORPORATION) (NY PARTNERSHIP) 1114 FIRST AVENUE NEW YORK, NY 10022
<PAGE>
Doc F-2 of Set #1
WOLLENSKY'S GRILL
Status: REGISTERED
Gds/Svcs: Int'l. Cl.: 42 (U.S. Cl.: 100)
RESTAURANT SERVICES
First Use: 12/22/1980 In Commerce: 12/22/1980
Reg. No.: 1,399,014 Registered: 06/24/1986
Serial No.: 73-566896 Filed: 11/04/1985 Published: 04/01/1986
Owns: 1,271,216
Disclaims: "GRILL"
Affidavits: 8 & 15 12/15/1992
Owner: ST. JAMES ASSOCIATES, COMPOSED OF SMITH & WOLLENSKY OPERATING
CORP., A NEW YORK CORPORATION (NY LTD. PARTNERSHIP)
NEW YORK, NY
Registrant: ST. JAMES ASSOCIATES, COMPOSED OF ALAN N. STILLMAN, A U.S. CITIZEN
AND CHAMBLAIR REALTY CORP., A N.Y. CORPORATION (NY LTD.
PARTNERSHIP) NEW YORK, NY
Assignments:
Assignee: ST. JAMES ASSOCIATES (NY A LIMITED PARTNERSHIP) NEW YORK, NY
Assignor: ST. JAMES ASSOCIATES (NY A LIMITED PARTNERSHIP)
Recorded: 10/19/1992 Assigned: 10/09/1992 Reel/Fr.: 0899/0126
Action: NUNC PRO TUNC JULY 1, 1986
<PAGE>
[GRAPHIC OMITTED]
Int. Cl.: 42
Prior U.S. Cl.: 100
Reg. No. 1,572,565
Registered Dec.19, 1989
United States Patent and Trademark Office
- --------------------------------------------------------------------------------
SERVICE MARK
PRINCIPAL REGISTER
IF STEAK WERE A RELIGION, THIS WOULD BE ITS
CATHEDRAL
ST. JAMES ASSOCIATES (PARTNERSHIP), FIRST USE 6-0-1986; IN COMMERCE
DBA SMITH & WOLLENSKY 6-0-1986.
THE NEW YORK RESTAURANT GROUP, INC.
1114 FIRST AVENUE
NEW YORK, NY 10021 SER. NO. 73-777,747, FILED 1-30-1989.
FOR: RESTAURANT SERVICES, IN CLASS
42 (U.S. CL. 100). LALITHA MANI, EXAMINING ATTORNEY
<PAGE>
[GRAPHIC OMMITTED]
BENELUX-MERKENBUREAU
BEWIJS VAN INSCHRIJVING
01 Inschrijvingsnummer
555703
Nummer en dagtekening (dag en uur) van het depot
828578 09.06.1994,24.00
02 Vervaldatum
09.06.2004
03 Naam van de deposant
St. James Associates, New York corporation
04 Adres (straat en nummer) van de deposant
c/o The New York Restaurant Group Inc.
1114 First Avenue
05 Postcode, plaats en land van de deposant
New York - New York 10021,
Ver.St.v.Am.
06 Naam en adres van de gemachtigde of vermelding van het correspondentie-adres
van de deposant
Nederlandsch Octrooibureau
Scheveningseweg 82
2517 KZ's-Gravenhage
Nederland.
08 Woordmerk
SMITH & WOLLENSKY
13 Klasse-aanduiding en opgave van de waren en diensten
Kl 42 Diensten van een restaurant.
14 Klasse-opsomming (00 = tot en met)
42
Publikatiedatum van de inschrijving
05/1995
Kenmerken van de deposant of de gemachtigde
ma 5786- 1 Ben 941492 wm/mjv
Den Haag, 02/05/1995 /s/ P. Rome
P. Rome
Directeur
<PAGE>
INSTITUT NATIONAL DE LA PROPRIETE II USTRIELLE
DIVISION DES MARQUES - 32, rue des Trois Fontanot - 92016 NANTERRE Cedex
Telex: INPI DEF Tel.:(1) 46 92
614 096 F
MARQUES DE FABRIQUE,
DE COMMERCE
OU DE SERVICE
(Loi n (Degrees) 64-1360 du 31 decembre 1964
Decret n (Degrees) 65-621 du 27 juillet 1965)
Certificat d'enregistrement
Le Directeur General de l'Institut national de la propriete
industrielle certifie que la marque reproduite au verso a ete
enregistree.
La date legale d'enregistrement est celle a laquelle la demande a
ete deposee.
Le depot produit ses effets pendant 10 ans a compter de cette date.
Toutefois, le depot en renouvellement tardif a une duree de validite
de 10 ans a compter du jour de l'expiration du depot precedent.
L'enregistrement sera publie au Bulletin Officiel de la Propriete
Industrielle
n (Degrees) 91/56
Le Directeur general de l'Institut national
de la propriete industrielle
/s/ J.C. COMBALDIEU
J.C. COMBALDIEU
<PAGE>
[GRAPHIC OMITTED]
CABINET LAVOIX
2 Place d'Estienne d'Orves
75009 PARIS
SMITH & WOLLENSKY
Enregistrement N(degrees) : 1 682 457
Depot du : 23 JUILLET 1991
a : I.N.P.I
sous le N(degrees) : 299 789
ST. JAMES ASSOCIATES, (association regie salon les lois de
l'Etat de New-York), 1114 First Avenue, NEW-YORK, Etat de
New-York 10021, ETATS UNIS D'AMERIOUE.
Mandataire: LE CABINET LAVOIX.
Produits ou service designes : Hotellerie, restauration.
Maisons de repos et de convalescence. Pouponnieres.
Accompagnement en societe. Agences matrimoniales. Salons do
beaute, de coiffure. Pompes funebres, fours crematoires.
Reservation de chambres d'hotel pour voyagours. Travaux
d'ingenieurs, consultations professionnelles et etablissement
de plans sans rapport avec la conduite des affaires. Travaux
du genie (pas pour la construction). Prospection. Forages.
Essais de materiaux. Laboratoires. Location de materiel pour
exploitation agricole, do vetements, de literie, d'appareils
distributeurs. Imprimerie.Programmation pour ordinateurs.
Classes de produits ou services : 42.
La protection est revendiquee pour la totalite des services
entrant dans la classe ci-dessus indiquee.
<PAGE>
BUNDESREPUBLIK DEUTSCHLAND
[GRAPHIC OMITTED]
URKUNDE
Uber die Eintragung des umstehenden Zeichens
DEUTSCUES PATENTAMT
[GRAPHIC OMITTED]
<PAGE>
Klasse Aktenzeichen
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42 S 52475/42 Wz
SMITH & WOLLENSKY
10.6.91 St. James Associates, New York, N.Y. (V.St.A.).
Vertr.: Stolberg, U., Graf, Dr.; Suchantka, J., Dipl.-Ing.; Huber, A.,
Dipl.-Ing.; Kameke, A. v., Dr.; Voelker, I., Dipl.-Biol.; Franck, P., Dr.; Both,
G., Dr., Pat.-Anwalte, 2000 Hamburg.
Geschaftesbetrieb: Restaurant.
Waren/Dienstleistungen: Bewirtung von Gasten. GK. 42.
- --------------------------------------------------------------------------------
Eingetragen am Nummer
01.06.93 2037384
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Schutzdauer verlangert mit Wirkung vom:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Bei Eintragung nach ss. 6a Warenzeichangesetz:
Widerspruchsverfahren abgeschlossen am
- --------------------------------------------------------------------------------
Geloscht am
================================================================================
Internationale Registrierung
- --------------------------------------------------------------------------------
Registriert unter Nr. am
- --------------------------------------------------------------------------------
Geloscht am
- --------------------------------------------------------------------------------
<PAGE>
[GRAPHIC OMITTED]
MINISTERO DELL'INDUSTRIA DEL COMMERCIO E DELL'ARTIGIANATO
D.G.P.I. - UFFICIO ITALIANO BREVETTI E MARCHI
ATTESTATO DI REGISTRAZIONE PER MARCHIO D'IMPRESA
Tipo PRIMO DEPOSITO
N. 00613631
Il presente attestato viene rilasciato per il marchio d'impresa oggetto della
domanda:
----------------------------------------------------------------
num. data pres.
domanda anno U.P.I.C.A. domanda
================================================================
002930 91 ROMA 12/08/1991
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TITOLARE ST. JAMES ASSOCIATES A NEW YORK, NEW YORK
(USA)
RAPPR.TE DE SIMONE DOMENICO
INDIRIZZO BARZANO' E ZANARDO ROMA SPA
VIA PIEMONTE 26
00100 ROMA
MARCHIO L' ESEMPLARE DEL MARCHIO PRODOTTI E SERVIZI
DA CONTRADDISTINGUERE SONO QUELLI INDICATI
NELLA UNITA DICHIARAZIONE DI PROTEZIONE
[GRAPHIC OMITTED]
Roma, 30 DICEMBRE 1993 IL DIRIGENTE
Fir.to SANTE PAPARO
Consegnato dal Direttore Upica di Roma
o facente funzione il FIRMA
14 SET. 1994 /s/ [ILLEGIBLE]
La registrazione dura dieci anni a partire dalla data di deposito
della domanda
<PAGE>
RM 91 COO2930
[GRAPHIC OMITTED]
DICHIARAZIONE DI PROTEZIONE
di cui all'art.4 del Regolamento approvato con Decreto 8 Maggio 1948, n. 795,
concernente la registrazione di un Marchio d'Impresa di servizio di primo
deposito a nome della Sacieta:
ST. JAMES ASSOCIATES (Societa costituita secondo le leggi dello Stato di New
York) 1114 First Avenue, New York, New York 10021, S.U.A. di nazionalita: S.U.A.
Il marchio consiste nella dicitura:
SMITH & WOLLENSKY
(come da esemplare in calce)
Il marchio potra essere usato dalla Richiedente sui prodotti, involucri,
etichette, stampati, nella pubblicita (compresa la trasmissione radiotelefonica
e radiotelevisiva, la proiezione cinematografica ed ogni altro mezzo di
propaganda), ecc..., in qualsiasi dimensioni, caratteri e colori, essendo
riprodotto sia mediante stampa, impressione o rilievo, sia in ogni altro modo
canveniente.
Il marchio serve a contraddistinguere i seguenti servizi che la
Richiedente intende esercitare nel territorio dello Stato ed in ogni altro
territorio in cui spieghi efficacia la legge Italiana, o introdurre nel
territorio stesso per scopi commerciali: "Servizi di ristorante; Servizi di
ristorazione" (classe 42)
<PAGE>
SMITH & WOLLENSKY
Roma, 12 Agosto 1991
p.p. ST. JAMES ASSOCIATES
Ing. Barzano & Zanardo Roma S.p.A.
/s/ Domenico de Simone
[ILLEGIBLE] MANDATARIO NdS/OG.-
[ILLEGIBLE]
Domenico de Simone
(Il d'iscr. 377)
[GRAPHIC OMITTED]
<PAGE>
A TRADE MARKS [GRAPHIC OMITTED] Registration
REGISTRY Certificate
- --------------------------------------------------------------------------------
Trade Marks Act 1938 of Great Britain and Northern Ireland
SMITH & WOLLENSKY
The Mark shown above has been registered in Part B of the Register under No.
1466535 as of the date 07.06.1991 in respect of:
Class 42:
Restaurant and bar services; all included in Class 42.
In the name of:
St. James Associates
(United States of America, New York)
Registration of this mark shall give no right to the exclusive use of the word
"Smith".
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Sealed this day at my direction
/s/ Paul [ILLEGIBLE]
P.R.S HARTNACK, REGISTRAR
<PAGE>
Filed July 24, 1996
Serial No. : Not yet assigned
SERVICE MARK
1495-4024
APPLICANT - St. James Associates, d.b.a. Smith &
Wollensky, a New York Partnership
composed of the following general
partners: Smith & Wollensky Operating
Corp., a New York Corporation and
Chamblair Realty, Inc., a New York
Corporation
ADDRESS - c/o The New York Restaurant Group,
L.L.C.
1114 First Avenue
New York, New York 10021
DATE OF FIRST USE - At least as early as June, 1986
IN COMMERCE - At least as early as June, 1986
SERVICES - Class 42: Restaurant services
THE QUINTESSENTIAL NEW YORK CITY STEAKHOUSE
ATTORNEYS - MORGAN & FINNEGAN, L.L.P.
ADDRESS - 345 Park Avenue, New York, New York 10154
Ref.: 1495-4024
<PAGE>
Exhibit 10.12
LIMITED PARTNERSHIP AGREEMENT
OF
ST. JAMES ASSOCIATES
Dated: September 12, 1977
<PAGE>
ST. JAMES ASSOCIATES
TABLE OF CONTENTS
Page
----
1. Definitions 1
2. Formation 6
3. Name 6
4. Term 6
5. Purpose 6
6. General and Limited Partners 7
7. Capital Contributions 7
8. Additional Capital 7
9. Rights, Duties and Obligations of Partners 11
10. Profits and Losses, Distributions 19
11. Restrictions on Transfer 27
12. Death, Retirement, Bankruptcy, etc. of a General Partner 36
13. Limited Partners 36
14. Termination 38
15. Representations and Covenants of the Stillman Group 39
16. Indemnity 42
17. Books and Records 43
18. Bank Accounts 45
19. Power of Attorney 45
20. Distribution after Termination 47
21. Withdrawal 48
22. Arbitration 48
23. Notices 49
24. Captions 50
25. Variations in Pronouns 50
26. Miscellaneous 50
<PAGE>
LIMITED PARTNERSHIP AGREEMENT
OF
ST. JAMES ASSOCIATES
LIMITED PARTNERSHIP AGREEMENT made as of this 12th day of September,
1977, by and among the parties signing this agreement.
WITNESSETH:
1. DEFINITIONS
The following terms shall have the following meanings:
(A) "Act" shall mean the Securities Act of 1933 as amended;
(B) "Affiliate" shall have the meaning set forth in Rule 405
promulgated under the Act;
(C) "Agreement" shall mean this partnership agreement between the
General Partners and the Limited Partners, pursuant to which the
Partnership is organized;
(D) "Available Funds" shall have the meaning set forth in Article 10
["Profits and Losses, Distributions"];
1
<PAGE>
(E) "Balance Sheet" shall have the meaning set forth in Article 15
["Representations and Covenants of the Stillman Group"];
(F) "Contracts" shall have the meaning set forth in Article 15
["Representations and Covenants of the Stillman Group"];
(G) "Capital Percentage" shall mean the ratio of the capital
contributed by a Partner to the capital contributed by all Partners
as set forth on Exhibit "A" as the same may be adjusted as permitted
herein;
(H) "Corporate General Partner" shall mean Chamblair Realty, Inc.
one of the General Partners of the Partnership;
(I) "Distributions" shall have the meaning set forth in Article 10
["Profits and Losses; Distributions"];
(J) "Excess Proceeds" shall have the meaning set forth in Article 10
["Profits and Losses; Distributions"];
(K) "General Partners" shall mean Alan N. Stillman and Chamblair
Realty, Inc., as a group;
(L) "Group" shall mean the Investor Group or the Stillman Group, as
the context requires;
(M) "Incentive Management Fee" shall have the meaning set forth in
Article 9 ("Rights, Duties and Obligations of Partners");
2
<PAGE>
(N) "Interest Notice of Election" shall have the meaning set forth
in Article 11 [Restrictions on Transfer"]
(0) "Interest Offered Price" shall have the meaning set forth in
Article 11 ["Restrictions on Transfer"];
(P) "Interest Option Notice" shall have the meaning set forth in
Article 11 ["Restrictions on Transfer"];
(Q) "Investor Group" shall mean the following Partners: Leon Levy,
Jack Nash, Dr. Albert Willner, Myron Chase, James H. Levi, Peter
Venison, Arnold Adlin, Colin Keith and the Corporate Partner, and
any successor or assign of any of the foregoing to the extent of the
interest assigned, jointly (except as otherwise provided in the
Agreement) and severally;
(R) "Limited Partner" shall mean any limited partner of the
Partnership and "Limited Partners" shall mean each limited partner
collectively;
(S) "Mortgage Proceeds" shall have the meaning set forth in Article
10 ["Profits and Losses; Distributions"]
(T) "Net Profits or Net Losses" shall mean the gross revenues
received by the Partnership from operations less Operating Expenses;
(U) "New Master Limited Partnership" shall have the meaning set
forth in Article 9 ("Rights, Duties and Obligations of Partners").
3
<PAGE>
(V) "Notice of Election" shall have the meaning set forth in Article
11 ["Restrictions on Transfer"];
(W) "Offered Price" shall have the meaning set forth in Article 11
["Restrictions on Transfer"];
(X) "Offering Partner" shall have the meaning set forth in Article
11 ["Restrictions on Transfer"];
(Y) "Operating Expenses" shall mean all expenses of the Partnership
except depreciation, investment credit, sales tax, mortgage
recording tax, transfer tax, franchise taxes, occupancy taxes, if
any, unincorporated business taxes, charitable contributions,
interest, rent, if any, real estate taxes and other similar items
(however, any of the foregoing may be characterized for tax
purposes);
(Z) "Option Notice" shall have the meaning set forth in Article 11
["Restrictions on Transfer"];
(AA) "Partner" shall mean any signatory hereto (including the
General Partners) and a successor or assign thereof upon the
admission of such successor or assign as a Partner;
(BB) "Partnership" shall mean the Partnership organized under this
Agreement and the certificate filed pursuant thereto;
(CC) "Property" shall mean the leasehold interest in the land and
building (collectively) on which the Restaurant is operated;
4
<PAGE>
(DD) "Restaurant" shall mean a first-class restaurant serving steak
and other meat and fish dinners and beverages to patrons primarily
for sit-down on-premises consumption at 797 Third Avenue, New York
City;
(EE) "Realty Partnership" shall mean a New York limited Partnership
known as M W Realty Associates;
(FF) "Realty Partnership Agreement" shall mean the limited
partnership agreement under which the Realty Partnership was
organized;
(GG) "Recipient" shall have the meaning set forth in Article 11
["Restrictions on Transfer"];
(HH) "Recipient Group" shall have the meaning set forth in Article
11 ["Restrictions on Transfer"];
(II) "Sales Proceeds" shall have the meaning set forth in Article 10
["Profits and Losses; Distributions"]
(JJ) "Stillman" shall mean ALAN N. STILLMAN, one of the General
Partners
(KK) "Stillman Group" shall mean the following Partners: Stillman,
Bennett Benson, Ernest Kalman Stanley Blumenfeld, Eugene Byrne,
James Gannon and Joseph Phair, and any successor or assign of any of
the foregoing, to the extent of the interest assigned, jointly and
severally;
5
<PAGE>
(LL) "Supplemental Capital Contribution shall have the meaning set
forth in Article 8 ["Additional Capital"];
(MM) "Supplemental Contributor" shall have the meaning set forth in
Article 8 ["Additional Capital"];
(NN) "Term" shall have the meaning set forth in Article 4 ["Term"].
2. FORMATION
The parties hereto do hereby form a limited partnership (the
"Partnership") pursuant to the provisions of the Uniform Limited Partnership Law
of the State of New York. The office of the Partnership shall be c/o TWTF
Restaurant Group, 401 East 63rd Street, New York, N. Y. 10022, or such other
place as the General Partners may determine.
3. NAME
The Partnership shall be conducted under the firm name and style of
ST. JAMES ASSOCIATES.
4. TERM
The term of the Partnership ("Term") shall commence as of the date
hereof and continue until terminated as provided in Article 14 ("Termination").
5. PURPOSE
The principal purpose of the Partnership is to operate the
Restaurant in a portion of the building located on the real
6
<PAGE>
property at the corner of Third Avenue and East 49th Street (said real property
and building and any fixtures or personal property owned by the Partnership and
located therein being hereafter collectively called the "Property") and to
conduct therein all other activities related to such Restaurant.
6. GENERAL AND LIMITED PARTNERS
(A) GENERAL PARTNERS
ALAN N. STILLMAN, residing at 322 East 57th Street, New York
City ("Stillman") and CHAMBLAIR REALTY, INC., a New York corporation, with an
office c/o Warshaw, Sylvester, Burstein & Franks, at 555 Fifth Avenue, New York,
N. Y. 10017, shall be the General Partners.
(B) LIMITED PARTNERS
The Limited Partners shall be the persons whose names,
addresses, Group and respective Capital Percentages appear on Exhibit A as
Limited Partners.
7. CAPITAL CONTRIBUTIONS
The capital contributions with which the Partnership shall commence
business is $275,000. Each of the Partners has contributed to the capital of the
Partnership, in cash, the sum set forth opposite his name on Exhibit A.
8. ADDITIONAL CAPITAL
(A) No Partner is required to make an additional capital
contribution except as set forth in subparagraph (B). However, voluntary capital
contributions are permitted under the circumstances set forth below in
subparagraphs (C)-(D) of this Article 8.
7
<PAGE>
(B) If the Partnership requires additional funds at any time, or
from time to time, the Stillman Group shall advance and re-advance the first
$50,000 of those funds, and if $50,000 has been so advanced by the Stillman
Group and has not been repaid, in whole or in part, by the Partnership, the
members of the Investor Group shall (subject to compliance by the Stillman Group
with its obligations hereunder) advance and re-advance, as and when needed by
the Partnership, as determined by the General Partners in their reasonable
discretion (which discretion may be exercised notwithstanding the willingness of
Partners or others to lend the Partnership money as permitted under Article 9
["Rights, Duties and Obligations of Partners"] their respective PRO RATA shares
of a total of $50,000 (each Partner to advance up to the amount set forth on
Exhibit A opposite his name), provided however if, at any time, the unrepaid
advances of the Stillman Group is less than $50,000, the Stillman Group shall
first advance the difference and only after the total of all advances by the
Stillman Group which remains unrepaid by the Partnership aggregates $50,000 may
the Investor Group be requested, as set forth above, to advance or re-advance
any portion of the next $50,000; and provided further however, that the
obligation of the Stillman Group and the Investor Group under this subparagraph
(B) shall not, at any time, exceed the aggregate of $100,000 and shall be
reduced by the amount of any sums advanced and unrepaid under subparagraph (B)
of Article 8 of the Realty Partnership Agreement. All sums advanced hereunder
shall be repaid, without interest, as provided in Article 10 ("Profits and
Losses; Distributions").
(C) If, at a time when the Partners are not obligated
8
<PAGE>
under subparagraph (B), the business of the Partnership requires additional
funds, or if the contributions so required under subparagraph (B) are not
made, the General Partners, without waiving any other rights they may have,
shall submit to the Partners a plan to obtain such additional funds through
PRO RATA voluntary contributions 58.3333% thereof from the Stillman Group and
41.6667% thereof from the Investor Group. If Partners holding an aggregate of
67 in Capital Percentage (including members of the Investor Group holding 67
in Capital Percentage) then approve the plan, the General Partners shall
implement it and all Partners shall be bound thereby. If the Plan is not so
approved, or if having been approved is not implemented in accordance with
its terms, the General Partners acting jointly may either (1) seek to obtain
a voluntary capital contribution or contributions to the Partnership from one
or more persons, firms or corporations (including but not limited to,
existing Limited Partners who are members of the Investor Group, the General
Partners, or Affiliates of any of the foregoing) desiring to make a capital
contribution to the Partnership of all or part of the required additional
funds, upon such terms and conditions, and with such dilution or priorities
in allocations or Distributions or both (including adjustments in Capital
Percentages) as the General Partners may reasonably determine, and may admit
additional partners for this purpose; or (2) obtain from one or more persons,
firms or corporations (including but not limited to, existing Partners or
Affiliates of the foregoing) loans of such sums as are felt necessary, which
loans shall be repayable on such terms as may be agreed to by the General
Partners, as permitted under Article 9 ("Rights, Duties and Obligations of
Partners"). (Any such voluntary contributions to the Partnership by a person,
firm or corporation [including but not limited to such existing
9
<PAGE>
Partners or Affiliates of any of the foregoing] shall be called a "Supplemental
Capital Contribution" and the person, firm or corporation making such
Supplemental Capital Contribution shall be called a "Supplemental Contributor".)
To the extent any Supplemental Capital Contributions in excess of the amounts
needed are contributed, such excess Supplemental Capital Contributions shall be
promptly returned in such proportion as the General Partners shall determine,
without interest, to each Supplemental Contributor, but the Supplemental
Contributor shall not be entitled to the benefits of subparagraphs (C) and (D)
with respect to such excess.
(D) Upon the making of a Supplemental Capital Contribution, the
Supplemental Contributor shall receive from the Net Profits, Net Losses and
Distributions, such priorities and preferences, and in addition, the Capital
Percentage that the General Partners shall reasonably determine to be
appropriate.
(E) Each of the Partners acknowledges that his failure to make the
capital contribution required under subparagraph (B) and the subsequent need for
funds at a time when the Partners are not obligated thereunder may subject the
Partnership and each of the other Partners to losses in an amount presently
impossible to calculate with any accuracy. Accordingly, each Limited Partner
accepts the procedure whereby his Partnership interest may be diluted or
subordinated as provided in subparagraphs (C) and (D) of this Article, and as
permitted under Article 9 ("Rights, Duties and Obligations of Partners") as fair
compensation for the loss (in the nature of liquidated damages) which the
Partnership and the Partners who do make capital contributions will suffer, and
not as a penalty. Furthermore, except as provided for in this Article, neither
the Partnership nor any Partner or other person,
10
<PAGE>
firm or corporation shall have any other remedies, and no Partner shall be
subject to any liability other than as set forth in this Article arising from
the failure of a Partner to volunteer to make capital contributions. The
personal liability of the Partners to make capital contributions under
subparagraph (B) shall be limited to the respective sums set forth on Exhibit A,
opposite each Partner's name, plus interest as permitted by law.
All contributions made under this Article shall be sent to the
principal office of the Partnership in the manner set forth in the notice, or to
such other place as set forth in a notice.
9. RIGHTS, DUTIES AND OBLIGATIONS OF PARTNERS
(A) Except as specifically qualified by this Agreement, the General
Partners shall have all the rights and powers and be subject to all of the
restrictions and liabilities of a general partner under the Uniform Limited
Partnership Law of the State of New York.
(B) As part of the ordinary business of the Partnership, the General
Partners shall manage the affairs of the Partnership and, in that connection,
without limitation, have all the powers of a partner in a partnership which is
not a limited partnership and owns, operates and manges a first-class restaurant
open to the public.
(C) The General Partners may, but are not required to borrow from
any source, including Partners, or the Realty Partnership or Affiliates thereof,
upon such terms as the General Partners may determine. In connection with any
such loan which may be made, the General Partners may also agree to repay such
loan with or without interest prior to making any Distributions under Article 10
("Profits and Losses; Distributions").
11
<PAGE>
(D) Each Partner recognizes that the other Partners and their
respective Affiliates are presently engaged in other business ventures and
activities which could be considered to be competitive with the activities of
the Partnership. The General Partners and any Limited Partner may engage in
other business ventures of every nature and description, independently or with
others, including but not limited to, the real estate or restaurant businesses
in all its phases, even if same competes with the Partnership, and neither the
Partnership nor any Partner hereof shall have any rights in and to said
independent venture, or the income or profits derived therefrom, by reason of
his interest in this Partnership.
(E) The Stillman Group shall receive, as an Incentive Management
Fee, $30,000 PER ANNUM paid at the time described in and subject to the
conditions of subparagraphs (F)(9) and, if applicable, F(8) of Article 10
("Profits and Losses; Distributions") and the share of Distributions allocated
to the Stillman Group as provided for in subparagraph (F)(6), (F)(7), (F)(10)
and (G) of Article 10 ("Profits and Losses; Distributions").
(F) Subject to the subsequent provisions of this subparagraph (F),
the General Partners may employ, on behalf of the Partnership, such persons,
firms or corporations as it, in its sole judgment, shall deem advisable,
necessary or helpful for the proper
12
<PAGE>
and efficient operation and management of the business of the Partnership,
including a general contractor or management agents, investment advisors,
brokers, accountants and lawyers, even if any is an Affiliate, on such terms and
for such compensation as they, in their sole judgment shall determine, provided
the compensation and terms are comparable to those generally available in New
York City from firms which are not related. The fact that a Partner or any
member of the family of a Partner or Affiliate of a Partner is directly or
indirectly interested in or connected with any person, firm or corporation
employed by the Partnership to render or perform a service, or from which or
whom the Partnership may buy merchandise or other property, shall not prohibit
the General Partner from employing such person, firm or corporation or from
otherwise dealing with him or it, provided the terms and compensation are
comparable with those available in New York City from firms which are not
related. Without limiting the foregoing, TWTF Restaurant Group may be retained
by the Partnership to provide the Partnership and the Realty Partnership with
all necessary bookkeeping, accounting and normal legal services for which it
will be paid an annual fee of 2.3% of all Sales (hereafter defined) for Sales in
such year of $2 million or less, and 1.3% of all Sales in such year which exceed
$2 million. As used herein, the term "Sales" shall mean all monies received by
the Partnership or for its account, from the operation of the
13
<PAGE>
Restaurant, in cash, by credit card or otherwise, but less, as to all the
foregoing, in respect of the Restaurant, bona fide refunds to customers,
gratuities and tips in fact paid out by the Partnership to employees of the
Restaurant, the value of meals served to employees and taxes imposed and paid by
the Partnership on customer checks. If any portion of the Property is occupied
by TWTF Restaurant Group, or any Affiliate, except as an office of the manager
used exclusively for the business of the Partnership or the Realty Partnership,
TWTF Restaurant Group or such Affiliate shall pay fair rental value therefor.
(G) The General Partners are hereby authorized without limitation
(1) to maintain title to the assets of the Partnership in the name of an
individual or corporate nominee or (2) to transfer such assets to a duly
organized corporation in exchange for stock in said corporation, if in their
sole judgment and discretion the corporate form of organization would best serve
the interests of the Partners hereto. Each Partner shall have the same
proportionate beneficial interest in the stock of said corporation as he had
with respect to the Partnership but the stock may be issued in the name of the
General Partners and held in trust for the benefit of the Partners. Officers and
Directors of such corporation shall be elected by the Partners upon such terms
and conditions as the General Partners, in their sole discretion, deem
advisable. The General Partners may elect to distribute the stock to the
Partners, in which event the Partners, as stockholders, shall continue to be
bound by the provisions of Article 9 ("Rights, Duties and Obligations of
Partners") and Article 10 ("Profits and Losses, Distributions") and Article 8
("Additional Capital")
14
<PAGE>
of this Agreement except that the difference between the fair market value of
the stock (determined by an independent appraisal of the assets of the
corporation) and the value at which it is carried on the books of the
Partnership shall be determined, and the difference shall be credited or charged
to the Partners in accordance with their Capital Percentages.
(H) Notwithstanding the provisions of subparagraph (G) of this
Article, the Corporate General Partner may at any time elect to organize a new
limited partnership (the "New Master Limited Partnership"), in which event the
members of the Investor Group will if requested by the Corporate General Partner
at any time, or from time to time, assign all, or any part, of their respective
partnership interests in the Partnership to such New Master Limited Partnership
and such New Master Limited Partnership may become a limited partner of this
partnership. The partnership agreement of the New Master Limited Partnership
shall contain terms and conditions substantially similar to those of this
Agreement but in addition shall contain such additional terms and conditions as
may be reasonably requested by the members of the Stillman Group to protect the
rights and privileges of the Stillman Group under this Agreement. After the
transfer to the New Master Limited Partnership the general partner thereof may,
in his or its discretion, determine that it be preferable that the
15
<PAGE>
partners of the New Master Limited Partnership again be limited partners of this
Partnership; in which event such partnership interests will, if requested, be
re-transferred, in whole or in part as so requested, to this Partnership
whereupon the assignees may again request to become Limited Partners of this
Partnership, but shall otherwise be revested with their other rights and
privileges hereunder.
(I) No General Partner shall be liable, responsible or accountable
in damages or otherwise to any of the Limited Partners, for acts performed
within the scope of the authority conferred by this Agreement, except for acts
of willful misconduct, fraud, bad faith or gross negligence, PROVIDED FURTHER
HOWEVER, that such limitation shall not affect any of the rights granted the
Partners by the Act.
(J) The General Partner shall, if requested, make the election
described in Section 754 of the Internal Revenue Code, or provisions comparable
thereto, at the time of such election.
(K) The powers and rights of the General Partners, conferred under
this Agreement or by law, may be exercised by either of them except:
16
<PAGE>
(1) Where the vote of the Partners is required as set forth in
subparagraph (L) of this Article 9; and
(2) The Corporate General Partner shall devote or cause to be
devoted to the Partnership business such time and effort which in
its sole discretion it feels is necessary for the proper conduct of
the business of the Partnership, and Stillman shall supervise the
ownership and day-to-day management of the Property and Restaurant
without, except as set forth below, obtaining the approval of the
Corporate General Partner; and
(3) The consent or approval of all General Partners shall be
required for any decision concerning:
(a) the need for and method of obtaining additional funds
solicited under Articles 8 ("Additional Capital") or 9 ("Rights,
Duties and Obligations of Partners") and the admission of a new
partner or the granting of any preferences to an existing Partner;
(b)(i) the sale, leasing or mortgaging of the Property or
Restaurant, or (ii) the modification of any existing mortgage, lease
or similar document;
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(c) the granting of an option to purchase or lease the
Property or Restaurant;
(d) changing the operation of the Property from a Restaurant;
(e) incurring of an obligation -- contingent or otherwise --
in excess of $5,000.00, in one transaction or in a series of related
transactions, (except for the incurring in a single transaction or
series of related transactions the customary obligations of a
restaurant business in excess of $10,000.00) or incurring any
liability or obligations with an Affiliate;
(f) the making of any capital improvement in excess of
$10,000.00 to the Property or Restaurant;
(g) determining insurance coverage and limits;
(h) determining whether to cease conducting business;
(i) the content of the Partnership tax returns;
(j) determination of Sales, Net Profits, Net Losses, Available
Funds, Distributions and Excess Proceeds;
(k) the institution of a lawsuit in which a claim of more than
$3,000.00 is made or the selection of counsel in any action in which
the Partnership is a party; and
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(1) such other matters as provided in this Agreement are to be
determined by "the General Partners".
If all of the General Partners cannot agree on a decision concerning
a matter in subparagraph (K)(3), the issue shall be submitted to Arbitration as
provided under Article 22 ("Arbitration").
(L) Notwithstanding the determination of both the General Partners
to act, no action by the General Partners concerning a matter described in
subdivisions 3(a), (b)(i), (c) or (h) of subparagraph (K) of Article 9 shall be
valid unless concurred in or ratified in writing by the holders of 67 in Capital
Percentage, including 67 in Capital Percentage of the Investor Group.
10. PROFITS AND LOSSES: DISTRIBUTIONS
(A) The following terms shall have the following meanings:
(1) "Available Funds" shall mean all cash on hand, as
determined by the General Partners, exclusive of Excess Proceeds
(hereinafter defined), less any funds the General Partners may deem
advisable to retain as reserves. At such time as the General
Partners determine that the unused balance of any such reserves
previously retained out of funds which would otherwise have been
Available Funds are no longer necessary, the same shall thereupon be
deemed Available Funds.
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(2) "Distributions" shall mean Available Funds or Excess
Proceeds paid to the Partners during any fiscal year.
(3) "Excess Proceeds" shall mean the aggregate of Sales
Proceeds and Mortgage Proceeds.
(4) "Sales Proceeds" shall mean the net cash proceeds of sale
of all or any part of the Partnership assets, including a purchase
money mortgage (but excluding interest thereon which shall be deemed
Available Funds) and including the net proceeds of a taking in
condemnation or threat thereof, or by any right of eminent domain,
and the insurance proceeds available after payment of expenses
incurred to collect such proceeds and after any application which
may be required to restore the Property or Restaurant, less any
funds the General Partners may deem advisable to retain as reserves.
At such time as the General Partners determine that the unused
balance of any such reserves previously retained out of funds which
would otherwise have been Sales Proceeds are no longer necessary,
the same shall thereupon be deemed Sales Proceeds.
(5) "Mortgage Proceeds" shall mean the net cash proceeds of
(i) borrowing by the Partnership, (ii) refinancing of any mortgage,
(iii) advances or additional advances under any mortgages, or (iv)
sale-leaseback after deducting
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(a) expenses, including amounts paid to brokers, in connection
with the foregoing;
(b) sums sufficient for the payment of the mortgage or other
indebtedness being refinanced and all other obligations
required to be satisfied therefrom, provided, however, when
the unused balance of any reserves retained are no longer
needed to be reserved for such purposes, the same shall
thereupon be deemed Mortgage Proceeds;
(c) cost of performance of all alterations, repairs, capital
improvements or other work or the taking of any other action
required by the mortgagee; and
(d) the use or the establishment of any reasonable reserves
for working capital or for alterations, repairs or capital
improvements or other work deemed advisable by the General
Partners whether or not for the foregoing purposes, provided
however that as the unused balance of any such reserves so
retained are no longer necessary, the same shall become
Mortgage Proceeds.
(B) From and after the date of this Agreement and until the
termination of the Partnership, no Distributions to the Partners shall be made
except as provided in this Article.
(C) The fiscal year of the Partnership shall be the calendar year.
(D) The profits and losses of the Partnership during each fiscal
year shall be computed as required under this Agreement and otherwise in
accordance with the principles generally accepted for tax accounting purposes
and shall be allocated among the Partners as follows:
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(1) First, each item of depreciation, investment credit, sales
tax, mortgage recording tax, transfer tax, franchise taxes,
occupancy tax, if any, unincorporated business taxes, charitable
contributions, interest, rent, if any, real estate taxes, Net Losses
and other similar items (however, any of the foregoing may be
characterized for tax purposes) available to the Partnership shall
be allocated 16.6667% thereof to the Stillman Group and 83.3333%
thereof to the Investor Group, to be divided among each Partner in
accordance with his respective Capital Percentage; and then
(2) Net Profits of the Partnership after adjustment for the
foregoing items, shall be allocated 58.3333% thereof to the Stillman
Group and 41.6667% thereof to the Investor Group, to be divided
among each Partner in accordance with his Capital Percentage; and
(3) Net Profits of the Partnership from a sale of all or any
part of the Property shall be allocated as follows:
(a) In the manner set forth in subparagraph (F)(6) of this
Article; then
(b) In the manner set forth in subparagraph (F)(7) of this
Article; then
(c) In such amount as will, after the allocations set forth in
subparagraphs (D)(1), (D)(2), (D)(3)(a) and (D)(3)(b), bring
the balance of the capital accounts of the Stillman Group and
the Investor Group into the ratio 58.3333 to 41.6667; and
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<PAGE>
(d) The balance, if any, in the manner set forth in
subparagraph (F)(10) of this Article.
If any Partner was not a Partner (or assignee) for an entire year,
the foregoing allocations to such Partner shall be the proportion thereof
consistent with the portion of the year during which he was a Partner.
(E) The General Partners shall, from time to time, as they deem
appropriate, but at least monthly, determine the amount of Available Funds and
Excess Proceeds, if any.
(F) For each fiscal year (considered independently without reference
to any previous fiscal year except as set forth below), any Available Funds or
Excess Proceeds, or both, shall be paid in the following manner, amount and
sequence:
(1) Available Funds or Excess Proceeds, or both, shall be paid
to the Partners to whom preferences in Available Funds or Excess
Proceeds have been promised as conditions to their making capital
contributions or loans under the provisions of Article 8
("Additional Capital") and 9 ("Rights, Duties and Obligations of
Partners") and have not been previously repaid hereunder or under
subparagraph (F)(1) of Article 10 of the Realty Partnership
Agreement; and then
(2) Available Funds or Excess Proceeds, or both, shall be paid
to the members of the Investor Group who have made advances as
contemplated by Article 8(B) ("Additional Capital") to the extent
that such sums, without interest thereon have not been previously
re-
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paid hereunder or under subparagraph (F)(2) of Article 10 ("Profits
and Losses; Distributions") of the Realty Partnership Agreement;
then
(3) Available Funds or Excess Proceeds, or both, shall be paid
to the Stillman Group who have made advances as contemplated by
Article 8(B) ("Additional Capital") to the extent that such sums,
without interest thereon, have not been previously repaid hereunder
or under subparagraph (F)(3) of Article 10 ("Profits and Losses;
Distributions") of the Realty Partnership Agreement; then
(4) Available Funds or Excess Proceeds, or both, to the extent
that such sums due under subparagraph (F)(5) of Article 10 ("Profits
and Losses; Distributions") hereunder or under subparagraph (F)(5)
of Article 10 ("Profits and Losses; Distributions") of the Realty
Partnership Agreement have not been paid during each prior fiscal
year, shall be paid to the Partners in accordance with their
respective Capital Percentages; then
(5) Available Funds or Excess Proceeds, or both, still
remaining, to the extent of $30,000 (less any sums previously paid
hereunder or under subparagraph (F) (5) of Article 10 ["Profits and
Losses; Distributions"] of the Realty Partnership Agreement with
respect to such fiscal year) shall be paid to the Partners in
accordance with their respective Capital
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<PAGE>
Percentages; then
(6) Excess Proceeds still remaining, to the extent of
$300,000, less sums previously received during the Term under
subparagraph (F)(6) of Article 10 of this Agreement or of the Realty
Partnership Agreement shall be paid to the Partners in accordance
with their respective Capital Percentages; then
(7) Excess Proceeds to the extent of $300,000, less sums
previously received during the Term under subparagraph (F)(7) of
Article 10 of this Agreement or of the Realty Partnership Agreement
shall be paid to the Stillman Group in accordance with their
respective Capital Percentages; then
(8) Available Funds or Excess Proceeds, or both, to the extent
that such sums due under subparagraph (F)(9) of Article 10 of this
Agreement, or subparagraph (F)(9) of Article 10 ("Profits and
Losses; Distributions") of the Realty Partnership Agreement have not
been paid during any prior fiscal year, shall be paid to such
Partners in accordance with their respective Capital Percentage;
then
(9) Available Funds or Excess Proceeds, or both, still
remaining, to the extent of $30,000 (less any sums previously paid
hereunder or under subparagraph (F)(9) of Article 10 ["Profits and
Losses; Distributions"] of the Realty Partnership Agreement with
respect to such fiscal year) shall be paid to the
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<PAGE>
Stillman Group as an Incentive Management Fee to be divided in
accordance with their respective Capital Percentages; then
(10) The balance of Available Funds or Excess Proceeds, or
both, still remaining (less sums previously paid hereunder or under
subparagraph (F)(10) of the Realty Partnership Agreement) shall be
distributed as follows: 58.3333% thereof to the Stillman Group, as
additional Incentive Management Fee and 41.6667% thereof to the
Investor Group, each to be divided in accordance with the respective
Capital Percentages of each member.
(G) Subject to the provisions of subdivisions (F)(1) to (F)(3)
inclusive and (F)(6) and (F)(7) of this Article 10, any Excess Proceeds received
upon a foreclosure of the mortgages or other sale of the entire Property and the
termination of the Partnership shall be paid to those Partners having positive
capital accounts in amounts equal to such positive capital accounts in
settlement thereof.
(H) In the event that at any time payments are due under
subparagraphs (F)(1), (F)(2) or (F)(3) of this Article, more than one advance
has not been repaid, repayments shall be made in the inverse order in which such
advance was made unless the General Partners otherwise agree with each Partner
making such advance, and as between advances made concurrently, the same shall
be repaid PRO RATA within each such category. The foregoing requirement shall
not prevent the General Partners from subordinating the foregoing priorities to
those of parties who have loaned
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<PAGE>
money or contributed capital to the Partnership if, in its discretion, such
subordination is in the best interests of the Partnership.
11. RESTRICTIONS ON TRANSFER
(A) Except as hereinafter set forth in this Article, no Partner
shall sell, assign, transfer or otherwise dispose of or encumber his, her or its
Partnership interest or any part thereof.
(B)(1) After one (1) year from the date hereof, any member of the
Investor Group (including a legal representative thereof) may, at any time, or
from time to time, sell, assign or transfer all or any portion of his
Partnership interest to any other Partner so long as the aggregate transfers in
any twelve (12) month period is less than 50% of all partnership interests. No
assignment shall be effective unless there is first delivered to the
Partnership: (a) an executed and acknowledged copy of any assignment; (b) the
agreement in writing of the assignee, expressly stating that the interest
assigned is subject to all of the terms and conditions of this Agreement,
including, without limitation, the provisions of this Article 11; and (c) a
statement executed by the Assignee stating that he is acquiring such interest
for his own account for investment and not with a view to distribution,
fractionalization or resale thereof.
(2) No assignee shall become a substituted Limited Partner without
the consent in writing of a General partner (which consent may be arbitrarily
withheld) and compliance with the other provisions of this subparagraph.
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<PAGE>
(3) Any request by an assignee to become a substituted Limited
Partner in place of his assignor must be accompanied by (a) a duly executed and
acknowledged written assignment in form approved by a General Partner setting
forth the request of the assignor that the assignee become a substituted Limited
Partner in his place; (b) the execution, acknowledgment and delivery by the
transferee of a power of attorney containing the powers provided for in Article
18 ["Power of Attorney"]; (c) the payment of the reasonable fees and expenses of
the General Partners, including their respective counsel's fees incurred in
connection with the request; and (d) the execution, acknowledgment and delivery
of such other instruments as the General Partners may reasonably deem necessary
or desirable to effect such substitution. No substitution will be effective
until the General Partners have consented thereto and an appropriate amendment
to the Certificate of Limited Partnership has been duly filed. The General
Partners shall file such amended certificate reasonably promptly after
consenting thereto and after the foregoing conditions have been met, but shall
not be required to file more than one amended certificate in any twelve (12)
month period.
(C)(1) If, at any time after one year from the date hereof, any
Partner shall desire to sell all or any part of his interest in the Partnership,
he shall give notice ("Interest Option Notice") to the other Partners of that
desire and of the
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<PAGE>
price ("Interest Offered Price") and other terms upon which he desires to sell
his interest, provided however, that no member of the Stillman Group may give
the Interest Option Notice until first obtaining the written consent of the
members of the Investor Group who hold 67 or more in Capital Percentage
(2) The Interest Option Notice shall be deemed to be an offer on his
behalf ("Offering Partner") to each other Partner ("Recipient") to elect by
notice in writing ("Interest Notice of Election") that the Recipient shall
purchase the entire interest of the Offering Partner at a price equal to the
Interest Option Price and otherwise upon the terms and conditions set forth in
the Interest Option Notice, except that the maximum amount of cash payable at
the closing will be the sum of (a) the amount of all capital contributions made
by the Offering Partner less Excess Proceeds received by the Offering Partner as
of the date the Interest Notice of Election was sent and (b) one-fifth (1/5) of
the balance of the Interest Option Price. The remaining balance of the Interest
Option Price shall be paid in four equal annual installments commencing one (1)
year from the date of closing, with interest on the unpaid balance at the rate
of 8 1/2% per annum provided, however, that the Recipient shall prepay in any
year such amount of principal that will result in minimum principal payments
during each twelve (12) month period after the closing of $75,000. Upon the
sending of an Interest Option Notice, the Offering Partner shall have no further
rights to invoke the provisions of subparagraphs (B), (D) or (E) of this
Article, unless a closing of the sale has not occurred by reason of the default
of the Recipient.
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<PAGE>
(3) Each Recipient shall have a period of twenty (20) days within
which to serve an Interest Notice of Election (copies of which shall be sent to
all Partners) designating whether he elects to accept the option to purchase the
interest of the Offering Partner upon the terms and conditions set forth in the
Interest Option Notice. If the offer described in subparagraph (C)(2) is
accepted, a closing shall occur at 10:00 A.M. at the office of the Partnership,
on the date set forth in the Interest Notice of Election (which date shall be no
earlier than the 30th day or later than the 60th day after the mailing of the
Interest Notice of Election) as determined by the Recipient, at which time the
offering Partner shall sell, assign and convey to the purchaser the entire
interest of said Partner in the Partnership and the purchaser shall purchase
such interest at the Interest Option Price and otherwise on the terms and
conditions set forth in the Interest Option Notice. If more than one Recipient
sends an Interest Notice of Election the interest being sold shall be sold to
all Recipients PRO RATA in accordance with their respective Capital percentages
and the closing date shall be on the 60th day after the mailing of the Interest
Notice of Election.
(4) If no timely Interest Notice of Election is sent, the Offering
Partner may sell, assign and convey to any person, firm or corporation, all of
his partnership interest at the price and upon the terms and conditions in said
Interest Option Notice and otherwise in compliance with the provisions of
subparagraph (B)(1) of this Article, provided however, that if the Offering
Partner has not so conveyed the Interest described in the Interest Option Notice
upon the terms and conditions set forth therein within sixty (60) days
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<PAGE>
of the sending of the Interest Option Notice, the offering Partner must, prior
to any sale of all or any part of his partnership interest, again comply with
the provisions of subparagraph (C) of this Article 11.
(D)(1) If, at any time, a member of the Stillman Group has failed to
obtain the consent of the Investor Group to sell, assign or transfer his
interest, as required under subparagraph (C) of this Article, and within 120
days of such failure so to consent, any member of the Stillman Group receives a
bona fide written offer to purchase all of the assets of the Partnership, which
offer is acceptable to the members of the Stillman Group holding 67 in Capital
Percentage of that Group, he shall give notice ("Option Notice") to the Investor
Group stating that he has received (a) a bona fide written offer to purchase all
of the assets of the Partnership, setting forth the price offered ("Offered
Price"); (b) a certified check for ten (10%) percent of the Offered Price; (c) a
statement from the prospective purchaser setting forth the brokers, if any, with
whom he dealt in connection with the proposed sale and the amount of commissions
that may be due the brokers; (d) an agreement by any such brokers that it or
they will be entitled to commissions from the Partnership only if, as and when
title closes, and (e) an executed contract for the purchase of all of the assets
of the Partnership conditioned upon the acceptance of the offer within thirty
(30) days by the Partnership. The Option Notice shall include true copies of the
instruments described in subdivisions (a) to (e) inclusive.
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(2) The Option Notice shall be deemed to be an offer on behalf of
the Stillman Group to the Investor Group to elect by notice in writing ("Notice
of Election") either that (a) the Partnership, or (b) the Investor Group shall
purchase the entire interest of the Stillman Group at a price ("Option Price")
equal to the net sum the Stillman Group would receive (and be payable upon the
same terms and conditions) if the Partnership accepted the offer, closed the
sale on the same terms and conditions set forth in the Option Notice and
liquidated the Partnership. Upon the sending of an Option Notice, the Stillman
Group shall have no further rights to invoke the provisions of subparagraphs
(B), (C) or (E) of this Article unless a closing of the sale of all the assets
of the Partnership has not occurred by reason of the default of any member of
the Investor Group or of the Partnership.
(3) The Investor Group shall have a period of twenty (20) days
within which to serve a Notice of Election designating which option, if any, it
elects to accept. If the option described is accepted, a closing shall occur at
10:00 A.M., at the office of the Partnership, on the date set forth in the
Notice of Election (which date shall be no later than the 190th day after the
mailing of the Notice of Election) at which time the Stillman Group shall sell,
assign and convey to the Partnership or to the Investor Group, as the case may
be, the entire interest of said Group in the Partnership which shall purchase
such interest at a price equal to the Option Price, subject to the liabilities
of the Partnership, upon the terms and conditions set forth in the Option
Notice.
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(4) If a timely Notice of Election is not sent, the bona fide
written offer shall be deemed to have been accepted and the Partnership shall
sell, assign and convey all of the assets thereof to the person named in the
Option Notice at the price and upon the terms and conditions contained in said
Option Notice.
(5) The members of each Group shall, from time to time, execute,
acknowledge and deliver, at the reasonable request of the General Partner who is
a member of the other Group, all affidavits, letters of direction, consents or
approvals, that may be necessary to effectuate the purposes of subparagraphs
(D)(3) and (D)(4) of this Article.
(6) During the period between the sending of an Option Notice and
the Closing of the sale to the Investor Group or the Partnership:
(a) Any General Partner who is a member of the Stillman Group
and each member thereof shall not unreasonably withhold or delay its
consent to the taking of any action desired by the Investor Group or
by the General Partner which is a member of the Investor Group.
(b) No member of the Stillman Group shall be required or
requested to make Supplemental Capital Contributions or loans to the
Partnership.
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(d) The General Partner which is a member of the Stillman
Group shall not be entitled to any compensation or income arising
from any services performed for the benefit of the Partnership.
(e) Except as set forth above, all of the terms and conditions
of the Partnership Agreement shall remain in full force and effect.
For the purposes of the provisions of subparagraph (D) of this
Article 11, each member of each Group shall be bound by the decision of the
holders of 67 in Capital Percentage of that Group.
(E) In the event that, at any time after one year from the date
hereof, the holders of a majority in Capital Percentage of the Investor Group
desire to sell their entire interests in the Partnership, such holders may
notify the Stillman Group of the purchase price and the terms upon which such
holders (and no other members of the Investor Group) will either (a) sell their
entire Partnership interests to the Stillman Group or to the Partnership, or (b)
purchase or cause the Partnership to purchase from the Stillman Group, the
entire Partnership interests of the Stillman Group. The Stillman Group shall
have a period of forty-five (45) days within which to elect which option, if
any, it elects to accept. If the members of the Stillman Group are not
unanimous, then the decision of a majority in Capital Percentage shall be
binding on all members, and if no notice is sent, the Stillman Group shall be
deemed
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<PAGE>
to have elected to purchase the Partnership interests of such members of the
Investor Group (without affecting the rights of the balance of the members of
the Investor Group). Upon acceptance of the option, a closing shall be held at
the time and in the manner set forth in subparagraph (D)(3) except that the
actual date of closing shall be determined by the purchaser who may also elect
in such notice to cause the Partnership to redeem the interest of such holders.
(F) The Partners may, at any time, and from time to time, transfer
their partnership interests, in whole or in part, to the New Master Limited
Partnership as permitted under Article 9 ("Rights, Duties and Obligations").
(G) In the event that any Partner transfers his interest in the
Partnership (to the extent permitted by this Agreement) such member or his
transferee may require the Partnership to make the election permitted under
Section 754 of the Internal Revenue Code of 1954, as amended, or any comparable
statutory provision then in effect, in which event the Partnership shall duly
make such election, unless the making of such election shall, in the opinion of
counsel to the Partnership, have a material adverse tax or financial impact on
any of the non-transferring Partners.
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12. DEATH, RETIREMENT, BANKRUPTCY, ETC., OF A GENERAL PARTNER
In the event of the retirement, bankruptcy or, in the case of an
individual, adjudication of insanity or incompetency or death, of a General
Partner, the Partnership shall be dissolved and terminated unless the surviving
General Partner, or if there be none, the Limited Partners shall within one
hundred and twenty (120) days of such death, retirement, adjudication, removal
or bankruptcy by unanimous vote of the Limited Partners or their legal
representatives (A) elect to continue the Partnership and (B) designate one or
more successor General Partners.
If the Partnership continues, the Partnership interest of such
deceased, retired, incompetent, removed or bankrupt General Partner, if any,
shall become a Limited Partners' Interest of which a portion of its Capital
Percentage sufficient to vest in the new General Partner a Capital Percentage of
1 and shall be allocated to such surviving or successor General Partner with
the balance thereof allocated to such former General Partner.
The parties shall execute and deliver such documents as may be
necessary to accomplish the foregoing.
13. LIMITED PARTNERS
(A) No Limited Partner shall participate in the management or
control of the Partnership's business. The fore-
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going shall not prevent a General Partner who is also a Limited Partner from
acting as a General Partner, or prevent the Limited Partner from voting on the
matters set forth in subparagraph (K)(3) of Article 9 ("Rights, Duties and
Obligations of Partners, or being employed in the business of the Partnership.
Except as otherwise provided in Article 8 ["Additional Capital"] the Limited
Partners shall be liable for obligations of the Partnership only to the extent
of the statutory requirement set forth in Section 106 of the New York Uniform
Limited Partnership Law ["Liability of limited partner to Partnership"] to
contribute, with interest, capital returned to a Partner.
(B) If any individual Limited Partner shall die, his executor or
administrators (or if he shall become insane, his committee or representative)
shall, upon executing, acknowledging and delivering to the Partnership an
agreement in writing, assuming and agreeing to be bound by this Agreement and
approving the power of attorney set forth in Article 18 [Power of Attorney"], be
deemed to be an assignee of such deceased or insane Limited Partner and shall
have the same rights that such Limited Partner would have had if he had not died
or had not become insane, subject to the terms, provisions and conditions of
this Agreement, as if such Limited Partner had not died or become insane.
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14. TERMINATION
The Partnership shall terminate upon the happening of any of the
following events:
(A) Upon the sale or transfer of the last remaining property, real
or personal, held by the partnership (except, in any such case, to an individual
nominee or corporate nominee) provided however, if in connection with such sale
a purchase money mortgage is received, such mortgage may be transferred to an
agent to be held, administered and enforced for the benefit of the Partners.
(B) The retirement or bankruptcy of any General Partner or the
adjudication of insanity or incompetency or death, of an individual General
Partner and the failure in any such instance of the surviving General Partner,
if any, or the Limited Partners to elect to continue the Partnership as provided
in Article 12 ["Death, Retirement, Bankruptcy, Etc. of a General Partner").
(C) December 31, 2068
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15. REPRESENTATIONS AND COVENANTS OF THE STILLMAN GROUP
(A) In order to induce the Investor Group to execute this Agreement
and make the capital contributions required hereunder, the Stillman Group
warrants and represents as follows:
(1) Entertainment Concepts, Inc. entered into two written
contracts, each dated August 3, 1977, with Michael F. Drinkhouse ("Contracts")
for the purchase of real property located at 49th Street and Third Avenue for a
total purchase price of approximately $1,000,000 of which $75,000 to be paid in
cash, $406,592 to be paid by taking title subject to a first mortgage, $468,408
to be paid by taking title subject to a second mortgage, and the balance,
$50,000, for the purchase of certain fixtures and personal property. Title
closed under the Contracts in accordance with their terms on August 22, 1977,
with adjustments as of August 17, 1977. Stillman has caused Entertainment
Concepts, Inc. to convey the real and personal property which is the subject
matter of the Contracts to the Realty Partnership, concurrently herewith.
(2) Stillman has obtained an assignment to the Realty
Partnership of all rights to the good will and trade name "MANNY WOLF".
(3) The Restaurant formerly operated at 49th Street at Third
Avenue, had a legal seating capacity of 188 persons and is not now contemplated
to be designated a "landmark".
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(4) Stillman has heretofore delivered to the Investor Group
the following financial statements signed by Stillman:
(a) Balance Sheet, as at July 31, 1977, prepared by
Clifford Management Group, Inc. ("Balance Sheet"); and
(b) Federal Income tax returns Of Tuesday's, Inc.,
Wednesday's, Inc., Thursday's, Inc. and Stillman & Horton, a
partnership, prepared by M. J. Stillman & Co., for the
calendar years ended December 31, 1974, 1975 and 1976.
The foregoing Balance Sheet fairly presents the financial
position of Stillman as at the date thereof, and the income tax returns fairly
present the results of the operations of Stillman's restaurants for the periods
referred to therein.
(5) As of the date hereof, Stillman has no liabilities, debts
or obligations of a nature customarily reflected in the body or footnotes of a
balance sheet whether accrued, absolute, contingent or otherwise, except as set
forth on the Balance Sheet, and the only liabilities or obligations incurred on
behalf of the Partnership have been disclosed in a letter delivered concurrently
to the Corporate General Partner.
(6) There is no broker who brought about the transaction
pursuant to which this Partnership Agreement is being
40
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executed and the property acquired.
(7) No other person, firm or corporation other than the
signatories to this agreement as members of the Stillman Group, has any interest
direct or indirect in this property or in this transaction. Each member of the
Stillman Group is over the age of twenty-one (21) years, has sufficient net
worth to afford to lose his entire investment, is sophisticated in investments
of this type, has been fully advised that he may lose his entire investment and
is making this investment for his own account and not with a view to
distribution, sale or transfer.
(8) The warranties and representations by the Stillman Group
in Article 15 of the Realty Partnership Agreement are true and correct.
(B) As further inducement to execute this agreement, the Stillman
Group covenants that during the Term:
(1) Stillman shall use his best efforts to cause the
Partnership to obtain a liquor license and to obtain a sidewalk cafe permit;
(2) Stillman will cause TWTF Restaurant Group to provide the
Partnership with all necessary bookkeeping, accounting and normal legal services
at no cost except as permitted hereunder.
(3) Stillman will cause the partnership to maintain such
insurance and in such amounts and for the benefit of such parties as may be
reasonably requested by the Corporate General Partner;
(4) At the request of the Corporate General Partner, Stillman
will cooperate in the obtaining of life insurance
41
<PAGE>
on his life for the benefit of the Investor Group, in such amount as may be
reasonably determined by the Investor Group, but not more than $250,000, the
premiums for which shall be paid by the Partnership;
(5) The Partnership will pay all expenses of this transaction,
including without limitation, organizational fees, filing fees, annual corporate
franchise taxes, mortgage recording taxes and other expenses except for the fees
charged by counsel to the Investor Group or to the Stillman Group for services
rendered to such Group, and except for those expenses which are paid for by the
Realty Partnership.
(6) Stillman will comply with his other obligations under this
Agreement and the Realty Partnership Agreement.
16. INDEMNITY
The Partnership shall indemnify and save harmless the General
Partners and each of them, of and from any personal liability, loss or damage
suffered or incurred by it by reason of any acts performed for and on behalf of
the partnership and within the scope of its authority, to the extent not
prohibited by the Act, except for damages arising from their gross negligence,
fraud, or willful misconduct.
In the event any action, suit or proceeding is instituted against
the Partnership or the General Partner, with respect to the business assets,
liabilities or activities of the Partnership, the General Partner or the
Partnership may obtain separate legal counsel and other expert assistance to
defend or assist in defending any such suit, action or proceeding. The
42
<PAGE>
General Partner shall have advanced to it or any of them, by the Partnership, at
its request, funds for payment of all expenses and costs incurred in connection
with their defense of any such action, suit or proceeding and, in addition, the
General Partner shall also be reimbursed for or indemnified against and saved
harmless from any and all liabilities, costs and expenses incurred in connection
with the defense of any such action, suit or proceeding, including costs and
expenses paid in settlement or compromise of the action, suit or proceeding,
provided such reimbursement or indemnity is approved by the General Partners.
17. BOOKS AND RECORDS
(A) At all times during the continuance of the Partnership, Stillman
shall cause TWTF Restaurant Group, to keep and maintain full, complete and
accurate books of account in which shall be entered, fully and accurately, each
and every transaction of the Partnership. Stillman shall keep such books for at
least six (6) years after the close of the taxable year to which they pertain
unless there is pending or threatened, with respect to such year, any proceeding
or action by any taxing or other governmental authority, in which event such
books shall be kept until such proceeding is finally concluded.
(B) All of said books of account for the then current year, together
with an executed copy of the Agreement and of the Certificate of Limited
Partnership and any amendments thereto, shall, at all times, be maintained at
the principal office of the
43
<PAGE>
Partnership and shall be open to the inspection and examination of the Partners
or their representatives during normal business hours, at times convenient to
the General Partners.
(C) Each Partner will be provided monthly with unaudited financial
and operating reports and annually with financial statements of the Partnership
including a balance sheet and the related statements of income and retained
earnings and changes in financial position accompanied by an annual report of an
independent public accountant and containing an express opinion that such
statements fairly present the financial position and results of operations of
the Partnership and (if the Investor Group so requests it) stating that an audit
of such financial statements has been made in accordance with generally accepted
auditing standards, stating the opinion of the accountant in respect of the
financial statements and the accounting principles and practices reflected
therein and, as to the consistency of the application of the accounting
principles, and identifying any matters to which the accountant takes exception
and stating, to the extent practicable, the effect of each such exception on
such financial statements. In addition, each Partner will be supplied with
information as to each Partner's share of distributive income or loss and any
other information required to be furnished to permit such Partner to prepare his
income tax returns, Source of Distributions Statement, and such other
information as the Partners shall request, or the New York Attorney General
shall require. The Corporate General Partners shall receive copies of all
litigation papers served on or by the Partnership or any General Partner.
44
<PAGE>
18. BANK ACCOUNTS
(A) All funds of the Partnership are to be deposited in the
Partnership's name, in such bank account or accounts as shall be designated by
the General Partners.
(B) Authority to make withdrawals from any such bank account or
accounts shall be made as determined by the General Partners.
19. POWER OF ATTORNEY
Each of the Limited Partners hereto constitutes and appoints the
General Partners and each additional or successor General Partner, as the same
may be determined from time to time, the true and lawful attorney for such
Limited Partner, and in the name, place and stead of such Limited Partner, to
make, execute, sign, acknowledge and file, from time to time, Certificates or
Certificates of Amendment of Limited Partnership under the laws of the State of
New York or any other jurisdiction in which the General Partner reasonably
believes a Certificate or any Amendment thereto should be filed, in order to
carry out any of the powers, rights and privileges granted to the General
Partner by the Partnership Agreement. Any such Certificate or Amendment may
reflect and accomplish, without limitation, any of the following: admission of
an additional or successor General Partner, as provided in
45
<PAGE>
Article 6 ("General and Limited Partners") and Article 12 ("Death, Retirement,
Bankruptcy, Etc. of a General Partner"); changes resultant upon the making of
capital contributions as provided in Article 8 ("Additional Capital"); the
transfer to the New Master Limited Partnership of the partnership interests of
the Investor Group (as permitted in Article 9 ["Rights, Duties and Obligations
of Partners"]; any other change of a technical or ministerial nature which does
not adversely affect the rights or increase the obligations of the Limited
Partners and to include in any certificate authorized under this Article all
information required by the laws of the state applicable thereto. In addition,
the General Partner may make, execute, sign, acknowledge and file a Certificate
of Dissolution of Limited partnership under the laws of said state or states and
to include therein all information required by the laws of said state or states,
and may also make, execute, sign, acknowledge and file a Certificate of
Conducting Business under an Assumed Name, or any amendment or amendments to any
of the foregoing certificates, and to execute such other instruments as may be
required under the laws of the State of New York or other jurisdiction for the
formation, continuation or dissolution of the Partnership.
This power of attorney is deemed irrevocable, shall be
46
<PAGE>
deemed coupled with an interest and is intended to survive any subsequent death,
disability or incapacity or incompetency to the extent permitted by law, and may
be utilized from time to time as the General Partner may elect.
The foregoing power of attorney shall survive the delivery of an
assignment by any of the Limited Partners of the whole or any portion of his
Limited Partnership interest, except that where an assignee of such Limited
Partnership interest has been approved by the General Partner, as a Substituted
Limited Partner, then the foregoing power of attorney of the assignor Limited
Partner shall survive the delivery of such assignment for the sole purpose of
enabling the General Partner to execute, acknowledge and file the certificates
necessary to effect such substitution.
20. DISTRIBUTION AFTER TERMINATION
Upon the termination of the Partnership, the sale of all of the
Partnership property or dissolution of the Partnership, a full account of the
assets and liabilities of the partnership shall be taken and the assets shall be
applied, except as otherwise provided in this Agreement, as follows:
(A) To the payment of all debts and liabilities of the Partnership
and the expenses of liquidation, including the establishment of reserves, deemed
appropriate by the General Partner.
(B) The balance shall be distributed pursuant
47
<PAGE>
to Article 10 ("Profits and Losses; Distributions").
21. WITHDRAWAL
It is agreed by and among all of the Partners hereto that they shall
not, at any time, withdraw from the Partnership. Nothing set forth herein shall
limit the right of the Corporate General Partner to resign at any time.
22. ARBITRATION
(A) Any dispute or controversy concerning a decision requiring the
approval of all General Partners or whether such joint approval is needed shall
be settled and determined by arbitration held in the City of New York in
accordance with this Article.
(B) The General Partner desiring such arbitration shall give written
notice to that effect to the other General Partner, specifying in said notice
the issue to be arbitrated and the name and address of a person -- who shall
have experience appropriate to the issue -- to act as arbitrator. Within ten
(10) days after the service of such notice, the other party shall give written
notice to the first party specifying whether such designee is acceptable. If
such person is not acceptable, the General Partners will endeavor to agree on an
arbitrator. If such agreement cannot be reached within thirty (30) days of the
sending of the notice, their right to seek, obtain and compel arbitration
hereunder is ended.
48
<PAGE>
(C) The decision of the arbitrator so chosen shall be given within a
period of thirty (30) days after his appointment. The decision of the arbitrator
so appointed and acting hereunder shall, in all cases, be binding and conclusive
upon the Partnership and all the parties, and judgment upon any award pursuant
to such arbitration may be entered in any court having competent jurisdiction.
The Partnership shall pay the reasonable fees and expenses of the arbitrator and
counsel to the General Partners.
23. NOTICES
Unless otherwise specified in a written notice sent to the
Partnership, whose address for all purposes is the address set forth in Article
2 ("Formation"), the address of each Partner for all purposes shall be the
address set forth on Exhibit A. In the event of a change in address of the
partnership, a notice shall be sent to each Partner; in the event of a change in
the address of a Partner, a notice shall be sent to the Partnership.
Any notice, election, consent, designation, demand or other
communication required or permitted to be given under this Agreement shall be in
writing and sent to such address; and if intended for the Partnership or the
General Partner, a copy shall also be sent to every General Partner; and shall
be sent by registered or certified mail, return receipt requested, to such
address. Unless otherwise specified in this Agreement, all notices shall be
effective upon mailing and shall be deemed sent on that date.
49
<PAGE>
24. CAPTIONS
Any paragraph titles or captions contained in this Agreement are for
convenience only and shall not be deemed a part of this Agreement.
25. VARIATIONS IN PRONOUNS
All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural as the identity of the
person or persons, firm or firms, corporation or corporations may require.
26. MISCELLANEOUS
(A) This Agreement contains the entire understanding between the
parties and supersedes any prior understandings and agreements between them
respecting the within subject matter. There are no representations, agreements,
arrangements or understandings, oral or written, between or among the parties
hereby relating to the subject matter of this Agreement which are not fully
expressed herein. If there is any inconsistency between this Agreement and the
provisions of the Realty Partnership Agreement, the provisions of the Realty
Partnership Agreement will prevail.
(B) This Agreement and any modification or amendment thereof may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which shall be deemed to constitute one and the same
instrument. Counterparts of this Agreement and the Certificate of Limited
Partnership have been
50
<PAGE>
executed prior to the date hereof. However, the date set forth on the first page
of this Agreement and the Certificate is the date upon which the Partnership
began doing business and the date upon which this Agreement and the Certificate
become effective.
(C) This Agreement shall be binding upon the signatories hereto and
enure to the benefit of their heirs, successors and assigns, except as Article
11 ("Restrictions on Transfer") provides limitations on assignments and
transfers of Limited Partnership interests. Nothing set forth in this Agreement
shall give rise to any rights or claims except in favor of the signatories
hereto, and then only to the extent set forth herein.
(D) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, and may not be modified or amended
except by an instrument in writing executed by all signatories.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals, all as of the day and year first above written.
GENERAL PARTNERS
/s/ Alan N. Stillman
---------------------
ALAN N. STILLMAN
CHAMBLAIR REALTY, INC.
By /s/ [ILLEGIBLE]
------------------
President
<PAGE>
LIMITED PARTNERS
(Stillman Group)
/s/ Bennett Benson
------------------------------
Bennett Benson
/s/ Ernest Kalman
------------------------------
Ernest Kalman
/s/ Stan Blumenfeld
------------------------------
Stan Blumenfeld
/s/ Eugene Byrne
------------------------------
Eugene Byrne
/s/ James Gannon
------------------------------
James Gannon
/s/ Joseph Phair
------------------------------
Joseph Phair
<PAGE>
LIMITED PARTNERS
(Investor Group)
/s/ Leon Levy
------------------------------
Leon Levy
------------------------------
Jack Nash
------------------------------
Albert Willner
------------------------------
James H. Levi
------------------------------
Myron Chase
------------------------------
Peter Venison
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
/s/ Jack Nash
------------------------------
Jack Nash
------------------------------
Albert Willner
------------------------------
James H. Levi
------------------------------
Myron Chase
------------------------------
Peter Venison
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
------------------------------
Jack Nash
/s/ Albert Willner
------------------------------
Albert Willner
------------------------------
James H. Levi
------------------------------
Myron Chase
------------------------------
Peter Venison
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
------------------------------
Jack Nash
------------------------------
Albert Willner
/s/ James H. Levi
------------------------------
James H. Levi
------------------------------
Myron Chase
------------------------------
Peter Venison
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
------------------------------
Jack Nash
------------------------------
Albert Willner
------------------------------
James H. Levi
/s/ Myron Chase
------------------------------
Myron Chase
------------------------------
Peter Venison
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
------------------------------
Jack Nash
------------------------------
Albert Willner
------------------------------
James H. Levi
------------------------------
Myron Chase
/s/ Peter Venison
------------------------------
Peter Venison
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
------------------------------
Jack Nash
------------------------------
Albert Willner
------------------------------
James H. Levi
------------------------------
Myron Chase
------------------------------
Peter Venison
/s/ Colin Keith
------------------------------
Colin Keith
------------------------------
Arnold Adlin
<PAGE>
LIMITED PARTNERS
(Investor Group)
------------------------------
Leon Levy
------------------------------
Jack Nash
------------------------------
Albert Willner
------------------------------
James H. Levi
------------------------------
Myron Chase
------------------------------
Peter Venison
------------------------------
Colin Keith
/s/ Arnold Adlin
------------------------------
Arnold Adlin
<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the [ILLEGIBLE] day of September, 1977, before me personally came
THOMAS J. MALMUD, to me known, who, being by me duly sworn, did depose and say,
that he resides at 7 Seymour Place, White Plains, New York; that he is the
President of Chamblair Realty, Inc., the corporation described in and which
executed the within instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that he
signed his name thereto by like order.
/s/ Irving Hymson
-------------------------
Notary Public
IRVING HYMSON
Notary Public, State of New York
No. 41-7028245
Qualified in Queens County
Commission Expires March 30, 1978
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 9th day of September, 1977, before me personally came LEON
LEVY, JACK NASH, JAMES H. LEVI, PETER VENISON, COLIN KEITH and ARNOLD ADLIN, to
me known, and known to me to be the persons described in and who executed the
foregoing instrument and acknowledged to me that they executed the same.
/s/ Karen Lynn Caruso
-------------------------
Notary Public
KAREN LYNN CARUSO
Notary Public, State of New York
No. 41-7028245
Qualified in New York County
Commission Expires March 30, 1978
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came MYRON
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------------------
Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came ALBERT
WILLNER, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came THOMAS
J. MALMUD, to me known, who, being by me duly sworn, did depose and say, that he
resides at 7 Seymour Place, White Plains, New York; that he is the President of
Chamblair Realty, Inc., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
-------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came LEON
LEVY, JACK NASH, JAMES H. LEVI, PETER VENISON, COLIN KEITH and ARNOLD ADLIN, to
me known, and known to me to be the persons described in and who executed the
foregoing instrument and acknowledged to me that they executed the same.
-------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 9th day of September, 1977, before me personally came MYRON
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
[ILLEGIBLE NOTARY SEAL] /s/ Grace [ILLEGIBLE]
-------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came ALBERT
WILLNER, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came THOMAS
J. MALMUD, to me known, who, being by me duly sworn, did depose and say, that he
resides at 7 Seymour Place, White Plains, New York; that he is the President of
Chamblair Realty, Inc., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
-------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came LEON
LEVY, JACK NASH, JAMES H. LEVI, PETER VENISON, COLIN KEITH and ARNOLD ADLIN, to
me known, and known to me to be the persons described in and who executed the
foregoing instrument and acknowledged to me that they executed the same.
-------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the __ day of September, 1977, before me personally came MYRON
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that they executed the
same.
-------------------------
Notary Public
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 12th day of September, 1977, before me personally came ALBERT
WILLNER, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that they executed the
same.
ALAN M. DAVIS
Notary Public, State of New York
[ILLEGIBLE] /s/ Alan Davis
Qualified in Kings County -------------------------
Commission Expires March 30, 1978 Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 12th day of September, 1977, before me personally came ALAN
N. STILLMAN, BENNETT BENSON, ERNEST KALMAN, STAN BLUMENFELD, EUGENE BYRNE, JAMES
GANNON and JOSEPH PHAIR, to me known, and known to me to be the persons
described in and who executed the foregoing instrument and acknowledged to me
that they executed the same.
/s/ Irving Hymson
-------------------------
NOTARY PUBLIC
IRVING HYMSON
Notary Public, State of New York
No. 41-7028245
Qualified in Queens County
Commission Expires March 30, 1978
<PAGE>
CAPITAL CAPITAL ADDITIONAL
[ILLEGIBLE] & RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- ----------------------- ------------ ---------- ----------
GENERAL PARTNERS
(Stillman Group)
[ILLEGIBLE] Stillman
[ILLEGIBLE] East 57th Street $14,056.15 5.1113 $15,334.00
[ILLEGIBLE] York, N. Y.
(Investor Group)
[ILLEGIBLE] Realty, Inc.
[ILLEGIBLE], Sylvester,
[ILLEGIBLE] & Franks 229.17 .0832 50.00
[ILLEGIBLE] Avenue
[ILLEGIBLE], N. Y. 10017
Thomas J. Malmud
LIMITED PARTNERS
(Stillman Group)
[ILLEGIBLE] Benson
[ILLEGIBLE] 48th Street 14,055.25 5.1111 15,333.00
[ILLEGIBLE], N. Y.
[ILLEGIBLE] Kalman
[ILLEGIBLE] Street 14,055.25 5.1111 15,333.00
[ILLEGIBLE], N. Y.
[ILLEGIBLE] Blumenfeld
[ILLEGIBLE] Street 916.67 .3333 1,000.00
[ILLEGIBLE], New Jersey 07666
[ILLEGIBLE] Byrne
[ILLEGIBLE] Devonia Avenue 916.67 .3333 1,000.00
[ILLEGIBLE], New York 10552
[ILLEGIBLE] Gannon
[ILLEGIBLE] 54th Street 916.67 .3333 1,000.00
[ILLEGIBLE], N. Y. 10022
[ILLEGIBLE] Phair
[ILLEGIBLE] 75th Street 916.67 .3333 1,000.00
[ILLEGIBLE], N.Y.
[ILLEGIBLE] contributed as partners of M W Realty Associates, a New York
[ILLEGIBLE] Partnership whose Certificate is being filed concurrently.
EXHIBIT A
<PAGE>
CAPITAL CAPITAL ADDITIONAL
[ILLEGIBLE] & RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- ----------------------- ------------ ---------- ----------
LIMITED PARTNERS
(Investor Group)
[ILLEGIBLE] Levy
[ILLEGIBLE] Park Avenue $44,026.58 16.0097 $ 9,605.80
[ILLEGIBLE] York, N. Y.
[ILLEGIBLE] Nash
[ILLEGIBLE] Park Avenue 44,026.58 16.0097 9,605.80
[ILLEGIBLE] York, N. Y.
[ILLEGIBLE] Willner
[ILLEGIBLE] Crest Drive 44,026.58 16.0097 9,605.80
[ILLEGIBLE] Orange, N.J.
[ILLEGIBLE] Chase
[ILLEGIBLE] Seven Oaks Lane 44,026.58 16.0097 9,605.80
[ILLEGIBLE], N. Y.
[ILLEGIBLE] H. Levi
[ILLEGIBLE] Larchmont Avenue 26,415.59 9.6057 5,763.40
[ILLEGIBLE], N. Y.
[ILLEGIBLE] Venison
[ILLEGIBLE] Bank 13,208.02 4.8029 2,881.75
[ILLEGIBLE] Place
[ILLEGIBLE], N. Y.
[ILLEGIBLE] Keith
[ILLEGIBLE] East 74th Street 8,805.04 3.2018 1,921.00
[ILLEGIBLE] York, N. Y.
[ILLEGIBLE] Adlin
[ILLEGIBLE] Henry Hudson Parkway 4,402.53 1.6009 960.55
[ILLEGIBLE], New York 10471
[ILLEGIBLE] sums contributed as partners of M W Realty Associates, a New York
[ILLEGIBLE] Partnership whose Certificate is being filed concurrently.
<PAGE>
FIRST AMENDMENT OF AGREEMENT
OF
LIMITED PARTNERSHIP OF ST. JAMES ASSOCIATES
THIS FIRST AMENDMENT OF AGREEMENT OF LIMITED PARTNERSHIP is made and
entered into as of the 1st day of January, 1979, by and among the parties
signing this Agreement.
WITNESSETH:
WHEREAS, on September 13, 1977, pursuant to Certificate of Limited
Partnership filed in the County Clerk's office of the County Clerk of New York
County as amended by Certificate of Amendment dated as of August 31, 1978 and
filed in the said office on January 25, 1979, and Agreement of Limited
Partnership dated September 12, 1977 ("Agreement"), St. James Associates was
organized as a New York limited partnership (the "Partnership"); and
WHEREAS, the parties desire to modify the Agreement, thereby
confirming prior understandings reached by them in certain respects, all as
hereinafter set forth.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Amendment of Agreement.
The Agreement is hereby modified and amended effective as of the 1st
day of January, 1979, as follows:
<PAGE>
(A) Article 1 ("Definitions") shall be modified and amended as
follows:
(1) By deleting from each of subparagraph (C), the
definition of "Agreement" and subparagraph (FF), the definition of "Realty
Partnership Agreement", the semi-colon and adding in its place: ", as the
same may be amended from time to time".
(2) By deleting subparagraph (M), the definition of
"Incentive Management Fee";
(3) By adding to subparagraph (Y), the definition of
"Operating Expenses", after the phrase "tax purposes);" the following:
"provided further, however, from and after January
1, 1979 Operating Expenses shall mean all expenses
of every kind and nature of the Partnership."
(B) Article 8 of the Agreement ("Additional Capital") is
hereby modified and amended by deleting from subparagraph (C) "58.3333%" and
substituting therefor, "53%" and by deleting therefrom "41.6667%" and
substituting "47%".
-2-
<PAGE>
(C) Article 9 of the Agreement ("Rights, Duties and
Obligations of Partners") is hereby modified and amended as follows:
(1) By deleting subparagraph (E) thereof and
substituting in its place the following:
"(E) Except as provided in this Agreement or in
the Realty Partnership Agreement, no Partner shall
receive any fee for rendering management or
supervisory management services to the
Partnership."
(D) Article 10 of the Agreement ("Profits and Losses;
Distributions") shall be modified and amended as follows:
(1) By deleting the first sentence of subdivision (A)(4)
and substituting the following:
"(4) "Sales Proceeds" shall mean the net cash
proceeds of the sale of all or any part of the
Partnership assets (after payment of all expenses
incurred to collect such proceeds), including
promissory
-3-
<PAGE>
notes whether or not secured by a purchase money
mortgage (but excluding interest thereon, which
shall be deemed Available Funds) and including the
net proceeds of a taking in condemnation or threat
thereof, or by any right of eminent domain, and
any insurance proceeds available after payment of
expenses incurred to collect such proceeds and
after any application which may be required to
restore the Property, less any funds the General
Partners may deem advisable to retain as
reserves."
(2) By deleting subparagraph (C) and substituting the
following:
"(C) The fiscal year of the Partnership shall be
the calendar year or such other fiscal year as the
General Partners shall determine."
(3) By adding to subparagraph (D) new subdivisions (4)
and (5), to read as follows:
"(4) Notwithstanding the provisions of subdivision
(1) - (3) of subparagraph
-4-
<PAGE>
(D), from and after January 1, 1979, the profits
and losses of the Partnership during each fiscal
year shall be computed in accordance with
principles generally accepted for tax accounting
purposes and shall be allocated among the Partners
as follows:
"(a) Net Losses of the Partnership shall be
allocated 16.6667% thereof to the Stillman Group
and 83.3333% thereof to the Investor Group, to be
divided among each Partner within each Group in
accordance with his respective Capital Percentage;
"(b) Except as provided in subdivision
(D)(4)(c), Net Profits of the Partnership shall be
allocated as follows:
"(i) 53% thereof to the Stillman
Group, to be divided among each Partner of the
Stillman Group in
-5-
<PAGE>
accordance with his respective Capital Percentage;
and
"(ii) 47% thereof to the Investor
Group, to be divided among each Partner of the
Investor Group in accordance with his respective
Capital Percentage;
"(C) Net profits of the Partnership from the
sale of all or any part of the Property shall be
allocated in the following amounts and order:
"(i) first, to the Partners having
negative capital balances in their capital
accounts (after adjustment for Net Profits or Net
Losses for the year of such sale) to the extent of
such negative balances so as to bring the capital
balances of such Partners to zero; and
"(ii) second, any balance if all of
the Property has been sold, or all of the net
profits if less than all of the Property has been
-6-
<PAGE>
sold, shall be allocated to the Stillman Group and
the Investor Group in the ratio of 53 to 47, to be
divided among each Partner within each Group in
accordance with his respective Capital
Percentage."
"(5) If any Partner was not a Partner (or
assignee) for an entire year, the foregoing
allocations to such Partner shall be the
proportion thereof consistent with the portion of
year during which he was a Partner (or assignee)."
(4) By deleting subdivisions (4) through (10) inclusive
of subparagraph (F) of Article 10, and replacing said subdivision
with the following subdivisions (4) and (5):
"(4) The balance of Available Funds, if any, still
remaining shall be distributed as follows:
"(a) 53% thereof to the Stillman Group, to
be divided among each Partner of the Stillman
Group in accordance with his Capital Percentage;
-7-
<PAGE>
and
"(b) 47% thereof to the Investor Group, to
be divide among each Partner in accordance with
his respective Capital Percentage.
"(5) The balance of Excess Proceeds, if any, still
remaining shall be distributed as follows:
"(a) 53% thereof to the Stillman Group to be
divided among each Partner of the Stillman Group
in accordance with his Capital Percentage; and
"(b) 47% thereof to the Investor Group, to
be divided among each Partner in accordance with
his respective Capital Percentage."
(6) By deleting subparagraph (G) thereof and
substituting the following:
"(G) Subject to the provisions of subdivisions
(F)(1) to (F)(4) inclusive of this Article, any
Excess Proceeds received upon a foreclosure of
-8-
<PAGE>
the mortgages or other sale of the entire Property
and the termination of the Partnership (less sums
previously paid hereunder or under subparagraph
(G) of Article 10 of the Realty Partnership
Agreement ("Profits and Losses; Distributions")
shall be paid to those Partners having positive
capital balances in amounts equal to such positive
capital accounts and in settlement thereof."
2. Ratification
The Agreement as hereby modified and amended is hereby ratified,
confirmed and approved and shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals on the day and year first above written.
GENERAL PARTNERS
/s/ Alan N. Stillman
--------------------------------------------
Alan N. Stillman
CHAMBLAIR REALTY, INC.
By /s/ [ILLEGIBLE]
-----------------------------------------
President
-9-
<PAGE>
LIMITED PARTNERS
(Investor Group)
/s/ Leon Levy
--------------------------------------------
Leon Levy
/s/ Jack Nash
--------------------------------------------
Jack Nash
/s/ Albert Willner
--------------------------------------------
Albert Willner
/s/ James H. Levi
--------------------------------------------
James H. Levi
/s/ Myron Chase
--------------------------------------------
Myron Chase
Peter J. Venison
/s/ [ILLEGIBLE]
--------------------------------------------
Attorney-in-Fact
/s/ Colin Keith
--------------------------------------------
Colin Keith
--------------------------------------------
Arnold Adlin
-10-
<PAGE>
LIMITED PARTNERS
(Stillman Group)
/s/ Bennett Benson
--------------------------------------------
Bennett Benson
/s/ Ernest Kalman
--------------------------------------------
Ernest Kalman
/s/ Eugene Byrne
--------------------------------------------
Eugene Byrne
/s/ James Gannon
--------------------------------------------
James Gannon
/s/ Joseph Phair
--------------------------------------------
Joseph Phair
/s/ Frances Singer
--------------------------------------------
Frances Singer
/s/ Colin Keith
--------------------------------------------
Colin Keith
-11-
<PAGE>
SECOND AMENDMENT OF AGREEMENT
OF
LIMITED PARTNERSHIP OF ST. JAMES ASSOCIATES
THIS SECOND AMENDMENT OF AGREEMENT OF LIMITED PARTNERSHIP is made
and entered into as of the 1st day of January, 1979, by and among the parties
signing this Agreement.
WITNESSETH:
WHEREAS, on September 13, 1977, pursuant to Certificate of Limited
Partnership filed in the County Clerk's office of the County Clerk of New York
County as amended by Certificate of Amendment dated as of August 31, 1978 and
filed in the said office on January 25, 1979 and by Certificate of Second
Amendment of such Certificate dated as of January 1, 1979 and filed in said
office on January 10, 1980, and Agreement of Limited Partnership dated September
12, 1977 as modified and amended by a First Amendment of Agreement of Limited
Partnership (said agreement, as so modified and amended being hereinafter called
the ("Agreement"), St. James Associates was organized as a New York limited
partnership (the "partnership"); and
WHEREAS, the parties desire to modify the Agreement, thereby
confirming prior understandings reached by them in certain respects, all as
hereinafter set forth.
<PAGE>
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Amendment of Agreement.
The Agreement is hereby modified and amended effective as of the 1st
day of January, 1980, by substituting for Exhibit A annexed thereto, Exhibit A
annexed hereto and by approving and consenting to the admission of Stillman as a
Limited Partner and a member of the Stillman Group.
2. Ratification
The Agreement as hereby modified and amended is hereby ratified,
confirmed and approved and shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals on the day and year first above written.
GENERAL PARTNERS
/s/ Alan N. Stillman
--------------------------------------------
Alan N. Stillman
CHAMBLAIR REALTY, INC.
By /s/ [ILLEGIBLE]
-----------------------------------------
President
-2-
<PAGE>
LIMITED PARTNERS
(Stillman Group)
/s/ Alan N. Stillman
--------------------------------------------
Alan N. Stillman
/s/ Bennett Benson
--------------------------------------------
Bennett Benson
/s/ Ernest Kalman
--------------------------------------------
Ernest Kalman
/s/ Eugene Byrne
--------------------------------------------
Eugene Byrne
/s/ James Gannon
--------------------------------------------
James Gannon
/s/ Joseph Phair
--------------------------------------------
Joseph Phair
/s/ Frances Singer
--------------------------------------------
Frances Singer
/s/ Colin Keith
--------------------------------------------
Colin Keith
-3-
<PAGE>
LIMITED PARTNERS
(Investor Group)
/s/ Leon Levy
--------------------------------------------
Leon Levy
/s/ Jack Nash
--------------------------------------------
Jack Nash
/s/ Albert Willner
--------------------------------------------
Albert Willner
/s/ James H. Levi
--------------------------------------------
James H. Levi
/s/ Myron Chase
--------------------------------------------
Myron Chase
Peter J. Venison
/s/ [ILLEGIBLE]
--------------------------------------------
Attorney-in-Fact
/s/ Colin Keith
--------------------------------------------
Colin Keith
/s/ Arnold Adlin
--------------------------------------------
Arnold Adlin
-4-
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
GENERAL PARTNERS
(Stillman Group)
Alan N. Stillman $13,750.51 5.0002 $15,000.64
322 East 57 Street
New York, N.Y.
(Investor Group)
Chamblair Realty Inc. 229.17 .0832 50.00
c/o Warshaw Burstein
Cohen Schlesinger & Kuh
555 Fifth Avenue
New York, N.Y.
Att: Thomas J. Malmud
LIMITED PARTNERS
(Stillman Group)
Alan N. Stillman 5,728.50 2.0831 6,249.36
322 East 57 Street
New York, N.Y.
Bennett Benson 10,770.92 3.9167 11,750.00
230 East 48 Street
New York, N.Y.
Ernest Kalman 10,770.92 3.9167 11,750.00
23 Hyatt Street
Briarcliff, N.Y.
Frances Singer 916.67 .3333 1,000.00
3601 Johnson Avenue
Bronx, New York
Eugene Byrne 1,145.80 .4168 1,250.00
300 East Devonia Ave
Mt. Vernon, N.Y.
James Gannon 916.67 .3333 1,000.00
334 East 54th Street
New York, N.Y.
Joseph Phair 916.67 .3333 1,000.00
5809 - 75th Street
Elmhurst, N.Y.
Colin Keith 916.67 .3333 1,000.00
175 East 74 Street
New York, N.Y.
* Less sums contributed as partners of M W Realty Associates, a New York
Limited Partnership.
EXHIBIT A
(Page 1)
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
LIMITED PARTNERS
(Investor Group)
Leon Levy $44,026.58 16.0097 $ 9,605.80
983 Park Avenue
New York, N.Y.
Jack Nash 44,026.58 16.0097 9,605.80
784 Park Avenue
New York, N.Y.
Albert Willner 44,026.58 16.0097 9,605.80
45 Crest Drive
So. Orange, N.J.
Myron Chase 44,026.58 16.0097 9,605.80
1005 Seven Oaks Lane
Mamaroneck, N.Y.
James H. Levi 26,415.59 9.6057 5,763.40
85 Larchmont Avenue
Larchmont, N.Y.
Peter Venison 13,208.02 4.8029 2,881.75
P.O. Box 5087
Johannesburg,
South Africa
Colin Keith 8,805.04 3.2018 1,921.10
175 East 74th St
New York, N.Y.
Arnold Adlin 4,402.53 1.6009 960.55
6 Ridgecrest East
Scarsdale, N.Y.
* Less sums contributed as partners of M W Realty Associates, a New York
Limited Partnership.
EXHIBIT A
(Page 2)
<PAGE>
THIRD AMENDMENT OF AGREEMENT
OF
LIMITED PARTNERSHIP OF ST. JAMES ASSOCIATES
THIS THIRD AMENDMENT OF AGREEMENT OF LIMITED PARTNERSHIP is made and
entered into as of the 1st day of October, 1980, by and among the parties
signing this Agreement.
WITNESSETH:
WHEREAS, on September 13, 1977, pursuant to Certificate of Limited
Partnership filed in the County Clerk's office of the County Clerk of New York
County as amended by Certificate of Amendment dated as of August 31, 1978 and
filed in the said office on January 25, 1979 and by Certificate of Second
Amendment of such Certificate dated as of January 1, 1979 and filed in said
office on January 10, 1980 and by Certificate of Third Amendment dated as of
January 1, 1979 and filed in said office on March 4, 1980, and Agreement of
Limited Partnership dated September 12, 1977 as modified and amended by a First
Amendment of Agreement of Limited partnership and by a Second Amendment of
Agreement of Limited partnership dated as of January 1, 1979 (said agreement, as
so modified and amended being hereinafter called the ("Agreement"), St. James
Associates was organized as a New York limited partnership (the "Partnership");
and
WHEREAS, the parties desire to modify the Agreement, thereby
confirming prior understandings reached by them in cer-
<PAGE>
tain respects, all as hereinafter set forth.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Amendment of Agreement.
The Agreement is hereby modified and amended effective as of the 1st
day of October, 1980 as follows:
A. By deleting each reference to "TWTF Restaurant Group" and
replacing it with "TGI Specialty Restaurant Consulting and Management, Inc.".
B. By adding, after the phrase "(hereinafter defined)" in line 20 of
subparagraph (F) of Article 9 of the Agreement ("Rights, Duties and Obligations
of Partners") the following: "provided, however, if the business of TGI
Specialty Restaurant Consulting and Management, Inc. is not operated and
directed by Stillman, the Corporate General partner may terminate the retention
of such entity and replace such entity with any person, firm and corporation
selected by the Corporate General Partner." and deleting from lines 20 and 21 of
that subparagraph the following: "for Sales in such year of $2 million or less,
and 1.3% of all Sales in such year which exceed $2 million."
C. By deleting the period at the end of subdivision (2) of
subparagraph (B) of Article 15 ("Representations and Covenants of the Stillman
Group") and adding the following: "until the retention of such entity is
terminated as permitted hereunder."
-2-
<PAGE>
D. By adding to the end of subparagraph (C) of Article 17 ("Books
and Records") the following sentence: The independent public accountant shall be
Oppenheim, Appel, Dixon & Co., Certified Public Accountant, or such other firm
approved in writing by the members of the Investor Group who hold 67 or more in
the Capital Percentage of that Group.
2. Ratification
The Agreement as hereby modified and amended is hereby ratified,
confirmed and approved and shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals on the day and year first above written.
GENERAL PARTNERS
/s/ Alan N. Stillman
--------------------------------------------
Alan N. Stillman
CHAMBLAIR REALTY, INC.
By /s/ [ILLEGIBLE]
-----------------------------------------
President
-3-
<PAGE>
LIMITED PARTNERS
(Stillman Group)
/s/ Alan N. Stillman
--------------------------------------------
Alan N. Stillman
/s/ Bennett Benson
--------------------------------------------
Bennett Benson
/s/ Ernest Kalman
--------------------------------------------
Ernest Kalman
/s/ Eugene Byrne
--------------------------------------------
Eugene Byrne
/s/ James Gannon
--------------------------------------------
James Gannon
/s/ Joseph Phair
--------------------------------------------
Joseph Phair
/s/ Frances Singer
--------------------------------------------
Frances Singer
/s/ Colin Keith
--------------------------------------------
Colin Keith
-4-
<PAGE>
LIMITED PARTNERS
(Investor Group)
/s/ Leon Levy
--------------------------------------------
Leon Levy
/s/ Jack Nash
--------------------------------------------
Jack Nash
/s/ Albert Willner
--------------------------------------------
Albert Willner
/s/ James H. Levi
--------------------------------------------
James H. Levi
/s/ Myron Chase
--------------------------------------------
Myron Chase
Peter J. Venison
/s/ [ILLEGIBLE]
--------------------------------------------
Attorney-in-Fact
/s/ Colin Keith
--------------------------------------------
Colin Keith
/s/ Arnold Adlin
--------------------------------------------
Arnold Adlin
-5-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 4th day of December, 1980, before me personally came ALAN N.
STILLMAN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Vera Hallemann Leifman
--------------------------
Notary Public
VERA HALLEMANN LEIFMAN
NOTARY PUBLIC, State of New York
No. 314687795
Qualified in New York County
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 4th day of December, 1980, before me personally came BENNETT
BENSON, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Vera Hallemann Leifman
--------------------------
Notary Public
VERA HALLEMANN LEIFMAN
NOTARY PUBLIC, State of New York
No. 314687795
Qualified in New York County
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 3rd day of December, 1980, before me personally came ERNEST
KALMAN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Gregory P. Prissmann
------------------------
Notary Public
GREGORY P. PRISSMANN
NOTARY PUBLIC, State of New York
No. 31-3157471
Qualified in New York County
Commission Expires March 30, 1981
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 9th day of December, 1980, before me personally came EUGENE
BYRNE, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Howard Weiner
-----------------
Notary Public
HOWARD WEINER
NOTARY PUBLIC, State of New York
No. 31-4657659
Qualified in New York County
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 9th day of December, 1980, before me personally came JAMES
GANNON, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Howard Weiner
-----------------
Notary Public
HOWARD WEINER
NOTARY PUBLIC, State of New York
No. 31-4657659
Qualified in New York County
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 9th day of December, 1980, before me personally came JOSEPH
PHAIR, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Howard Weiner
-----------------
Notary Public
HOWARD WEINER
NOTARY PUBLIC, State of New York
No. 31-4657659
Qualified in New York County
Commission Expires March 30, 1981
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 10th day of December, 1980, before me personally came FRANCES
SINGER, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Howard Weiner
-----------------
Notary Public
HOWARD WEINER
NOTARY PUBLIC, State of New York
No. 31-4657659
Qualified in New York County
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the [ILLEGIBLE] day of December, 1980, before me personally came
COLIN KEITH, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Joan Haderstick
-------------------
Notary Public
JOAN HADERSTICK
NOTARY PUBLIC, State of New York
No. [ILLEGIBLE]
Qualified in [ILLEGIBLE] County
Commission Expires March 30, [ILLEGIBLE]
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 5 day of December, 1980, before me personally came THOMAS J.
MALMUD, to me known, who, being by me duly sworn, did depose and say, that he
resides at 7 Seymour Place, White Plains, New York; that he is the president of
Chamblair Realty Inc., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
/s/ [ILLEGIBLE]
---------------
Notary Public
[ILLEGIBLE]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 29th day of October, 1980, before me personally came LEON
LEVY, to me known and known to me to be the person described in and who executed
the foregoing instrument and acknowledged to me that he executed the same.
/s/ [ILLEGIBLE]
---------------
Notary Public
[ILLEGIBLE]
NOTARY PUBLIC, State of New York
No. 31-755[ILLEGIBLE]
Qualified in [ILLEGIBLE] County
Commission Expires March 30, 1982
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 31st day of October, 1980, before me personally came JACK
NASH, to me known and known to me to be the person described in and who executed
the foregoing instrument and acknowledged to me that he executed the same.
/s/ Helen M. Rosenbergen
------------------------
Notary Public
HELEN M. ROSENBERGEN
NOTARY PUBLIC, State of New York
No. 03-3352985 - Qual. in Bronx Co.
Cert. Filed in New York County
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 29th day of October, 1980, before me personally came JAMES H.
LEVI, to me known and known to me to be the person described in and who executed
the foregoing instrument and acknowledged to me that he executed the same.
/s/ Stephanie A. Long
---------------------
Notary Public
STEPHANIE A. LONG
NOTARY PUBLIC, State of New York
No. [ILLEGIBLE]
Cert. Filed in [ILLEGIBLE] County
Commission Expires March 30, 198[ILLEGIBLE]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 5th day of December, 1980, before me personally came THOMAS
J. MALMUD, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same as Attorney-in-Fact for Peter J. Venison pursuant to Power of Attorney date
September 25, 1979.
/s/ Murray Lambert
------------------
Notary Public
MURRAY LAMBERT
Murray Lambert of New York
No. [ILLEGIBLE]
Certified in [ILLEGIBLE] County
Commission Expires March 30, 1982
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 11 day of December, 1980, before me personally came COLIN
KEITH, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Joan Haderstick
-------------------
Notary Public
JOAN HADERSTICK
NOTARY PUBLIC,[ILLEGIBLE] New York
No. [ILLEGIBLE]
Qualified in Kings County
Commission Expires March 30, 1982
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of December, 1980, before me personally came ARNOLD
ADLIN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Stephanie A. Long
---------------------
Notary Public
STEPHANIE A. LONG
NOTARY PUBLIC, State of New York
No. [ILLEGIBLE]
[ILLEGIBLE] County
Commission Expires March 30, 1981
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 3rd day of December, 1980, before me personally came MYRON
CHASE, to me known, and known to me, to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Gloria J. Clarke
--------------------
Notary Public
GLORIA J. CLARKE
Notary Public, State of New York
No. 24-[ILLEGIBLE]
Qualified in Kings County
Certification Filed in New York Country
Commission Expires March 30, 1981
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 5 day of December, 1980, before me personally came ALBERT
WILLNER, to me known, and known to me, to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Murray Lambert
------------------
Notary Public
MURRAY LAMBERT
Murray Lambert of New York
No. 41-7400500
Certified in Queens County
Commission Expires March 30, 1982
<PAGE>
FOURTH AMENDMENT OF AGREEMENT
OF
LIMITED PARTNERSHIP OF ST. JAMES ASSOCIATES
THIS FOURTH AMENDMENT OF AGREEMENT OF LIMITED PARTNERSHIP is made
and entered into as of the 31st day of December, 1983 by and among the parties
signing this Agreement.
WITNESSETH
WHEREAS, St. James Associates (the "partnership") was organized as a
New York limited partnership pursuant to a Certificate of Limited Partnership of
the partnership filed in the office of the County Clerk of New York County on
September 13, 1977, as amended by a Certificate of Amendment dated as of August
31, 1978 and filed in the said office on January 25, 1979 and by a Certificate
of Second Amendment of such Certificate dated as of January 1, 1979 and filed in
said office on January 10, 1980 and by a Certificate of Third Amendment dated as
of January 1, 1979 and filed in said office on March 4 1980; and
WHEREAS, the partners in the Partnership set forth their respective
rights, duties and obligations pursuant to an Agreement of Limited Partnership
dated September 12, 1977, as
<PAGE>
modified and amended by a First Amendment of Agreement of Limited Partnership
dated as of January 1, 1979, by a Second Amendment of Agreement of Limited
Partnership dated as of January 1, 1979 and by a Third Amendment of Agreement of
Limited Partnership dated as of October 1, 1980 (said Agreement, as so modified
and amended, being hereinafter called the "Agreement"); and
WHEREAS, Alan N. Stillman assigned his entire interest as a general
partner in the Partnership to Smith & Wollensky Operating Corp., a New York
corporation, effective as of December 31, 1983 as conditioned upon the consent
thereto of all of the Partners of the Partnership (the "GP Assignment"); and
WHEREAS, Alan N. Stillman assigned his entire interest as a limited
partner in the Partnership, .2096/2.0831 of his interest to Donna Stillman, as
Trustee under a Trust Agreement dated December , 1983 for the benefit of
Michael Stillman and 1.8735/2.0831 of his interest to Smith & Wollensky
Operating Corp., a New York corporation, effective as of December 31, 1983 as
conditioned upon the consent thereto of all of the Partners of the Partnership
(the "LP Assignment"); and
WHEREAS, Myron L. Chase assigned 3.0/16.0097 of his entire interest
as a limited partner in the Partnership to the
-2-
<PAGE>
Chase Trust Partnership, a general partnership, on September 19, 1983 (the
"Chase Assignment"); and
WHEREAS, the parties desire to modify the Agreement to reflect the
GP Assignment, the LP Assignment, the Chase Assignment and certain changes in
the taxation of the Partnership resulting from the GP Assignment all as
hereinafter set forth.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Consent and Waiver
The parties hereby consent to the GP Assignment, the LP Assignment
and the Chase Assignment and agree to waive any rights they may have to receive
notice thereof and any and all rights resulting therefrom pursuant to Article 11
("Restrictions on Transfer") of the Agreement.
2. Amendment of Agreement
The Agreement is hereby modified and amended effective as of
December 31, 1983 as follows:
(A) By deleting each reference to "TGI Specialty Restaurant Consulting and
Management, Inc." and replacing it with "The New York Restaurant Group, Inc."
(B) Article 1 ("Definitions") shall be modified as follows:
-3-
<PAGE>
(1) By deleting from subparagraph (K) "Alan N. Stillman"
and substituting therefor, "Smith & Wollensky Operating
Corp.".
(2) By deleting from subparagraph (JJ) "ALAN N.
STILLMAN" and substituting therefor "SMITH & WOLLENSKY
OPERATING CORP.".
(3) By deleting from subparagraph (KK) "Stillman" and
substituting therefor "Smith & Wollensky Operating Corp.".
(C) Article 6 of the Agreement ("General and Limited Partners") is hereby
modified and amended by deleting from subparagraph (A) "ALAN N. STILLMAN,
residing at 322 East 57th Street, New York City" and substituting therefor
"SMITH & WOLLENSKY OPERATING CORP., a New York Corporation with an office c/o
The New York Restaurant Group, Inc., 401 East 63rd Street, New York, NY 10021.".
(D) Subparagraph D of Article 10 of the Agreement ("Profits and Losses;
Distributions") is hereby modified and amended by revising subdivision 4(b)
thereof to read in its entirety as follows:
"(b) Except as provided in the subdivision (D) (4)(c), Net Profits
of the partnership shall be allocated as follows:
(i) To the Partners referred to in subdivision (1) of
subparagraph (F) of Article 10, to the
-4-
<PAGE>
extent of the amount distributed to each such Partner
during the fiscal year; and
(ii) Of the remaining Net Profits, 53% thereof to the
Stillman Group to be divided among each Partner of the
Stillman Group in accordance with his respective Capital
Percentage, and 47% thereof to the Investors Group to be
divided among each Partner of the Investors Group in
accordance with his respective Capital Percentage"
(E) Subparagraph F of Article 10 of the Agreement ("Profits and Losses;
Distributions") is hereby modified and amended by inserting the following
provision as subdivision 1 thereof and renumbering subdivisions (1) to (5)
inclusive of such subparagraph F as subdivisions (2) to (6) inclusive:
"(1) For any fiscal year beginning on or after January 1, 1984, to
each Partner, an amount equal to such Partner's New York City
Unincorporated Business Tax or Corporation Business Tax
liability for the preceding fiscal year attributable to
Partnership income paid or allocated to such Partner in the
preceding fiscal year. Such amount may not exceed the lesser
of (a) the City of New York Unincorporated Business Tax
savings realized by the
-5-
<PAGE>
Partnership for its preceding fiscal year from the exemption
which it receives under Secton S46-9.0(2) of the New York
City Administrative Code attributable to the income paid or
allocated to such Partner; or (b) the Partner's total New York
City Unincorporated or Corporation Business Tax for the
preceding fiscal year; and then"
(F) Subparagraph G of Article 10 of the Agreement ("Profits and Losses;
Distributions") is hereby modified and amended to read in its entirety as
follows:
"(G) Subject to the provisions of subdivisions (F)(1) to (F)(5)
inclusive of this Article, any Excess Proceeds received upon a
foreclosure of the mortgages or other sale of the entire Property
and the termination of the Partnership (less sums previously paid
hereunder or under subparagraph (G) of Article 10 of the Realty
Partnership Agreement ("Profits and Losses; Distributions")) shall
be paid to those Partners having positive capital balances in
amounts equal to such positive capital accounts and in settlement
thereof."
(G) Exhibit A of the Agreement is hereby modified and amended by
substituting for Exhibit A annexed thereto, Exhibit A annexed hereto.
-6-
<PAGE>
3. Ratification
The Agreement as modified and amended herein is hereby ratified,
confirmed and approved in all respects and shall continue in full force and
effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals as of the day and year first above written.
GENERAL PARTNERS
SMITH & WOLLENSKY OPERATING
CORP.
(Incoming General Partner)
By
-------------------------------------
Alan N. Stillman, President
---------------------------------------
Alan N. Stillman (withdrawing
General Partner)
CHAMBLAIR REALTY, INC.
By
-------------------------------------
President
-7-
<PAGE>
LIMITED PARTNERS
(Stillman Group)
---------------------------------------
Alan N. Stillman (withdrawing
limited partner)
SMITH & WOLLENSKY OPERATING
CORP.
(Incoming Limited Partner)
By
-------------------------------------
Alan N. Stillman, President
---------------------------------------
Donna Stillman, as Trustee
U/T/A dated December ,
1983 f/b/o Michael Stillman
(Incoming Limited Partner)
---------------------------------------
Bennett Benson
---------------------------------------
Ernest Kalman
---------------------------------------
Eugene Byrne
---------------------------------------
James Gannon
---------------------------------------
Joseph Phair
---------------------------------------
Frances Singer
---------------------------------------
Colin Keith
-8-
<PAGE>
LIMITED PARTNERS
(Investor Group)
---------------------------------------
Leon Levy
---------------------------------------
Jack Nash
---------------------------------------
Albert Willner
---------------------------------------
James H. Levi
---------------------------------------
Myron Chase
Peter J. Venison
By
-------------------------------------
Attorney-in-fact
---------------------------------------
Colin Keith
---------------------------------------
Arnold Adlin
Chase Trust Partnership
(Incoming Limited Partner)
By
-------------------------------------
Partner
-9-
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
GENERAL PARTNERS
(Stillman Group)
Stillman & Wollensky $13,750.51 5.0002 $15,000.64
Operating Corp.
c/o The New York Restaurant
Group, Inc.
401 East 63rd Street
New York, N.Y.
(Investor Group)
Chamblair Realty Inc. 229.17 .0832 50.00
c/o Warshaw Burstein
Cohen Schlesinger & Kuh
555 Fifth Avenue
New York, N.Y.
Att: Thomas J. Malmud
LIMITED PARTNERS
(Stillman Group)
Smith & Wollensky Operating 5,152.10 1.8735 5,620.56
Corp.
c/o The New York Restaurant
Group, Inc.
401 East 63rd Street
New York, New York
Donna Stillman, as 576.40 .2096 628.80
Trustee, under a Trust
Agreement dated December
, 1983 for the benefit
of Michael Stillman
Bennett Benson 10,770.92 3.9167 11,750.00
230 East 48 Street
New York, N.Y.
Ernest Kalman 10,770.92 3.9167 11,750.00
23 Hyatt Street
Briarcliff, N.Y.
Frances Singer 916.67 .3333 1,000.00
3601 Johnson Avenue
Bronx, New York
* Less sums contributed as partners of M W Realty Associates, a New York
Limited Partnership.
EXHIBIT A
(Page 1)
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
LIMITED PARTNERS
(Investor Group)
Eugene Byrne 1,145.80 .4168 1,250.00
300 East Devonia Ave
Mt. Vernon, N.Y.
James Gannon 916.67 .3333 1,000.00
334 East 54th Street
New York, N.Y.
Joseph Phair 916.67 .3333 1,000.00
5809 - 75th Street
Elmhurst, N.Y.
Colin Keith 916.37 .3333 1,000.00
175 East 74 Street
New York, N.Y.
Lean Levy $44,026.58 16.0097 $ 9,605.80
983 Park Avenue
New York, N.Y.
Jack Nash 44,026.58 16.0097 9,605.80
784 Park Avenue
New York, N.Y.
Albert Willner 44,026.58 16.0097 9,605.80
45 Crest Drive
So. Orange, N. J
Myron Chase 35,776.60 13.0097 7,805.80
1005 Seven Oaks Lane
Mamaroneck, N.Y.
Chase Trust Partnership 8,249.98 3.0000 1,800.00
201 East 42nd Street
New York, N.Y.
James H. Levi 26,415.59 9.6057 5,763.40
85 Larchmont Avenue
Larchmont, N.Y.
Peter Venison 13,208.02 4.8029 2,881.75
9 Hillview Drive
Scarsdale, N.Y.
Colin Keith 8,805.04 3.2018 1,921.10
175 East 74th St
New York, N.Y.
Arnold Adlin 4,402.53 1.6009 960.55
6 Ridgecrest East
Scarsdale, N.Y.
* Less sums contributed as partners of M W Realty Associates, a New York
Limited Partnership.
EXHIBIT A
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came ALAN N.
STILLMAN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me came ALAN N. STILLMAN, to
me known, who, being by me duly sworn, did depose and say; that he resides at
322 East 57th Street, New York, New York; that he is the President of Smith &
Wollensky Operating Corp., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporation's seal; that it was so affixed by
order of the board of directors of said corporation and that he signed his name
thereto by like order.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came DONNA
STILLMAN, as Trustee under a Trust Agreement dated December , 1983 for the
benefit of Michael Stillman, to me known and know to me to be the person
described in and who executed the foregoing instrument and acknowledged to me
that she executed the same in her capacity as said Trustee.
-------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came BENNETT
BENSON, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came ERNEST
KALMAN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came EUGENE
BYRNE, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
<PAGE>
)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came JAMES
GANNON, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came JOSEPH
PHAIR, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came FRANCES
SINGER, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that she executed the
same.
-------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came COLIN
KEITH, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came THOMAS J.
MALMUD, to me known, who, being by me duly sworn, did depose and say: that he
resides at 7 Seymour Place, White Plains, New York; that he is the President of
Chamblair Realty Inc., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation and that he signed his name
thereto by like order.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came LEON
LEVY, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came JACK
NASH, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came JAMES H.
LEVI, to me known and known to me to be the person described in and who executed
the foregoing instrument and acknowledged to me that he executed the same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came THOMAS J.
MALMUD, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same, as Attorney-in-Fact for Peter J. Venison pursuant to Power of Attorney
dated September 25, 1979.
-------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came COLIN
KEITH, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came ARNOLD
ADLIN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came MYRON
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came ALBERT
WILLNER, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the day of December, 1983, before me personally came STEPHEN
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same as a partner of the Chase Trust Partnership.
-------------
Notary Public
<PAGE>
FIFTH AMENDMENT OF AGREEMENT
OF
LIMITED PARTNERSHIP OF ST. JAMES ASSOCIATES
THIS FIFTH AMENDMENT OF AGREEMENT OF LIMITED PARTNERSHIP is made and
entered into as of the 20th day of January, 1934 by and among the parties
signing this Agreement.
WITNESSETH
WHEREAS, James Associates (the "Partnership") was organized as a New
York limited partnership pursuant to a Certificate of Limited Partnership of the
Partnership filed in the office of the County Clerk of New York County on
September 13, 1977, as amended by a Certificate of Amendment dated as of August
31, 1978 and filed in the said office on January 25, 1979 and by a Certificate
of Second Amendment of such Certificate dated as of January 1, 1979 and filed in
said office on January 10, 1980 and by a Certificate of Third Amendment dated as
of January 1, 1979 and filed in said office on March 4, 1980 and by a
Certificate of Fourth Amendment dated as of December 31, 1983 and to be filed
after the execution hereof; and
WHEREAS, the partners in the Partnership set forth their respective
rights, duties and obligations pursuant to an
<PAGE>
Agreement of Limited Partnership dated September 12, 1977, as modified and
amended by a First Amendment of Agreement of Limited Partnership dated as of
January 1, 1979, by a Second Amendment of Agreement of Limited Partnership dated
as of January 1, 1979, by a Third Amendment of Agreement of Limited Partnership
dated as of October 1, 1980 and by a Fourth Amendment of Agreement dated as of
December 31, 1983 (said Agreement, as so modified and amended, being hereinafter
called the "Agreement"); and
WHEREAS, Donna Stillman assigned .2097/.629 of her interest as a
limited partner in the partnership to Ronald Nicholson, Robert Villency and
Donna Stillman, as Trustees under a Trust Agreement dated as of December 31,
1983 for the benefit of Michael Stillman (the "Trust Assignment"); and
WHEREAS, the parties desire to modify the Agreement to reflect the
Trust Assignment all as hereinafter set forth.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Consent and Waiver
The General Partners (as defined in the Agreement) hereby consent to
the Trust Assignment in the form thereof.
-2-
<PAGE>
2. Amendment of Agreement
The Agreement is hereby modified and amended effective as of January
20, 1984 as follows:
(A) Exhibit A of the Agreement is hereby modified and amended by
substituting for Exhibit A annexed thereto, Exhibit A annexed hereto.
3. Ratification
The Agreement as modified and amended herein is hereby ratified,
confirmed and approved in all respects and shall continue in full force and
effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals as of the day and year first above written.
GENERAL PARTNERS
SMITH & WOLLENSKY OPERATING
CORP.
By /s/ Alan N. Stillman
-------------------------------------
Alan N. Stillman, President
CHAMBLAIR REALTY, INC.
By /s/ [ILLEGIBLE]
-------------------------------------
President
-3-
<PAGE>
LIMITED PARTNERS
(Stillman Group)
SMITH & WOLLENSKY OPERATING
CORP.
By /s/ Alan N. Stillman
-------------------------------------
Alan N. Stillman, President
/s/ Donna Stillman
---------------------------------------
Donna Stillman, as Trustee
/s/ Ronald Nicholson
---------------------------------------
Ronald Nicholson, as Trustee
/s/ Robert Villency
---------------------------------------
Robert Villency, as Trustee
As Trustees under a Trust
Agreement dated as of
December 31, 1983 for the
benefit of Michael Stillman
(Assignee)
/s/ Donna Stillman
---------------------------------------
Donna Stillman (Assignor)
/s/ Bennett Benson
---------------------------------------
Bennett Benson
/s/ Ernest Kalman
---------------------------------------
Ernest Kalman
/s/ Eugene Byrne
---------------------------------------
Eugene Byrne
/s/ James Gannon
---------------------------------------
James Gannon
/s/ Joseph Phair
---------------------------------------
Joseph Phair
-4-
<PAGE>
/s/ Frances Singer
---------------------------------------
Frances Singer
/s/ Colin Keith
---------------------------------------
Colin Keith
LIMITED PARTNERS
(Investor Group)
/s/ Leon Levy
---------------------------------------
Leon Levy
/s/ Jack Nash
---------------------------------------
Jack Nash
/s/ Albert Willner
---------------------------------------
Albert Willner
/s/ James H. Levi
---------------------------------------
James H. Levi
/s/ Myron Chase
---------------------------------------
Myron Chase
/s/ Peter J. Venison
---------------------------------------
Peter J. Venison
/s/ Colin Keith
---------------------------------------
Colin Keith
/s/ Arnold Adlin
---------------------------------------
Arnold Adlin
Chase Trust Partnership
By /s/ Stephen H. Chase
------------------------------------
Stephen H. Chase, Partner
-5-
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
GENERAL PARTNERS
(Stillman Group)
Stillman & Wollensky $13,750.51 5.0002 $15,000.64
Operating Corp.
c/o The New York Restaurant
Group, Inc.
401 East 63rd Street
New York, N.Y.
(Investor Group)
Chamblair Realty Inc. 229.17 .0832 50.00
c/o Warshaw Burstein
Cohen Schlesinger & Kuh
555 Fifth Avenue
New York, N.Y.
Att: Thomas J. Malmud
LIMITED PARTNERS
(Stillman Group)
Smith & Wollensky Operating 3,422.39 1.2445 3,733.54
Corp.
c/o The New York Restaurant
Group, Inc.
401 East 63rd Street
New York, New York
Donna Stillman, Ronald 1,153.05 .4193 1,257.91
Nicholson and Robert
Villency, as Trustees
under a Trust Agreement
dated as of December 31,
1983 for the benefit of
Michael Stillman
Donna Stillman 1,153.06 .4193 1,257.91
322 East 57th Street
New York, New York
Bennett Benson 10,770.92 3.9167 11,750.00
230 East 48 Street
New York, N.Y.
Ernest Kalman 10,770.92 3.9167 11,750.00
23 Hyatt Street
Briarcliff, N.Y.
Frances Singer 916.67 .3333 1,000.00
3601 Johnson Avenue
Bronx, New York
* Less sums contributed as partners of M W Realty Associates, a New York
Limited Partnership.
EXHIBIT A
(Page 1)
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
Eugene Byrne 1,145.80 .4168 1,250.00
300 East Devonia Ave
Mt. Vernon, N.Y.
James Gannon 916.67 .3333 1,000.00
334 East 54th Street
New York, N.Y.
Joseph Phair 916.67 .3333 1,000.00
5809 - 75th Street
Elmhurst, N.Y.
Colin Keith 916.67 .3333 1,000.00
175 East 74 Street
New York, N.Y.
LIMITED PARTNERS
(Investor Group)
Leon Levy $44,026.58 16.0097 $ 9,605.80
983 Park Avenue
New York, N.Y.
Jack Nash 44,026.58 16.0097 9,605.80
784 Park Avenue
New York, N.Y.
Albert Wilman 44,026.58 16.0097 9,605.80
45 Crest Drive
So. Orange, N.J.
Myron Chase 35,776.60 13.0097 7,805.80
1O05 Seven Oaks Lane
Mamaroneck, N.Y.
Chase Trust Partnership 8,249.98 3.0000 1,800.00
201 East 42nd Street
New York, N.Y.
James H. Levi 26,415.59 9.6057 5,763.40
85 Larchmont Avenue
Larchmont, N.Y.
Peter Venison 13,208.02 4.8029 2,881.75
P.O. Box 5037
Johannesburg, South Africa
Colin Keith 8,805.04 3.2018 1,921.10
175 East 74th St
New York, N.Y.
Arnold Adlin 4,402.53 1.6009 960.55
6 Ridgecrest East
Scarsdale, N.Y.
* Less sums contributed as partners of M W Realty Associates, a New York
Limited Partnership.
EXHIBIT A
[ILLEGIBLE]
<PAGE>
SIXTH AMENDMENT OF AGREEMENT
OF
LIMITED PARTNERSHIP OF ST. JAMES ASSOCIATES
THIS SIXTH AMENDMENT OF AGREEMENT OF LIMITED PARTNERSHIP is made and
entered into as of the 14 day of March, 1986 by and among the parties signing
this Agreement.
WITNESSETH:
WHEREAS, St. James Associates (the "Partnership") was organized as a
New York limited partnership pursuant to a Certificate of Limited Partnership of
the partnership filed in the office of the County Clerk of New York County Of
September 13, 1977, as amended by a Certificate of Amendment dated as of August
31, 1978 and filed in the said office on January 25, 1979 and by a Certificate
of Second Amendment of such Certificate dated as of January 1, 1979 and filed in
said office on January 10, 1980 and by a Certificate of Third Amendment dated as
of January 1, 1979 and filed in said office on March 4, 1980 and by a
Certificate of Fourth Amendment dated as of December 31, 1983 and filed in said
office on April 24, 1984; and
WHEREAS, the partners in the Partnership set forth their respective
rights, duties and obligations pursuant to
<PAGE>
an Agreement of Limited Partnership dated September 12, 1977, as modified and
amended by a First Amendment of Agreement of Limited Partnership dated as of
January 1, 1979, by a Second Amendment of Agreement of Limited Partnership dated
as of January 1, 1979, by a Third Amendment of Agreement of Limited Partnership
dated as of October 1, 1980, by a Fourth Amendment of Agreement dated as of
December 31, 1983 and by a Fifth Amendment of Agreement dated as of January 20,
1984, (said Agreement, as so modified and amended, being hereinafter called the
"Agreement"); and
WHEREAS, the parties desire to modify the Agreement to reflect the
Assignment all as hereinafter set forth.
WHEREAS, by an Assignment (the "Assignment") dated March 14, 1986,
Peter Venison, a limited partner in the Investor Group, assigned all of his
interest as a limited partner in the capital, income, profits and losses of the
Partnership (the "Interest") to James H. Levi to the extent of 90% of the
Interest, and to Arnold Adlin to the extent of 10% of the Interest, and their
respective heirs, successors and assigns.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Amendment of Agreement
The Agreement is hereby modified and amended effective as of July
15, 1986 as follows:
2
<PAGE>
(A) Exhibit A of the Agreement is hereby modified and amended
by substituting for Exhibit A annexed thereto, Exhibit A annexed hereto.
2. Ratification
The Agreement as modified and amended herein is hereby ratified,
confirmed and approved in all respects and shall continue in full force and
effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals as of the day and year first above written.
GENERAL PARTNERS
SMITH & WOLLENSKY OPERATING CORP.
By: /s/ Alan N. Stillman
-----------------------------------
Alan N. Stillman, President
CHAMBLAIR REALTY, INC.
By: /s/ Thomas J. Malmud
-----------------------------------
Thomas J. Malmud, President
LIMITED PARTNERS
(Stillman Group)
SMITH AND WOLLENSKY OPERATING CORP.
By: /s/ Alan N. Stillman
-----------------------------------
Alan N. Stillman, President
3
<PAGE>
/s/ Donna Stillman
---------------------------------------
Donna Stillman
/s/ Donna Stillman
---------------------------------------
Donna Stillman, as Trustee
/s/ Ronald Nicholson
---------------------------------------
Ronald Nicholson, as Trustee
/s/ Robert Villency
---------------------------------------
Robert Villency, as Trustee
As Trustees under a Trust
Agreement dated as of
December 31, 1983 for the
benefit of Michael Stillman
/s/ Bennett Benson
---------------------------------------
Bennett Benson
/s/ Ernest Kalman
---------------------------------------
Ernest Kalman
/s/ Eugene Byrne
---------------------------------------
Eugene Byrne
/s/ James Gannon
---------------------------------------
James Gannon
/s/ Joseph Phair
---------------------------------------
Joseph Phair
4
<PAGE>
/s/ Frances Singer
---------------------------------------
Frances Singer
/s/ Colin Keith
---------------------------------------
Colin Keith
LIMITED PARTNERS
(Investor Group)
/s/ Leon Levy
---------------------------------------
Leon Levy
/s/ Jack Nash
---------------------------------------
Jack Nash
/s/ Albert Willner
---------------------------------------
Albert Willner
/s/ James H. Levi
---------------------------------------
James H. Levi
/s/ Myron Chase
---------------------------------------
Myron Chase
/s/ Colin Keith
---------------------------------------
Colin Keith
/s/ Arnold Adlin
---------------------------------------
Arnold Adlin
Chase Trust Partnership
By: /s/ Stephen H. Chase
-----------------------------------
Stephen H. Chase, Partner
5
<PAGE>
WITHDRAWING LIMITED PARTNER:
/s/ Peter Venison
---------------------------------------
Peter Venison
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of March, 1986, before me personally appeared PETER
VENISON, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Barbara Joan Poplawsky
--------------------------
Notary Public
BARBARA JOAN POPLAWSKY
Notary Public, State of New York
No. [ILLEGIBLE]
[ILLEGIBLE] Bronx County
Commission Expires March 30, 1987
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came JAMES GANNON,
to me known and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came JOSEPH PHAIR,
to me known and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came FRANCES
SINGER, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that she executed the
same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came BENNETT
BENSON, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day 17 of June, 1986, before me personally came ERNEST
KALMAN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came EUGENE BYRNE,
to me known and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came COLIN KEITH,
to me known and known to me to be the person described in and executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 10th day of July, 1986, before me personally came THOMAS J.
MALMUD, to me known, who, being by me duly sworn, did depose and say: that he
resides at 7 Seymour Place, White Plains, New York; that he is the President of
Chamblair Realty Inc., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation and that he signed his name
thereto by like order.
/s/ Barbara Joan Poplawsky
--------------------------
Notary Public
BARBARA JOAN POPLAWSKY
Notary Public, State of New York
No. 03-3134033
Certified in Bronx County
Commission Expires March 30, 1987
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came LEON LEVY, to
me known and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1986, before me came ALAN N. STILLMAN, to
me known, who, being by me duly sworn, did depose and say: that he resides at
322 East 57th Street, New York, New York; that he is the President of Smith &
Wollensky Operating Corp., the corporation described in and which executed the
within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporation's seal; that it was so affixed by
order of the board of directors of said corporation and that he signed his name
thereto by like order.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30 day of June, 1986, before me personally came DONNA
STILLMAN, to me known and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that she executed the
same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30 day of June, 1986, before me personally came DONNA
STILLMAN, as Trustee under a Trust Agreement dated December 31, 1983 for the
benefit of Michael Stillman, to me known and known to me to be the person
described in and who executed the foregoing instrument and acknowledged to me
that she executed the same in her capacity as said Trustee.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 9 day of July l986, before me personally came RONALD
NICHOLSON, as Trustee under a Trust Agreement dated December 31, 1983 for the
benefit of Michael Stillman, to me known and known to me to be the person
described in and who executed the foregoing instrument and acknowledged to me
that he executed the same in his capacity as said Trustee.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 9 day of July l986, before me personally came ROBERT
VILLENCY, as Trustee under a Trust Agreement dated December 31, 1983 for the
benefit of Michael Stillman, to me known and known to me to be the person
described in and who executed the foregoing instrument and acknowledged to me
that he executed the same in his capacity as said Trustee.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came JACK NASH,
to the known, and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 18 day of June, 1986, before me personally came JAMES H.
LEVI, to me known and known to me to be the person described in and who executed
the foregoing instrument and acknowledged to me that he executed the same.
/s/ Eva L. Padilla
------------------
Notary Public
EVA L. PADILLA
Notary Public, State of New York
No. 4853899
Qualified in Suffolk County
Commission Expires Feb. 17, 1988
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came COLIN KEITH,
to me known, and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 18 day of June, 1986, before me personally came ARNOLD ADLIN,
to me known and known to me to be the person described in and who executed the
foregoing instrument and acknowledged to me that he executed the same.
/s/ Eva L. Padilla
------------------
Notary Public
EVA L. PADILLA
Notary Public, State of New York
No. 4853899
Qualified in Suffolk County
Commission Expires Feb. 17, 1988
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 20th day of June, 1986, before me personally came MYRON
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Michele Meyers
-----------------
Notary Public
MICHELE MEYERS
Notary Public, State of New York
No. 31-4769107
Qualified in New York County
Commission Expires March 30, 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 17 day of June, 1986, before me personally came ALBERT
WILLNER, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same.
/s/ Mark K. Levine
------------------
Notary Public
MARK K. LEVINE
Notary Public, State of New York
No. 44-4805577
Qualified in Rockland County
Commission Expires 1/31 1989
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 20th day of June, 1986, before me personally came STEPHEN
CHASE, to me known, and known to me to be the person described in and who
executed the foregoing instrument and acknowledged to me that he executed the
same as a partner of the Chase Trust Partnership.
/s/ Michele Meyers
-----------------
Notary Public
MICHELE MEYERS
Notary Public, State of New York
No. 31-4769107
Qualified in New York County
Commission Expires March 30, 1989
<PAGE>
EXHIBIT A
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
GENERAL PARTNERS
(Stillman Group)
Smith & Wollensky $13,750.51 5.0002 $15,000.64
Operating Corp.
c/o The New York Restaurant
Group, Inc.
401 East 63rd Street
New York, N.Y.
(Investor Group)
Chamblair Realty Inc. 229.17 .0832 50.00
c/o Warshaw Burstein
Cohen Schlesinger & Kuh
555 Fifth Avenue
New York, N.Y.
Att: Thomas J. Malmud
LIMITED PARTNERS
(Stillman Group)
Smith & Wollensky 3,422.39 1.2445 3,733.54
Operating Corp.
c/o The New York Restaurant
Group, Inc.
401 East 63rd Street
New York, N.Y.
Donna Stillman, Ronald 1,153.05 .4193 1,257.91
Nicholson and Robert
Villency, as Trustees
under a Trust Agreement
dated as of December 31,
1983 for the benefit of
Michael Stillman
Donna Stillman 1,153.06 .4193 1,257.91
322 East 57th Street
New York, New York
* Less sums contributed as Partners of H W Realty Associates, a New York
Limited Partnership.
A-1
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
Bennett Benson 10,770.92 3.9167 11,750.00
230 East 48th Street
New York, N.Y.
Ernest Kalman 10,770.92 3.9167 11,750.00
23 Hyatt Street
Briarcliff, N.Y.
Frances Singer 916.67 .3333 1,000.00
3601 Johnson Avenue
Bronx, New York
Eugene Byrne 1,145.80 .4168 1,250.00
300 East Devonia Ave.
Mt. Vernon, N.Y.
James Gannon 916.67 .3333 1,000.00
334 East 54th Street
New York, N.Y.
Joseph Phair 916.67 .3333 1,000.00
5809 - 75th Street
Elmhurst, N.Y.
Colin Keith 916.67 .3333 1,000.00
175 East 74th Street
New York, N.Y.
LIMITED PARTNERS
(Investor Group)
Leon Levy 44,026.58 16.0097 9,605.80
983 Park Avenue
New York, N.Y.
Jack Nash 44,026.58 16.0097 9,605.80
784 Park Avenue
New York, N.Y.
Albert Willner 44,026.58 16.0097 9,605.80
45 Crest Drive
So. Orange, N. J.
Myron Chase 35,776.60 13.0097 7,805.80
1005 Seven Oaks Lane
Mamaroneck, N.Y.
* Less sums contributed as Partners of M W Realty Associates, a New York
Limited Partnership.
A-2
<PAGE>
NAME AND CAPITAL CAPITAL ADDITIONAL
RESIDENCE CONTRIBUTION PERCENTAGE CAPITAL*
- --------- ------------ ---------- ---------
Chase Trust Partnership 8,249.98 3.0000 1,800.00
201 East 42nd Street
New York, N.Y.
James H. Levi 38,302.81 13.9283 8,356.98
85 Larchmont Avenue
Larchmont, N.Y.
Colin Keith 8,805.04 3.2018 1,921.10
175 East 74th St.
New York, N.Y.
Arnold Adlin 5,723.33 2.0812 1,248.73
6 Ridgecrest East
Scarsdale, N.Y.
* Less sums contributed as Partners of M W Realty Associates, a New York
Limited Partnership.
A-3
<PAGE>
Exhibit 10.13
RESTAURANT MANAGEMENT AGREEMENT made as of the ______ day of February,
1991, by and between NABIL CHARTOUNI, having an office at 11 East 44th
Street, New York, New York, and FOUAD CHARTOUNI, having an office at 11 East
44th Street, New York, ("the Chartounis"), and THE NEW YORK RESTAURANT GROUP,
INC., a domestic New York Corporation, with offices at 1114 First Avenue, New
York, New York 10021, ("Restaurant Group").
W I T N E S S E T H:
WHEREAS, the Chartounis have entered into a contract dated November 20,
1990 with Post House Associates, for the purpose of (i) acquiring a Lease on
the property located in the City, County and State of New York and known as
28 East 63rd Street, New York, New York (the "Premises"); (ii) owning,
operating, managing and maintaining a first-class restaurant on the Premises
known as "The Post House" (the "Restaurant"); and
WHEREAS, the Restaurant Group is a New York corporation experienced in
the business of restaurant administration; and
WHEREAS, upon consummation of such November 20, 1990 Contract of Sale,
the Chartounis wish to retain the Restaurant Group as an independent
contractor to provide administrative, managerial and operating services in
connection with the operation of the restaurant.
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration receipt and sufficiency of which is
hereby acknowledged, it is agreed as follows:
1. HIRING OF THE RESTAURANT GROUP. The Chartounis hereby retain the
Restaurant Group to provide administrative, managerial and operating services
in connection with the operation of the Restaurant and Room Service
(including a full Breakfast Service if requested by the Chartounis) for the
Lowell Hotel at the Premises during such hours as the Chartounis shall
require from time to time. The Restaurant Group shall render such services
upon the terms and conditions hereinafter set forth. The Chartounis
acknowledge that the Restaurant Group renders similar services to other
restaurants, which are competitive with the Restaurant and agree that it may
continue to render such services to those entities and accept employment with
other entities. The Restaurant Group acknowledges that it is the essence of
this agreement that the Post House continue to be operated as a first-class
Manhattan restaurant, in essentially the same manner that the premises have
been operated for the past five years.
2. SERVICES BY THE RESTAURANT GROUP. Subject to the discretion of the
Chartounis, the administrative services rendered by the Restaurant Group
shall include the maintenance of all bookkeeping and accounting records,
ledgers, and journals for the Restaurant, including such records as are
necessary to prepare and file timely all tax withholding forms for all
Restaurant employees and all sales and tax records and returns for the
Restaurant and pay timely to the appropriate tax authorities all taxes
required to be reported on such
- 2 -
<PAGE>
forms or returns. In addition, also subject to the direction and at the
expense of the Chartounis, the Restaurant Group shall perform the following:
comply with all governmental health and safety regulations, including the
maintenance of all necessary business, food and beverage licenses; maintain
all necessary fire, theft, accident and other insurance policies and renewals
thereof; purchase all supplies and equipment, food, food products and
beverages to be used in the operation of the Restaurant; supervise, manage,
hire and discharge Restaurant personnel; supervise the making of all
necessary repairs, decorations and alterations to the Restaurant; implement
promotional and advertising programs; recommend menu and wine list content
and pricing; manage collections, cash receipts and deposit arrangements and
make payments for those items chargeable to the Chartounis under this
Agreement out of the account referred to in, and as otherwise provided, in
Section 6 hereof; prepare financial budgets and information; furnish to the
Chartounis a fidelity bond covering the Restaurant Group's operations of the
Restaurant; generally act as liaison between the Chartounis and the employees
of the Restaurant, and continue the current operating policies of the
Restaurant Group with respect to the Post House Restaurant so as to maintain
the Restaurant as a first-class Manhattan restaurant. The Restaurant Group
will make all discount and bulk purchase arrangements which it has with third
parties available to the Chartounis on the same basis and furnish the
Chartounis with appropriate vouchers and backup information to support the
charges to the Chartounis.
- 3 -
<PAGE>
Without limiting the generality of the foregoing, the Restaurant
Group, shall:
(a) Within fifteen (15) business days after the end of each
calendar month commencing with the effective date of this agreement, furnish
to the Chartounis a monthly report of income, sales, expenses and cash flow.
Comparable quarterly reports will be delivered within fifteen (15) business
days of the end of each calendar quarter. A weekly sales report will also be
furnished within three (3) business days after the end of each week.
(b) Furnish to the Chartounis an annual financial statement of
Restaurant operations prepared (at the sole cost and expense of the
Chartounis) by a firm of certified public accountants chosen by the
Chartounis. The entire cost of all direct expenses of the business of the
Chartounis (other than salaries of the Restaurant Group employees) including,
without limitation, the cost of business licenses, taxes, insurance premiums,
food, beverages, payroll servicing, salaries of employees at the Restaurant,
office supplies, advertising, and legal and outside accounting fees for
services rendered to the Chartounis shall be paid by the Chartounis.
3. COMPENSATION.
(a) As compensation for the Restaurant Group's services hereunder,
the Chartounis shall pay to the Restaurant Group an interim amount equal to 3%
of all Restaurant Sales (as hereinafter defined) with respect to each month (or
portion thereof at the beginning and end
- 4 -
<PAGE>
of the term of this Agreement). Such amount shall be paid within seven (7) days
after the end of each calendar month and, until adjusted by the parties as
hereafter provided, the amount paid shall equal 3% of the Gross Sales for the
immediately preceding month.
(b) If at the close of any fiscal year (but not later than 90 days
thereafter) it is determined that the aggregate of the monthly payments for the
fiscal year has (i) exceeded or (ii) fallen short of 3% of Restaurant Sales for
such fiscal year, then the Restaurant Group and the Chartounis shall promptly
adjust the amount owing not later than 90 days after such fiscal year.
(c) For the purposes of this paragraph, the parties shall be bound
by the financial statement of the certified public accountants retained by the
Chartounis as accountants for the Restaurant.
(d) The term "Gross Sales" shall mean all monies received by the
Chartounis or for their account from the operation of the Restaurant, Room
Service and Breakfast Service, in cash, by credit card or otherwise, but less,
as to all the foregoing, in respect to the Restaurant and such Services, bona
fide refunds to customers, uncollected amounts, gratuities and tips in fact paid
out by the Restaurant to employees of the Restaurant, and taxes imposed and paid
by the Restaurant on customer checks. For the purposes of clarification, Gross
Sales shall be calculated in the same manner as on the calendar year 1990
Financial Statement of the Post House Restaurant, a true copy of which is
attached hereto as Exhibit "A".
- 5 -
<PAGE>
4. ADDITIONAL COMPENSATION
(a) Notwithstanding the contents of paragraph 3 above, should the
Gross Profits, as below defined, exceed 69% of Gross Sales on a quarterly basis
(or portion thereof at the beginning and end of the term of this Agreement), the
Restaurant Group shall be paid an additional percentage of Gross Sales as below
set forth, on a quarterly basis:
Percentage of Gross Sales
Gross Profit Paid to Restaurant Group
- ------------ ------------------------
69.1% .1%
69.2% .2%
69.3% .3%
69.4% .4%
69.5% or more .5%
(b) For the purpose of 4(a) above, Gross Profits and Gross Sales
shall be calculated in the same manner as in the Financial Statement of the Post
House Restaurant for the calendar year 1990, a true copy of which is attached
hereto as Exhibit "A".
(c) The sums due under paragraph 4(a) shall be calculated and
payable on an interim, quarterly basis, with any such sums due to be paid within
the later of fifteen (15) days after the end of each quarter or three (3)
business days after delivery of the quarterly report.
(d) If at the end of any fiscal year (but not later than 90 days
thereafter) it is determined that the aggregate of the
- 6 -
<PAGE>
quarterly payments made pursuant to this paragraph 4 is either more or less than
the payments that would be due if Gross Profits and Gross Sales referred to in
paragraph 4(a) were computed and applied on a fiscal year basis, then the
Restaurant Group and the Chartounis shall promptly adjust the amount owing
under this subparagraph (d) but not later than 90 days after such fiscal year,
and any disputes shall be reconciled as provided in paragraph 4.
5. COST CONTROL COMPENSATION.
(a) In addition to the compensation set forth in paragraphs 3 and 4
above, the Restaurant Group shall be entitled to additional compensation based
upon payroll control. Beginning with the calendar year commencing January 1,
1991, and for every year of the term of this agreement, the following
calculations shall be made:
(i) Payroll for the prior year;
(ii) Payroll for the calendar year in question;
(iii) Consumer Price Index increase for the prior year, plus 2 1/2%
(iv) Consumer Price Index increase for the calendar year in
question;
The percentage increase in payroll will then be calculated. If the
percentage increase in payroll is less then the percentage increase in Consumer
Price Index plus 2 1/2%, the Restaurant Group will be entitled to additional
compensation of .5% of Gross Sales as above defined, pro rated in the case of
less than a full calendar year during the term of this Agreement based on the
number of months of
- 7 -
<PAGE>
such year during which this Agreement is effective. This sum shall be payable on
an interim, quarterly basis, within fifteen (15) days after the end of each
quarter, calculations to be based upon the estimate of Consumer Price Index
increase published by Fortune magazine. Recalculations on an annual basis and
adjustments of the year's quarterly payments shall be made within fifteen (15)
days after the end of the calendar year in question and reconciled in the event
of disputes as provided in paragraph 4.
(b) For the purposes of this paragraph, the Consumer Price Index
shall be defined as follows: The term "Consumer Price Index" shall mean the
"Consumer Price Index" published by the Bureau of Labor Statistics of the U.S.
Department of Labor, all items, U.S. city average, all urban consumers
(presently denominated "CPI-U"), or a successor or substitute index
appropriately adjusted.
(c) An example of the additional compensation for payroll control
clause would be as follows:
1990 payroll - $1,000,000.00; 19991 payroll - $1,050,000.00;
increase of Consumer Price Index for 1991 over 1990, 4 1/2%. Since
the increase in payroll, 5% is less than the total of the CPI
increase plus 2 1/2%, the Restaurant Group would be entitled to the
additional compensation above set forth. If the Agreement was
effective for 9 months during 1991, the Restaurant Group would be
entitled to three-fourths of .5% or .375%.
(d) For the purpose of the payroll control provisions above set
forth, the Restaurant Group agrees to keep a base staff which is the same as the
current staff, and any additional hirings of additional personnel or salary
levels above the base staff not contemplated by the Restaurant Group as
indicated in an annual operating budget
- 8 -
<PAGE>
presented by the Restaurant Group to the Chartounis by December 15th for the
next succeeding fiscal year beginning on January 1st, but which are specifically
requested by the Chartounis, shall not be included in the payroll figures for
the purposes of this paragraph.
6. BANK ACCOUNTS.
The Chartounis shall establish a bank account at a bank of their
choice. The Chartounis and two (2) persons designated by the Restaurant Group,
who may be changed from time to time by the Restaurant Group with prior approval
by the Chartounis, shall be the authorized signatories for the account. Persons
designated as signatories by the Restaurant Group may be removed by the
Chartounis without notice and shall not have the authority to sign a check for
an amount in excess of [$2000.00]. Upon taking possession of the Restaurant,
Chartounis shall deposit $20,000 in the account. This amount shall be the
minimum balance maintained in the account by Chartounis during the term of this
Agreement, or any renewal thereof, but after the first twelve (12) full months
of operation the minimum shall in no event be less than the preceding one
month's operating expenses. The Chartounis from time to time as needed shall
replenish the account with sufficient funds to maintain such balance. All monies
received from the operation of the Restaurant, Room Service and Breakfast
Service and any and all expenses paid by Restaurant Group on account of the
operation of the Restaurant, Room Service and Breakfast Service shall pass
through this account. The Restaurant Group shall
- 9 -
<PAGE>
deliver copies of all invoices for which checks have been written by its
designees within five (5) business days of the date of the checks.
7. TERM.
This Agreement shall be effective on the date of the purchase by the
Chartounis of the Post House pursuant to the November 20, 1990 Asset Purchase
Agreement and shall terminate in three (3) years from such date, or upon the
earlier happening of any of the following events:
(a) The adjudicated bankruptcy or insolvency of the Restaurant Group
OR THE CHARTOUNIS.
(b) At the election of the Chartounis, upon 90 days' notice to the
Restaurant Group upon (i) a sale of the Restaurant or of the Lowell Hotel to a
bona fide third party in which the Chartounis hold an equity interest (of less
than 25%) or (ii) the obtaining of a participating convertible share
appreciation or any other type of financing arrangement from a bona fide third
party lender in which the lender is entitled to receive payments, other than (or
in addition to) fixed amounts of interest and principal repayments, representing
more than 75k% of the net profits, cash flow or sales proceeds or a right to
convert into a greater than 75% equity interest, for the Restaurant or the
Lowell Hotel, or both.
(c) At the election of the Chartounis, upon six months' notice to
the Restaurant Group, if the Chartounis enter into a joint venture in the
operation of the Restaurant or the Lowell Hotel with a bona fide third party in
which the Chartounis hold an equity interest
- 10 -
<PAGE>
of less then 75% or if the Chartounis obtain participating, convertible or
share appreciation or any other type of financing arrangement from a bona
fide third party lender in which lender is entitled to receive payments,
other than (or in addition to) fixed amounts of interest and principal
repayments, representing more than 25% of the net profits, cash flow or sales
proceeds or a right to convert into a greater than 25% equity interest.
(d) At the election of the Chartounis, upon one year's notice to
the Restaurant without cause.
(e) At the election of the Chartounis, upon 30 days' notice to the
Restaurant Group, "for cause", which shall be limited to the following grounds:
(i) the failure or refusal by the Restaurant Group, after written
notice thereof by the Chartounis to the Restaurant Group,
substantially to perform its duties and responsibilities (including
maintaining the current general atmosphere and administering cost
controls at least as effective as those in place at similar
restaurants) under this Agreement;
(ii) any willful or grossly negligent act which materially injures
the reputation, business or any business relationship of the
Restaurant, the Lowell Hotel or the Chartounis;
(iii) any act of moral turpitude or violation of law which would
materially affect the reputation of the Restaurant, the Lowell Hotel
or the Chartounis.
- 11 -
<PAGE>
(f) At the election of the Chartounis on 30 days' notice if Alan N.
Stillman (i) ceases to be the controlling owner and chief operating officer of
the Restaurant Group or (ii) ceases to supervise and be closely associated with
the rendering of services by the Restaurant Group under this agreement.
(g) At the election of the Chartounis at any time and without any
notice called for in the subparagraphs above, provided the Chartounis deliver a
notice of termination which refers to this subparagraph (g) and the subparagraph
pursuant to which termination is effected and states the amount payable to the
Restaurant Group as compensation for the notice period in the subparagraph
pursuant to which termination is effected which amount shall equal THE SAME
PERCENTAGE of Restaurant Sales WHICH WAS paid for the equivalent period in the
immediately prior year.
(h) At the election of the Restaurant Group, upon one year's notice
to the Chartounis.
(i) At the election of the Restaurant Group, upon 30 days' notice to
the Chartounis for cause, which shall be limited to the Chartounis' insistence
upon an operating policy of the Restaurant so different from the prior operating
policy at the Restaurant, and so different from the operating policy of the
other restaurants operated by the Restaurant Group, as would have a material
negative impact upon the business of the Restaurant Group, and upon the
reputation of the Restaurant Group. As an illustration, an insistence by the
Chartounis upon a substantial increase or decrease in prices would constitute
cause under this paragraph.
- 12 -
<PAGE>
Upon the termination of this Agreement, all fees owing to the
Restaurant Group shall be prorated to the date of termination and paid within
thirty (30) days thereof.
8. INSURANCE.
The Restaurant Group at present maintains insurance coverage for
public liability, automobile, elevator, theft, casualty and property damage,
comprehensive dishonesty, disappearance and destruction, and workmen's
compensation, all as reflected in the policies attached. The Chartounis shall
maintain comparable coverage during the term of this Agreement naming Chartounis
and the Restaurant Group as insureds as their interests shall appear under such
policies, provided, however, that such coverage shall be generally available at
rates comparable to the rates charged for the attached policies, adjusted for
reasonable inflation increases. The Chartounis shall not be required to maintain
coverage which cannot be generally obtained at commercially reasonable rates.
The Restaurant Group shall advise and assist in the review and renewal of such
insurance and, to the extent possible, make available to the Chartounis bulk
rates for such insurance coverage as are available to the Restaurant Group.
9. INDEMNITY.
The Chartounis agree:
(1) To the extent an insurance carrier does not assume the defense in
respect of any claim, action or proceeding against the Restaurant Group or the
Chartounis for actions allegedly within the scope of this Agreement, to defend
promptly and diligently, at the
- 13 -
<PAGE>
Chartounis' expense, any claim, action or proceeding brought against the
Restaurant Group or the Chartounis jointly or severally arising out of or
connected with any of the foregoing, and to hold harmless and fully indemnify
the Restaurant Group from any judgment, loss or settlement on account thereof to
the extent not covered by insurance, regardless of the jurisdiction in which any
such claims, actions or proceedings may be brought.
(2) To the extent not covered by insurance, to indemnify and hold the
Restaurant Group free and harmless from any liability finally determined
pursuant to paragraph (1) above for injury to persons or damage to property by
reason of any cause whatsoever, either in and about the Restaurant, as a result
of the performance of this Agreement by the Restaurant Group, its agents or
employees, irrespective of whether negligence on the part of the Restaurant
Group is alleged.
(3) Notwithstanding the foregoing, the Chartounis shall not be liable to
indemnify and hold the Restaurant Group harmless, and the Restaurant Group
hereby indemnifies and holds the Chartounis free and harmless, from any
liability which results from the "GROSS" negligence, fraud, or willful
misconduct of the Restaurant Group, its agents or employees.
10. BINDING EFFECT
This Agreement shall inure to the benefit of the parties hereto,
their respective successors and assigns, and may be modified only by a writing
signed by both parties, except that this Agreement may not be pledged,
transferred or assigned by the Restaurant Group without prior written approval
by the Chartounis which approval may be withheld for any reason by the
Chartonis.
- 14 -
<PAGE>
11. APPLICABLE LAW.
This Agreement shall be interpreted according to the laws of New
York State.
12. NOTICES.
Notices provided for hereunder shall be deemed given when mailed by
certified mail, return receipt requested, to the addresses of the parties as set
forth in this Agreement, or to such other address as either party may furnish by
a like notice, similarly given.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
year and day first above written.
/s/ Nabil Chartouni
---------------------------------------
NABIL CHARTOUNI
/s/ Fouad Chartouni
---------------------------------------
FOUAD CHARTOUNI
THE NEW YORK RESTAURANT
GROUP, INC.
By: /s/ [ILLEGIBLE]
---------------------------------------
- 15 -
<PAGE>
<TABLE>
<CAPTION>
MONTH ENDING
DECEMBER 31, 1990
CURRENT MONTH YEAR TO DATE
THIS YEAR PCT LAST YEAR PCT THIS YEAR PCT LAST YEAR PCT
--------- --- --------- --- --------- --- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SALES
FOOD 352,991 72.63% 354,191 71.14% 3,294,808 73.03% 3,215,392 72.33%
LIQUOR 38,632 7.95% 40,169 8.07% 367,830 8.15% 386,169 8.69%
BEER 5,947 1.22% 5,755 1.16% 60,454 1.34% 58,671 1.32%
WINE 88,417 18.19% 97,794 19.64% 788,259 17.47% 784,987 17.66%
-------- -------- ---------- ----------
BANQUETS
GROSS SALES 485,986 100.00% 497,909 100.00% 4,511,351 100.00% 4,445,218 100.00%
-------- -------- ---------- ----------
COST OF SALES
FOOD 96,912 27.45% 100,142 28.27% 942,163 28.60% 949,136 29.52%
LIQUOR 7,210 18.66% 6,876 17.12% 59,934 16.29% 61,752 15.99%
BEER 858 14.43% 1,083 18.82% 11,241 18.59% 15,844 27.01%
WINE 28,600 32.35% 31,211 31.91% 269,676 34.21% 268,065 34.15%
BANQUETS
BAR CONSUMMABLES 2,359 6.11% 2,754 6.86% 29,937 8.14% 26,543 6.87%
-------- -------- ---------- ----------
TOTAL COST OF SALES 135,939 27.97% 142,066 28.53% 1,312,950 29.10% 1,321,340 29.72%
-------- -------- ---------- ----------
GROSS PROFIT 350,047 72.03% 355,843 71.47% 3,198,400 70.90% 3,123,878 70.28%
-------- -------- ---------- ----------
INTEREST INCOME 495 .10% 592 .12% 7,062 .16% 5,519 .12%
OTHER INCOME 1,125 .23% 90 .02% 4,695 .10% 2,435 .05%
-------- -------- ---------- ----------
OPERATING INCOME 351,668 72.36% 356,525 71.60% 3,21O,157 71.16% 3,131,832 70.45%
-------- -------- ---------- ----------
PAYROLL RESTAURANT 53,612 11.03% 54,131 10.87% 655,832 14.54% 633,934 14.26%
PAYROLL MANAGERS 61,020 12.56% 52,219 10.49% 430,568 9.54% 413,284 9.30%
MANAGER BONUS
PAYROLL TAXES 10,651 2.19% 13,861 2.78% 102,192 2.27% 100,613 2.26%
OTHER EMPLOYEE BENEFITS 20,605 4.24% 19,472 3.91% 226,501 5.02% 210,200 4.73%
MANAGEMENT FEE 9,720 2.00% 9,958 2.00% 90,227 2.00% 88,904 2.00%
PARTNER FEE 9,720 2.00% 9,958 2.00% 90,227 2.00% 88,904 2.00%
-------- -------- ---------- ----------
TOTAL 165,328 34.02% 159,599 32.05% 1,595,545 35.37% 1,535,839 34.55%
-------- -------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONTH ENDING
DECEMBER 31, 1990
CURRENT MONTH YEAR TO DATE
THIS YEAR PCT LAST YEAR PCT THIS YEAR PCT LAST YEAR PCT
--------- --- --------- --- --------- --- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER EXPENSES
STORE RENT/SERVICE FEE 23,067 4.75% 21,358 4.29% 266,551 5.91% 246,807 5.55%
HEAT LIGHT AND POWER 5,488 1.13% 11,707 2.35% 114,423 2.54% 99,675 2.24%
TELEPHONE 1,164 .24% 1,996 .40% 9,627 .21% 13,175 .30%
CARTING 37 .01% 2,214 .44% 27,812 .62% 21,226 .48%
OFFICE EXPENSE 5,201 1.07% 3,022 .61% 38,785 .86% 30,244 .68%
AUTO 524 .11% 557 .11% 4,049 .09% 5,523 .12%
TRAVEL & ENTERTAINMENT 6,303 1.30% 1,018 .20% 24,407 .54% 11,759 .26%
TIPS 26 .01% 30 .01% 347 .01% 1,269 .03%
M & E RENTAL 1,109 .23% 2,059 .41% 12,125 .27% 17,560 .40%
PROFESSIONAL FEES 1,125 .23% 4,367 .88% 12,833 .28% 21,284 .48%
SECURITY 377 .08% 2,245 .05% 1,728 .04%
GIFTS & CONTRIBUTIONS 1,000 .21% (210) -.04% 4,500 .10% 606 .01%
CONSULTANTS FEE 860 .18% 60 .01% 13,158 .29% 5,342 .12%
MISCELLANEOUS 152 .03% 4,513 .91% 1,412 .03% 7,895 .18%
LINENS & UNIFORMS 7,288 1.50% 17,624 3.54% 72,545 1.61% 89,138 2.01%
GLASSWARE 642 .13% 1,091 .22% 5,532 12% 5,751 .13%
CHINA 687 .14% (80) -.02% 17,882 .40% 14,238 .32%
FLATWARE 544 .11% 98 .02% 4,703 .10% 7,360 .17%
PAPER 760 .16% 567 .11% 7,165 .16% 4,541 .10%
CLEANING 1,712 .35% 1,179 .24% 10,174 .23% 11,655 .26%
HARDWARE-KITCHEN & OTHER 3,447 .71% 5,181 1.04% 32,903 .73% 53,339 1.20%
DECORATING 2,398 .49% 2,637 .53% 26,873 .60% 29,086 .65%
PUBLIC RELATIONS 21,821 4.49% 12,403 2.49% 85,445 1.89% 72,030 1.62%
INSURANCE 4,020 .83% 5,026 1.01% 46,123 1.02% 44,666 1.00%
LICENSES 283 .06% 200 .04% 4,267 .09% 3,923 .09%
REPAIRS & MAINTENANCE 9,351 1.92% 11,014 2.21% 87,825 1.95% 97,897 2.20%
ADVERTISING 18,755 3.86% 34,531 6.94% 146,756 3.25% 155,847 3.51%
DUES & SUBSCRIPTIONS 1,133 .23% 1,001 .02% 1,607 .04%
REAL ESTATE TAXES 1,182 .24% 1,392 .28% 11,271 .25% 4,179 .09%
CREDIT CARD CHARGES 15,645 3.22% 18,935 3.80% 146,334 3.24% 150,786 3.39%
COMMERCIAL RENT TAX 1,455 .30% 1,378 .28% 24,126 .53% 15,420 .35%
AMORTIZATION & DEPRECIATION 24,499 5.04% 13,991 2.81% 40,119 .89% 29,481 .66%
INTEREST
BAD DEBTS 582 .12% 156 .03% 1,971 .04% 890 .02%
-------- -------- ---------- ----------
TOTAL OTHER EXPENSES 161,502 33.23% 181,146 36.38% 1,305,289 28.93% 1,275,926 28.70%
-------- -------- ---------- ----------
TOTAL EXPENSES (326,830) -67.25% (340,745) -68.44% (2,900,834) -64.30% (2,811,765) -63.25%
-------- -------- ---------- ----------
NET INCOME BEFORE TAXES
AND SPECIAL ITEMS 24,837 5.11% 15,780 3.17% 309,323 6.86% 320,066 7.20%
OTHER INCOME/EXPENSE
FIRE EXPENSE
PRIOR YEAR EXPENSE 3,090 .62% .00%
NET INCOME BEFORE TAXES 24,837 5.11% 12,690 2.55% 309,323 6.86% 320,066 7.20%
-------- -------- ---------- ----------
TAXES (1,399) -.29% (9,489) -1.91% 5,501 .12% 12,372 .28%
-------- -------- ---------- ----------
NET INCOME 26,236 5.40% 22,179 4.45% [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
</TABLE>
<PAGE>
MONTH ENDING
DECEMBER 31, 1990
ASSETS
CURRENT ASSETS
CASH & EQUIVALENTS 296,745
RECEIVABLES 65,764
INVENTORY 125,972
PREPAID EXPENSES 29,543
TOTAL CURRENT ASSETS 518,023
OTHER ASSETS
DEPRECIABLE ASSETS 562,285
ACCUM DEP'N & AMORT (433,061)
129,225
NON DEPRECIABLE ASSETS 5,213
OTHER ASSETS (150)
TOTAL OTHER ASSETS 134,288
TOTAL ASSETS 652,310
LIABILITIES & EQUITY
LIABILITIES
A/P & ACCRUED EXPENSES 228,654
NOTES/LOANS PAYABLE
OTHER LIABILITIES 41,887
TOTAL LIABILITIES 270,541
EQUITY
RETAINED EARNINGS
PARTNERS CAPITAL/CAPITAL STOCK 327,948
PARTNERS DISTRIBUTION (250,000)
77,948
NET INCOME 303,822
TOTAL EQUITY 381,769
TOTAL LIABILITIES & EQUITY 652,310
=====================================================================
POST HOUSE
=====================================================================
CURRENT MONTH YEAR TO DATE
THIS YR LAST YR THIS YR LAST YR
=====================================================================
7,890 8,160 COVERS 76,712 76,449
---------------------------------------------------------------------
$44.74 $43.41 FOOD $42.95 $42.06
$4.90 $4.92 LIQUOR $4.79 $5.05
$0.75 $0.71 BEER $0.79 $0.77
$11.21 $11.98 WINE $10.28 $10.27
---------------------------------------------------------------------
$61.60 $61.02 TOTAL $58.81 $58.15
=====================================================================
DECEMBER 90
=====================================================================
<PAGE>
FIRST AMENDMENT TO RESTAURANT MANAGEMENT AGREEMENT made as of the 6 of
December, 1994 by and between Post House Investors L.P. having an office at 11
East 44th Street, New York, NY ("Post House Investors") and the New York
Restaurant Group, Inc., a domestic corporation with offices at 1114 First
Avenue, New York, NY ("Restaurant Group").
W I T N E S S E T H
WHEREAS pursuant to an agreement made as of the 26th day of February,
1991, between NABIL CHARTOUNI and FOUAD CHARTOUNI, on the one hand, and the
Restaurant Group on the other hand, the CHARTOUNIS retained the Restaurant Group
as an independent contractor to provide administrative managerial and operating
services in connection with the operation of the restaurant known as the POST
HOUSE; and
WHEREAS POST INVESTORS are the designees of NABIL CHARTOUNI and FOUAD
CHARTOUNI under a certain asset purchase agreement dated November 20, 1991
concerning the purchase of the POST HOUSE RESTAURANT from POST HOUSE ASSOCIATES;
and
WHEREAS on the closing of such sale POST HOUSE INVESTORS agreed to be
bound under the terms of the February 26, 1991 management agreement; and
<PAGE>
WHEREAS the closing of such asset purchase agreement took place on January
24, 1992; and
WHEREAS the term of the restaurant management agreement commenced on such
closing date, that is January 24, 1992; and
WHEREAS, by its terms, the restaurant management agreement commenced on
such date for the term of three years, expiring on January 23, 1995; and
WHEREAS the parties wish to extend the term of such restaurant management
agreement, and to amend the terms thereof in certain respects.
Now, therefore in consideration of the mutual covenants herein contained
and other good and valuable consideration, it is agreed as follows:
1. The term of the February 26, 1991 management agreement shall be
extended for an additional two years commencing on January 24, 1995 and
terminating on January 23, 1997.
-2-
<PAGE>
2. Paragraphs 3, "Compensation", 4, "Additional Compensation" and 5, "Cost
Control Compensation" shall be deleted from the February 26, 1991 agreement and
replaced by a new paragraph 3, "Compensation", which shall read as follows:
3. COMPENSATION
a. As compensation for the Restaurant Group's services hereunder,
Post House Investors shall pay to the Restaurant Group an amount equal to 5% of
all Restaurant Sales (as hereinafter defined) with respect to each month (or
portion thereof at the beginning and end of the term of this Agreement). Such
amount shall be paid within seven (7) days after the end of each calendar month.
b. For the purposes of this paragraph, the parties shall be bound by
the financial statement of the certified public accountants retained by Post
House Investors as accountants for the Restaurant.
c. The term "Gross Sales" shall mean all monies received by Post
House Investors or for their account from the operation of the Restaurant, Room
Service and Breakfast Service, in cash, by credit card or otherwise, but less,
as to all the foregoing, in respect to the Restaurant and such Services, bona
fide refunds to customers, uncollected amounts, gratuities and tips in fact paid
out by the Restaurant to employees of the Restaurant, and taxes imposed and paid
by the Restaurant on customer checks.
-3-
<PAGE>
For the purposes of clarification, Gross Sales shall be calculated
in the same manner as on the calendar year 1990 Financial Statement of the POST
HOUSE RESTAURANT, a true copy of which is attached hereto as Exhibit "A".
3. The parties acknowledge that the total compensation payable to the
Restaurant Group is as set forth in paragraph 3, "Compensation", outlined above.
4. Except as herein specifically amended, the February 26, 1991 agreement
shall remain in full force and effect.
IN WITNESS WHEREOF the parties hereto have executed this agreement on the
year and day first above written.
POST HOUSE INVESTORS, L.P.
BY: KENSICO PROPERTIES, N.Y., INC.
BY: /s/ Fouad Chartouni
---------------------------------------
FOUAD CHARTOUNI, PRES.
THE NEW YORK RESTAURANT GROUP, INC.
BY: /s/ [ILLEGIBLE]
---------------------------------------
-4-
<PAGE>
SECOND AMENDMENT TO RESTAURANT MANAGEMENT AGREEMENT made as of
the 29 of October 1996 by and between Post House Investors L.P. having an
office at 11 East 44th Street, New York, NY ("Post House Investors") and the
New York Restaurant Group, Inc., a domestic corporation with offices at 1114
First Avenue, New York, NY ("Restaurant Group").
W I T N E S S E T H
WHEREAS, pursuant to an agreement made as of the 26th day of
February, 1991, between NABIL CHARTOUNI and FOUAD CHARTOUNI, on the one hand,
and the Restaurant Group on the other hand, the CHARTOUNIS retained the
Restaurant Group as an independent contractor to provide administrative
managerial and operating services in connection with the operation of the
restaurant known as the POST HOUSE; and
WHEREAS, POST INVESTORS are the designees of NABIL CHARTOUNI and
FOUAD CHARTOUNI under a certain asset purchase agreement dated November 20, 1991
concerning the purchase of the POST HOUSE RESTAURANT from POST HOUSE ASSOCIATES;
and
WHEREAS, on the closing of such sale POST HOUSE INVESTORS agreed to
be bound under the terms of the February 26, 1991 management agreement; and
WHEREAS, the closing of such asset purchase agreement took place on
January 24, 1992; and
WHEREAS, the term of the restaurant management agreement commenced
on such closing date, that is January 24, 1992; and
WHEREAS, by its terms, the restaurant management agreement commenced
on such date for the term of three years, expiring on January 23, 1995; and
<PAGE>
WHEREAS, by agreement dated December 12, 1994, the parties extended
the term of such agreement for a period of two years, through January 23, 1997,
and amended the agreement in certain respects, and
WHEREAS, the parties wish to further extend the term of such
restaurant management agreement, and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, it is agreed as follows:
1. The term of the February 26, 1991 management agreement shall be
extended for an additional two years commencing on January 24, 1997 and
terminating on January 23, 1999.
2. As compensation for the Restaurant Group's services, during the
term of this renewal, Post House Investors shall pay to the Restaurant Group an
amount equal to 6% of all Restaurant sales, as defined in the December 6, 1994,
first amendment to Restaurant Management Agreement.
3. Except as herein specifically amended herein, and in the December
6, 1994 first amendment, the February 26, 1991 agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
on the year and day first above written.
POST HOUSE INVESTORS, L.P.
BY: KENSICO PROPERTIES, N.Y., INC.
/s/ Fouad Chartouni
---------------------------------------
FOUAD CHARTOUNI, PRES.
THE NEW YORK RESTAURANT GROUP, LLC
BY: /s/ [ILLEGIBLE]
---------------------------------------
2
<PAGE>
THIRD AMENDMENT TO RESTAURANT MANAGEMENT AGREEMENT made as of the 29th of
October, 1996 by and between Post House Investors L.P. having an office at 11
East 44th Street, New York, New York ("Post House Investors") and the New York
Restaurant Group, Inc., a domestic corporation with offices at 1114 First
Avenue, New York, New York ("Restaurant Group").
WITNESSETH
WHEREAS, pursuant to an agreement made as of the 26th day of February,
1991, between NABIL CHARTOUNI and FOUAD CHARTOUNI, on the one hand, and the
Restaurant Group on the other hand, the CHARTOUNIS retained the Restaurant Group
as an independent contractor to provide administrative managerial and operating
services in connection with the operation of the restaurant known as the POST
HOUSE; and
WHEREAS, POST HOUSE INVESTORS are the designees of NABIL CHARTOUNI and
FOUAD CHARTOUNI under a certainf asset purchase agreement dated November 20,
1991 concerning the purchase of the POST HOUSE RESTAURANT from POST HOUSE
ASSOCIATES, and
WHEREAS, on the closing of such sale POST HOUSE INVESTORS agreed to be
bound under the terms of the February 26, 1991 management agreement; and
WHEREAS, the closing of such asset purchase agreement took place on
January 24, 1992; and
WHEREAS, the term of the restaurant management agreement commenced on such
closing date, that is January 24, 1992; and
WHEREAS, by its terms, the restaurant management agreement commenced on
such date for the term of three years, expiring on January 23, 1995; and
WHEREAS, by agreement dated December 12, 1994, the parties extended the
term of such agreement for a period of two years, through January 23, 1997, and
amended the agreement in certain respects, and
WHEREAS, by agreement dated October 29, 1996, the parties further extended
the term of such agreement for an additional period of two years, through
January 23, 1999; and
WHEREAS, the parties wish to further extend the term of such restaurant
management agreement, and
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, it is agreed as follows:
1. The term of the February 26, 1991 management agreement shall be
extended for an additional two years commencing on January 24, 1999 and
terminating on January 23, 2001.
2. As compensation for the Restaurant Group's services, during the term of
this renewal, Post House Investors shall pay to the Restaurant Group an amount
equal to 6% of all Restaurant sales, as defined in the December 6, 1994, first
amendment to Restaurant Management Agreement.
3. Except as herein specifically amended herein, and in the December 6,
1994 first amendment, and October 29, 1996 second amendment, the February 26,
1991 agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the
year and day first above written
POST HOUSE INVESTORS, L.P.
By: KENSICO PROPERTIES, N.Y., INC.
/s/ Fouad Chartouni
---------------------------------------
FOUAD CHARTOUNI, PRES.
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ [ILLEGIBLE]
---------------------------------------
<PAGE>
Exhibit 10.14
SUBMANAGEMENT AGREEMENT
(FOOD AND BEVERAGE DEPARTMENT)
DOUBLETREE GUEST SUITES HOTEL
CHICAGO, ILLINOIS
<PAGE>
TABLE OF CONTENTS
Page
----
PREAMBLE.................................................................. 1
RECITALS.................................................................. 1
ARTICLE 1 - SCOPE OF AGREEMENT............................................ 2
1.1 Engagement of Food Manager.................................... 2
1.2 Services by Food Manager...................................... 3
1.3 Permits....................................................... 7
1.4 Hours of Operation, Etc....................................... 8
1.5 Comp Policy................................................... 8
1.6 Owner's Property.............................................. 8
ARTICLE 2 - TERM
2.1 Commencement Date............................................. 9
2.2 Term.......................................................... 9
2.3 Hotel Manager's Special Termination Rights.................... 9
2.4 Food Manager's Special Termination Rights..................... 10
2.5 Early Termination of the Hotel Management
Agreement..................................................... 10
ARTICLE 3 - OPERATIONAL STANDARDS......................................... 13
3.1 Operational Standards......................................... 13
ARTICLE 4 - FISCAL MATTERS................................................ 14
4.1 Accounting Matters and Fiscal Periods......................... 14
4.2 Yearly Budgets................................................ 15
4.3 Payment of F&B Department Costs............................... 19
ARTICLE 5 - COMPENSATION.................................................. 20
5.1 Base Fee...................................................... 21
5.2 Departmental Profit Incentive Fee............................. 22
5.3 GOP Incentive Fee............................................. 24
ARTICLE 6 - USE OF TRADENAMES............................................. 27
6.1 Use of Name................................................... 27
6.2 Advertising Materials......................................... 29
6.3 Rights Upon Termination....................................... 30
ARTICLE 7 - OPERATING ACCOUNT............................................. 33
7.1 Operating Account............................................. 33
(i)
<PAGE>
ARTICLE 8 - RENOVATION.................................................... 34
8.1 Restaurant Renovation......................................... 34
8.2 Annual Renovation Amortization and Payments................... 34
8.3 Subsequent Adjustment......................................... 35
ARTICLE 9 - INDEMNITY AND INSURANCE....................................... 36
9.1 Indemnity by Owner............................................ 36
9.2 Indemnity by Food Manager..................................... 37
9.3 Insurance Requirements........................................ 39
ARTICLE 10 - DEFAULT AND TERMINATION...................................... 41
10.1 Events of Default............................................. 41
10.2 Termination................................................... 43
ARTICLE 11 - APPLICABLE LAW............................................... 45
11.1 Scope......................................................... 45
ARTICLE 12 - SUCCESSORS AND ASSIGNS....................................... 46
12.1 Assignment by Food Manager.................................... 46
ARTICLE 13 - FORCE MAJEURE................................................ 49
13.1 Operation of Hotel............................................ 49
13.2 Extension of Time............................................. 49
ARTICLE 14 - COVENANTS OF OWNER........................................... 50
14.1 General....................................................... 50
14.2 Funding....................................................... 50
14.3 Restriction of Hiring Food Manager Employees.................. 51
ARTICLE 15 - GENERAL PROVISIONS........................................... 51
15.1 Authorization................................................. 51
15.2 Formalities................................................... 51
15.3 Consents...................................................... 51
15.4 Notices....................................................... 52
15.5 Entire Agreement.............................................. 54
15.6 Waivers....................................................... 55
15.7 Relationship.................................................. 55
15.8 Overdue Payments.............................................. 55
15.9 Attorneys' Fees............................................... 56
SIGNATURES................................................................ 57
CONSENT AND JOINDER OF OWNER.............................................. 58
(ii)
<PAGE>
EXHIBIT 1 - PURCHASE ORDER PROCEDURES (Article 1.2(a))
EXHIBIT 2 - DEPARTMENTAL PROFITS (Article 5.2(c))
EXHIBIT 3 - GROSS OPERATING PROFIT (Article 5.1(b) and 5.3(c))
EXHIBIT 4 - EXAMPLES OF THE CALCULATION AND PAYMENT OF FOOD MANAGER'S FEES
(Article 5)
EXHIBIT 5 - METROPOLITAN CHICAGO AREA (MAP) (Article 6.1(c))
EXHIBIT 6 - 1995 YEARLY BUDGET FOR THE F&B DEPARTMENT (Article 4.2(a))
(iii)
<PAGE>
GLOSSARY OF DEFINED TERMS
1995 Yearly Budget - Article 4.2(a)
Advertising and Promotional Threshold Amount - Article 5.2(d)
Advertising and Promotional Excess - Article 5.2(d)
Agreement - Preamble
Annual Renovation Amortization - Article 8.2
Consent - Article 15.3
Defaulting Party - Article 10.1(a)
Departmental Profits - Article 5.2(c)
Departmental Profit Incentive Fee - Article 5.2(a)
Event of Default - Article 10.1
Excess Departmental Profits - Article 5.2(b)
Excess GOP - Article 5.3(b)
Execution Date - Preamble
F&B Department - Article 1.1(a)
F&B Department FF&E Budget - Article 4.2(c)
Fees - Article 5
FF&E - Article 4.2(c)
Food Manager - Preamble
Food Manager's Renovation Contribution - Article 8.1
Food Manager Transfer - Article 12.1(a)
Food Manager Employees - Article 1.2(b)
Food Manager Tradenames - Article 6
Full Commencement Date - Article 2.1
GOP Incentive Fee - Article 5.3(a)
Gross Operating Profit - Article 5.3(c) and Exhibit 3
Guarantor - Article 1.1(a)
Hotel - Witnesseth
Hotel Management Agreement - Witnesseth
Hotel Manager - Preamble
House F&B Operations - Article 1.1(a)
House F&B Operations - Article 1.1(a)
Index - Article 4.2(b)
Initial Period - Article 2.1
New York Cafe - Article 3.1
Non-Defaulting Party - Article 10.2(a)
NYRG - Article 1.1(a)
Operational Standards - Article 3.1
Operating Costs - Exhibit 3
Operating Account - Article 7.1(a)
Owner - Witnesseth
Owner's Renovation Contribution - Article 8.1
Permissible Costs - Article 4.3
Post-Termination Licensing Period - Article 6.3(b)
Pre-Opening - Article 8.1(b)
Purchase Order Procedures - Article 1.2(a)
Renovation - Article 8.1
Renovation Cost - Article 8.2
Requisitions - Article 7.1(b)
(iv)
<PAGE>
Stillman Entity - Article 12.1(b)
Stillman - Article 12.1(b)
Threshold GOP - Article 5.3(b)
Total F&B Department Revenue - Article 5.1(b)
Total Hotel Sales - Exhibit 3
Trade Name Operations - Article 1.1(a)
Unamortized Food Manager's Renovation Contribution - 2.5(a)(i)
Uniform System of Accounts - Article 5.1(b)
Year - Article 2.2(b)
Yearly Budget - Article 4.2(b)
(v)
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PREAMBLE
THIS SUBMANAGEMENT AGREEMENT (the "Agreement") is made and entered into on
the 9th day of June, 1995 (the "Execution Date"), but effective as of October
24, 1994, by and between DOUBLETREE PARTNERS (formerly known as Guest Quarters
Hotels Partnership), a Delaware partnership ("Hotel Manager"), and MRS. PARKS
MANAGEMENT COMPANY, L.L.C., an Illinois limited liability company ("Food
Manager").
WITNESSETH:
WHEREAS, Chicago HSR Limited Partnership ("Owner") owns a hotel operating
under the name Guest Quarters Suite Hotel (the "Hotel") located at 900 North
Mies Van Der Rohe Way, Chicago, Illinois; and
WHEREAS, pursuant to a Management Agreement (the "Hotel Management
Agreement") dated November 29, 1988, as amended, by and between Owner and Hotel
Manager, Hotel Manager was retained by Owner to operate the Hotel under the
tradename "Guest Quarters Suite Hotel," which name was changed to "Doubletree
Guest Suites" in February, 1995; and
WHEREAS, Hotel Manager is desirous of having Food Manager manage and
operate the food and beverage department within the Hotel upon the terms and
conditions as herein provided;
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NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Hotel Manager and Food Manager
agree as follows:
ARTICLE 1
SCOPE OF AGREEMENT
1.1 Engagement of Food Manager.
(a) Hotel Manager hereby engages Food Manager to supervise and
manage the food and beverage department at the Hotel for the term of this
Agreement, and Food Manager hereby agrees that it will manage the F&B Department
(as hereinafter defined) pursuant to and in accordance with the terms of this
Agreement. Food Manager further agrees to provide, or cause its affiliate,
Atlantic & Pacific Grill Associates, L.P. (the "Guarantor") to provide, the
trade names -- "Park Avenue Cafe" for the second floor restaurant and "Mrs.
Park's Tavern" for the first floor bistro -- for the Hotel's restaurant and
lounge (the "Trade Name Operations"). (Both Food Manager and the Guarantor are
affiliates of The New York Restaurant Group, Inc. ("NYRG").) As used herein, the
term "F&B Department" shall mean and refer to all operations of the food and
beverage department of the Hotel, including (i) room service and
catering/banquet operations (the "House F&B Operations"), and (ii) the Trade
Name Operations. Hotel Manager and Food Manager further
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agree that this Agreement provides for management in respect of the F&B
Department of the Hotel, and that Hotel Manager and Food Manager do not intend,
nor does this Agreement grant or create, a "franchise" within the meaning of the
Federal Trade Commission Act, or any rule or regulation promulgated thereunder
or in connection therewith.
1.2 Services by Food Manager.
(a) During the term of this Agreement, Food Manager shall, subject
to the applicable Yearly Budget (as hereinafter defined) and the other
limitations contained in this Agreement, purchase all food, supplies and other
items in the ordinary course of business of the F&B Department on behalf of
Owner and in Owner's name. With respect to the Trade Name Operations as well as
the House F&B Operations, Food Manager shall follow the purchasing authorization
procedure and shall otherwise conform to the purchase order approval
requirements and other related matters set forth in Exhibit 1, "Purchase Order
Procedures," attached hereto and made a part hereof. Food Manager will make, or
cause to be made, all discount and bulk purchase arrangements which it or NYRG
(or other NYRG affiliates) have with third parties available to the Hotel on the
same basis and furnish the Hotel with appropriate vouchers and backup
information to support the charges to the Hotel, if and to the extent such
discount and bulk purchase arrangements (i) are available to Chicago and (ii)
can be made without adverse impact on
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other restaurants operated by NYRG or its affiliates. Food Manager shall have
the right to select the vendors for purchases of food and beverages, linens,
supplies and equipment for the F&B Department, subject to Hotel Manager's
reasonable approval; provided, however, where Hotel Manager has arranged for
national or regional purchasing programs with certain vendors whereby total
aggregate volume generates better pricing, Food Manager shall, if Hotel
Manager so requests, purchase from such vendors, unless Food Manager
reasonably objects to the quality of such purchases or can effect such
purchases at even lower prices without sacrificing quality. During the term
of this Agreement, Hotel Manager will permit other restaurants operated by
NYRG or its affiliates to participate in Hotel Manager's group purchasing
programs if and to the extent such programs (i) are available at the
locations of such other restaurants and (ii) can be made available to NYRG
and its affiliates without adverse impact on the hotels operated by Hotel
Manager or its affiliates.
(b) Food Manager shall hire, train and supervise all F&B Department
personnel. Such responsibilities shall be carried out in consultation with the
Human Resources Director for the Hotel and in accordance with the personnel
policies and procedures established for the Hotel by Hotel Manager. All F&B
Department employees will continue to be employees of Owner, except for the Food
and Beverage Director and Executive Chef (collectively, the "Food Manager
Employees"), who will be employees of Food Manager.
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All salary and related benefits for F&B Department employees, including the Food
Manager Employees (and including relocation costs for the Food Manager Employees
in accordance with Hotel Manager's relocation policy) shall be paid for by the
Hotel as an operating expense of the F&B Department, subject to Hotel Manager's
approval of the budget therefor, which approval shall not be unreasonably
withheld or delayed. All training and supervision of employees, and other
employment-related matters, including (without limitation) salaries, wages and
benefit structure, and hiring and firing decisions, for the Food Manager
Employees as well as the other F&B Department personnel, shall be subject to
Hotel Manager's approval, excepting only that Food Manager will have the right
to fire the Food Manager Employees without the approval of Hotel Manager. Hotel
Manager, however, will also have the right to direct Food Manager (i) to fire
any F&B Department personnel who are employees of Hotel Manager, and (ii) to
terminate the employment at the Hotel of any Food Manager Employees. All F&B
Department personnel, including the Food Manager Employees, will be subject to
Hotel Manager's personnel policies, procedures and disciplinary rules. Such
policies, procedures and disciplinary rules shall be applied by Hotel Manager on
a non-discriminatory basis to all Hotel employees, including Food Manager
Employees and other F&B Department personnel. Without the consent of Food
Manager, Hotel Manager will not itself hire any Food Manager Employee to work at
the Hotel or at any other hotel managed by Hotel Manager (or any affiliate
thereof) for a period of twelve
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(12) months after such Food Manager Employee ceases to work for Food Manager at
the Hotel. Although Food Manager shall supervise all F&B Department personnel,
it is agreed that the catering sales staff (Director of Catering, Catering Sales
Managers, etc.) will continue to be directed by Hotel Manager's sales
department, but as an expense charged to the F&B Department, in order to ensure
optimalization of catering/meeting space utilization; bookings of the catering
sales staff will be credited to the F&B Department.
(c) Food Manager shall, subject to the applicable Yearly Budget and
to receiving the prior approval of Hotel Manager, establish formulation and
pricing of all menus and food offerings, and advertising, marketing and
promotional programs, for the House F&B Operations as well as the Trade Name
Operations. Hotel Manager will not unreasonably withhold its consent to the
foregoing with respect to the Trade Name Operations, provided that, as to
pricing, Food Manager shall (from time to time, upon request by Hotel Manager)
furnish to Hotel Manager a survey of pricing for comparable restaurant and
lounge operations in Chicago. As to House F&B Operations, Hotel Manager may
condition its approval upon conformity to Hotel Manager's chain-wide standards
or other generally established practices of Hotel Manager for similar quality
hotels.
(d) Without limiting the provisions of Article 15.7 hereof, Food
Manager shall not have any authority whatsoever to
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make any commitment or enter into any agreement for, or on behalf of, or
otherwise bind, Owner or Hotel Manager, except that purchase orders made by Food
Manager in accordance with Article 1.2(a) above shall be binding on Owner.
1.3 Permits. Hotel Manager shall, as an expense of the F&B Department,
obtain and keep in full force and effect all necessary licenses and permits,
including liquor, bar, restaurant, sign and hotel licenses, as may be required
for the operation of the F&B Department. Food Manager shall take, or cause NYRG
to take, all necessary actions to register and protect the use of the Trade
Names (as hereinafter defined) at the Hotel. All operating licenses and permits
are to be in effect at the Commencement Date, and (subject to the requirements
of local law) shall be in the name of Owner and Hotel Manager jointly. Food
Manager undertakes to comply with any conditions set out in any such licenses
and permits and at all times to operate and manage the F&B Department in
accordance with such conditions, all applicable governmental health and safety
regulations and any other legal requirements, all at Owner's expense, subject to
the limitations regarding Permissible Costs set forth in Article 4.3 below. (If
the cost of compliance with a particular governmental requirement is not
specifically provided for in the applicable Yearly Budget, such cost shall be
subject to the approval of Owner and Hotel Manager, which approval shall not be
unreasonably withheld or delayed.)
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1.4 Hours of Operation, Etc. Notwithstanding anything to the contrary
contained herein, Hotel Manager shall establish (and may change from time to
time) the hours of availability for room service as well as other F&B Department
related services at the Hotel, except that Food Manager shall establish (and may
change from time to time) the hours of operation for the Trade Name Operations,
subject to Hotel Manager's prior approval thereof. Hotel Manager shall also have
exclusive authority to book reservations at the Hotel for use of Hotel banquet
rooms and meeting facilities.
1.5 Comp Policy. Food Manager will provide complimentary and/or discounted
(i) food and beverage services and (ii) banquet, function and meeting facilities
in accordance with policies therefor to be promulgated by Hotel Manager from
time to time.
1.6 Owner's Property. All furniture, furnishings and operating equipment
of the F&B Department (including, but not limited to, items of decor, kitchen
equipment, equipment relating to bars, room service and banquet services as well
as chinaware, glassware, linens, silverware, utensils, uniforms and all similar
items) and all operating supplies (including, but not limited to, inventories of
food and beverages and other consumable items such as soap, cleaning materials,
matches and all similar items) shall be and remain the property of Owner.
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ARTICLE 2
TERM
2.1 Commencement Date. The Commencement Date of the term hereunder was
October 24, 1994, the date that Food Manager reopened the Hotel lounge to the
public following substantial completion of the Renovation (as hereinafter
defined) of such facility. As used herein, (a) the "Full Commencement Date"
shall mean January 1, 1995, and (b) the "Initial Period" shall mean the period
from the Commencement Date to the Full Commencement Date.
2.2 Term.
(a) Unless sooner terminated as hereinafter provided, this Agreement
shall expire on the earlier of (i) December 31, 2004 or (ii) the termination of
the Hotel Management Agreement. (The expiration date of the Hotel Management
Agreement is December 31, 2010.)
(b) As used in this Agreement, a "Year" shall mean and refer to the
calendar year commencing on the Full Commencement Date and each successive
calendar year thereafter. Accordingly, the first Year shall end December 31,
1995, the second Year shall end December 31, 1996, and so on.
2.3 Hotel Manager's Special Termination Rights. Hotel
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ARTICLE 3
OPERATIONAL STANDARDS
3.1 Operational Standards. Hotel Manager and Food Manager recognize that
an essential element of the success and reputation of the Hotel is the
satisfaction of its guests and customers with the management, maintenance,
quality and service to be provided by Food Manager with respect to the Trade
Name Operations and the House F&B Operations. Food Manager agrees that during
the term of this Agreement it will operate the Trade Name Operations in a
first-class manner commensurate with the standards of operations currently
practiced at the Park Avenue Cafe in New York City (the "New York Cafe") and
that the concept and decor for the restaurant and lounge at the Hotel will be
substantially the same as that presently established for the New York Cafe. Food
Manager further agrees to operate the House F&B Operations in accordance with
Hotel Manager's chain-wide standards and generally established practices
therefor for similar quality hotels. Hotel Manager shall cooperate with Food
Manager throughout the term of this Agreement to the end that Food Manager shall
be able to carry out its responsibilities in accordance with the foregoing
operational standards (the "Operational Standards").
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ARTICLE 4
FISCAL MATTERS
4.1 Accounting Matters and Fiscal Periods.
(a) The books and records for the Trade Name Operations, as well as
the House F&B Operations, will be kept by Hotel Manager in accordance with the
Uniform System of Accounts for Hotels as amended from time to time. Such books
and records shall be maintained by Hotel Manager either at the Hotel or at the
regional accounting office of Hotel Manager which serves the Hotel. Hotel
Manager will continue to provide accounting services for payroll, capital
purchases, and profit and loss/operating statement generation. The cost of
accounting services will not be a deduction in computing Departmental Profits
(as hereinafter defined).
(b) Food Manager may, within six (6) months after receipt of
year-end statistics and financial reports from Hotel Manager, and upon no less
than fifteen (15) days notice to Hotel Manager and Owner, at Food Manager's
expense, conduct an audit of the books and records of Hotel Manager pertaining
to Total F&B Department Revenue, Departmental Profits (as hereinafter defined),
Gross Operating Profit (as hereinafter defined) and any other matters relevant
to the operating results of the F&B Department and
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the calculation of Food Manager's compensation hereunder. In making such audit,
Food Manager shall have the right to examine Hotel Manager's records only for
the Year just ended. If an audit or examination by Food Manager shall show that
Food Manager's compensation for the period covered by the audit has been
overpaid, the excess shall be applied to any amounts then due to Food Manager by
Hotel Manager and the balance, if any, shall promptly be refunded by Food
Manager to Hotel Manager. If an audit or an examination by Food Manager shall
show that Food Manager's compensation for the period covered by the audit has
been underpaid, Hotel Manager shall promptly pay to Food Manager the amount of
the difference between the amount previously paid and the correct amount due.
4.2 Yearly Budgets.
(a) The approved operating budget for the F&B Department for 1995
(the "1995 Yearly Budget") is attached hereto and made a part hereof as Exhibit
6.
(b) On or before September 1, 1995, and on or before September 1 of
each year thereafter, Food Manager will propose to Hotel Manager an annual
budget (the "Yearly Budget") for the F&B Department for the upcoming calendar
year. During the months of September and October, Hotel Manager and Food Manager
will consult with each other to review and revise Food Manager's submission in
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order to develop a proposed Yearly Budget for the F&B Department which is
mutually satisfactory for submission on or before November 1 to Owner for its
approval as part of the annual budgeting process for the entire Hotel under the
Hotel Management Agreement. In the event that Food Manager and Hotel Manager,
despite using good faith efforts to do so, are unable to reach agreement on a
mutually satisfactory Yearly Budget for the F&B Department by November 1 of any
year, on such date, each of Food Manager and Hotel Manager shall submit a
proposed F&B Department Yearly Budget to Owner for its approval. In such event,
or in the event that Owner rejects the proposed Yearly Budget for the F&B
Department jointly developed by Food Manager and Hotel Manager as aforesaid,
then Owner, Hotel Manager and Food Manager shall cooperate with each other to
develop a mutually satisfactory Yearly Budget for the F&B Department. If Hotel
Manager and Food Manager each submits its own F&B Department Yearly Budget to
Owner as aforesaid, then Owner may approve either of such budgets or disapprove
them both. In the event that Owner does not approve a Yearly Budget for the F&B
Department prior to the commencement of the applicable calendar year, the
aggregate amount of the Yearly Budget for the F&B Department for the preceding
calendar year (exclusive of the F&B Department FF&E Budget, which shall be
governed by the provisions of Article 4.2(c) below, and exclusive of the
contingency fund, which shall be governed by Article 4.2(f) below) shall be
increased by an amount equal to the percentage increase in the Index (as
hereinafter defined) during such preceding calendar year, and as so increased,
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shall be deemed to be the Yearly Budget for the F&B Department in effect until
such time as a new Yearly Budget for the F&B Department has been approved by
Owner. As used herein, the "Index" shall mean the Consumer Price Index for Urban
Wage Earners and Clerical Workers -- Series A (1982-84=100) as published by the
United States Bureau of Labor Statistics for the City of Chicago, Illinois; if
the compilation and/or publication of such index shall be discontinued or
transferred to any other governmental department or bureau or agency, Hotel
Manager shall fix an alternate index or method to implement the intention of the
preceding sentence.
(c) Any renovations or changes in decor or other expenditures for
repair and replacement of furniture, fixtures and equipment ("FF&E") with
respect to the F&B Department proposed to be made by Food Manager shall be
subject to the prior approval of Hotel Manager and Owner, and shall be included
in the Yearly Budget as the "F&B Department FF&E Budget." Food Manager, Hotel
Manager and Owner recognize the necessity of replacement of FF&E due to age,
wear, condition or obsolescence. Hotel Manager and Owner agree to authorize the
expenditure of such amounts therefor as shall be required in the normal and
ordinary course of operation of the F&B Department, so as to operate the F&B
Department in accordance with the Operational Standards.
(d) References in this Article 4.2 and elsewhere in this Agreement
to the Yearly Budget for the F&B Department (and phrases
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of similar import) shall be deemed to include the portion of the Marketing
budget for the Hotel which is fairly allocable to the F&B Department. The
parties agree that for 1995, such portion is $150,000. For each year thereafter,
as part of the Yearly Budget process, the parties shall establish the portion of
the Hotel Marketing budget which is fairly allocable to the F&B Department, and
Food Manager shall direct, in accordance with the Yearly Budget, the advertising
for the F&B Department.
(e) Owner and Hotel Manager acknowledge and agree that there may
occur from time to time unpredicted significant changes, variables or events
affecting the operation of the F&B Department, including unanticipated changes
in Hotel occupancy rates, market conditions, or additional unanticipated items
of income or expense. In such event, Food Manager may request variance(s) from
the approved Yearly Budget which are reasonable and necessary to continue to
operate the F&B Department in accordance with the Operational Standards. Any
such request by Food Manager shall be submitted to Hotel Manager and Owner in
writing with an explanation thereof and shall be accompanied by supporting
information for the request. Hotel Manager's and Owner's approval of such a
request shall not be unreasonably withheld or delayed. References in this
Agreement to the approved Yearly Budget shall be deemed to incorporate any
revisions thereto made pursuant to this paragraph (e) and approved by Hotel
Manager and Owner as aforesaid.
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(f) Each Yearly Budget will contain a contingency fund in the amount
of $25,000 (or such other amount as may hereafter be approved by Owner, Hotel
Manager and Food Manager on an annual basis), which shall be available to Food
Manager for items which are otherwise unbudgeted (e.g., for spontaneous
purchases of artifacts for the restaurant and cafe); provided, however, that
all expenditures under this paragraph (f) shall be subject to the prior approval
of the Food and Beverage Director and the Hotel General Manager.
(g) Food Manager shall operate the F&B Department in accordance with
the Yearly Budget therefor as approved by Hotel Manager and Owner. Food Manager
shall not, in the performance of its duties as provided in this Agreement, be
entitled to reimbursement for any expenditure if and to the extent that such
expenditure is not provided for in the then applicable Yearly Budget or
otherwise approved by Hotel Manager in advance, which approval shall not be
unreasonably withheld.
4.3 Payment of F&B Department Costs. Subject to and in accordance
with the provisions of this Agreement, all amounts on account of direct labor
and operating costs (including, without limitation, all salary and related
benefits for the Food Manager Employees, but specifically excluding the
Renovation Cost, which is covered separately in Article 8) reasonably incurred
during the term of this Agreement in connection with the operation of the F&B
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Department in accordance with the terms of this Agreement, shall be paid for out
of the Operating Account by Hotel Manager pursuant to invoices therefor
submitted by the Food Manager to Hotel Manager, as provided in Article 7.1
hereof, but only to the extent that such amounts are provided for in, and are
incurred in accordance with, the then applicable Yearly Budget, or are otherwise
approved in writing in advance by Hotel Manager. (Such amounts are herein
collectively referred to as "Permissible Costs.") In no event shall Permissible
Costs include any amount on account of (i) any of Food Manager's internal costs
of operation, bookkeeping or overhead, (ii) any taxes imposed upon, or measured
by the gross or net income of, Food Manager (other than sales taxes upon F&B
Department revenues and employment-related taxes imposed upon the Food Manager
Employees at the Hotel), or (iii) any direct or indirect compensation, benefits
or other amounts which may be paid or payable by Food Manager to any person or
entity employed or engaged by Food Manager except and to the extent that such
amounts for any such person (including the Food Manager Employees) are provided
for in the then applicable Yearly Budget.
ARTICLE 5
COMPENSATION
In consideration of the services to be performed by Food Manager under
this Agreement, Food Manager shall be paid the Base Fee, the Departmental Profit
Incentive Fee and the GOP Incentive Fee (each as hereinafter defined and
collectively, the "Fees") from
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and after the Full Commencement Date. No Fees shall be payable to Food Manager
in respect of the Initial Period. Examples of the calculation and payment of the
Fees are attached hereto and made a part hereof as Exhibit 4.
5.1 Base Fee.
(a) The "Base Fee" shall mean and refer to a fee equal to one and
one-half percent (1 1/2%) of Total F&B Department Revenue (as hereinafter
defined) with respect to each month during the term of this Agreement from and
after the Full Commencement Date. The Base Fee for the immediately preceding
month shall be paid monthly from the Operating Account on or before the
fifteenth (15th) day of each succeeding month. There shall be no Base Fee in
respect of the Initial Period.
(b) The term "Total F&B Department Revenue" shall mean, with respect
to any period, that portion of Total Hotel Sales (as defined in Exhibit 3)
derived from (or, if Total Hotel Sales include the proceeds of business
interruption insurance or the like, the portion of such insurance proceeds
fairly attributable to) the sale of food and beverages by the F&B Department
(including, without limitation, all catering revenues) and rental and other
miscellaneous income from the Hotel's function room(s), including audio/visual
rentals. Total F&B Department Revenue shall be determined on an accrual basis
and in accordance with the
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Uniform System of Accounts for Hotels, as the same may be amended from time to
time (the "Uniform System of Accounts"), or in accordance with generally
accepted accounting principles, consistently applied.
5.2 Departmental Profit Incentive Fee.
(a) In respect of 1995, the "Departmental Profit Incentive Fee"
shall mean and refer to a fee equal to fifteen percent (15%) of Excess
Departmental Profits (as hereinafter defined). In respect of each Year
thereafter, the Departmental Profit Incentive Fee shall mean and refer to a fee
equal to seventeen and one-half percent (17 1/2%) of Excess Departmental Profits
for such Year. The Departmental Profit Incentive Fee shall be computed quarterly
(i.e., as of the end of the third, sixth, ninth and last month of each Year,
with Threshold Departmental Profits (as hereinafter defined) appropriately
prorated as of the end of each quarterly period), based upon cumulative Excess
Departmental Profits, if any, for the Year to date, and payment (net of previous
payments thereof for such Year) shall be made to Food Manager (or repayment, in
the event of a decrease in cumulative Excess Departmental Profits in any
quarter, shall be made by Food Manager) quarterly, on the twentieth (20th) day
of the month next following the end of each calendar quarter, with annual
adjustments, if applicable, upon final determination of Departmental Profits for
the Year in question. The Departmental
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Profit Incentive Fee shall be computed separately for each Year, and there shall
be no Departmental Profit Incentive Fee in respect of the Initial Period.
(b) The term "Excess Departmental Profits" shall mean, in respect of
each Year, the excess, if any, of (i) Departmental Profits (as hereinafter
defined) over (ii) Threshold Departmental Profits for such Year. "Threshold
Departmental Profits" shall mean (i) for 1995, $1,060,164 (being 105% of
Departmental Profits for calendar year 1993 (January 1, 1993 through December
31, 1993) which were $1,009,680); (ii) for 1996, $1,113,172 (being 105% of
Threshold Departmental Profits for 1995); (iii) for 1997, $1,168,831 (being
105% of Threshold Departmental Profits for 1996); and (iv) for 1998 and each
Year thereafter, $1,227,273 (being 105% of Threshold Departmental Profits for
1997).
(c) "Departmental Profits" shall mean, in respect of each Year, the
profits attributable to the F&B Department calculated in accordance with Exhibit
2 attached hereto and made a part hereof. Departmental Profits shall be
determined on an accrual basis and in accordance with the Uniform System of
Accounts or in accordance with generally accepted accounting principles,
consistently applied. Departmental Profits for each Year shall be determined in
a manner consistent with the calculation of Departmental Profits for 1993,
excepting only for the additional deductions provided for in paragraphs (d) and
(e) below.
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(d) In calculating Departmental Profits for each Year, there shall
be a deduction for the excess ("Advertising and Promotional Excess"), if any, of
(i) the advertising and promotional costs actually incurred by the Hotel in
respect of the F&B Department for such Year (which costs shall be included in
the Yearly Budget or otherwise expressly approved by Hotel Manager), over (ii)
$30,000.00 (the "Advertising and Promotional Threshold Amount") (being the
historical advertising and promotion expenditure level for the Hotel fairly
allocable to the F&B Department, which have not been, and will not be, charged
against Departmental Profits). In no event will any advertising or promotional
expenditures in respect of the Hotel, other than the Advertising and Promotional
Excess, be charged against Departmental Profits.
(e) For the first seven (7) Years (i.e., through December 31, 2001),
the calculation of Departmental Profits shall also include a deduction for
Annual Renovation Amortization (as hereinafter defined).
5.3 GOP Incentive Fee.
(a) In respect of 1995, the "GOP Incentive Fee" shall mean and refer
to a fee equal to two and one-half percent (2 1/2%) of Excess GOP (as
hereinafter defined). In respect of each Year thereafter, the GOP Incentive Fee
shall mean and refer to a fee
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equal to five percent (5%) of Excess GOP. The GOP Incentive Fee shall be
computed quarterly (i.e., as of the end of the third, sixth, ninth and last
month of each Year, with Threshold GOP (as hereinafter defined) appropriately
prorated as of the end of each quarterly period), based upon cumulative Excess
GOP, if any, for the Year to date, and payment (net of previous payments thereof
for such Year) shall be made to Food Manager (or repayment, in the event of a
decrease in cumulative Excess GOP in any quarter, shall be made by Food Manager)
quarterly, on the twentieth (20th) day of the month next following the end of
each calendar quarter, with annual adjustments, if applicable, upon final
determination of Gross Operating Profit for the Year in question. The GOP
Incentive Fee shall be computed separately for each Year, and there shall be no
GOP Incentive Fee in respect of the Initial Period.
(b) The term "Excess GOP" shall mean, in respect of each Year, the
excess, if any, of (i) Gross Operating Profit (as hereinafter defined) over (ii)
Threshold GOP for such Year. "Threshold GOP" shall mean (i) for 1995, $4,275,752
(being 105% of Gross Operating Profit for calendar year 1993 (January 1, 1993
through December 31, 1993), which was $4,072,145); (ii) for 1996, $4,489,540
(being 105% of Threshold GOP for 1995); (iii) for 1997, $4,714,017 (being 105%
of Threshold GOP for 1996); and (iv) for 1998 and each Year thereafter,
$4,949,718 (being 105% of Threshold GOP for 1997).
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(c) "Gross Operating Profit" shall mean, in respect of each Year,
the amount, if any, by which Total Hotel Sales (as defined in Exhibit 3) for
such Year exceed Operating Costs (as defined in Exhibit 3) for such Year. For
purposes of clarification, Gross Operating Profit shall be calculated in
accordance with Exhibit 3 attached hereto and made a part hereof. Gross
Operating Profit shall be determined on an accrual basis and in accordance with
the Uniform System of Accounts or in accordance with generally accepted
accounting principles, consistently applied. Gross Operating Profit for each
Year shall be determined in a manner consistent with the calculation of Gross
Operating Profit for 1993, excepting only for the deduction of Annual Renovation
Amortization provided for in paragraph (d) below.
(d) For the first seven (7) Years, the calculation of Gross
Operating Profit shall include a deduction for Annual Renovation Amortization.
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ARTICLE 6
USE OF TRADENAMES
6.1 Use of Name.
(a) During the term of this Agreement, the second floor restaurant
shall be known and designated as a "Park Avenue Cafe" and the first floor bistro
shall be known and designated as "Mrs. Park's Tavern," unless and until parties
hereto agree to the use of some other name(s). As used herein, the term "Food
Manager Tradenames" shall mean and include (i) the name "Park Avenue Cafe," (ii)
the name "Mrs. Park's Tavern," and (iii) any other name, tradename, logo,
trademark or service mark which may now or hereafter be used in connection with
the Hotel restaurant and bistro, and any name, tradename, logo, trademark or
service mark similar thereto, other than those owned by Owner or Hotel Manager.
(b) It is acknowledged that the Food Manager Tradenames are
registered service marks of the Guarantor and/or Food Manager (as the case may
be) and that the Food Manager Tradenames are and will continue to be the sole
property of the Guarantor and/or Food Manager. Provided, however, Food Manager
hereby consents, and to the extent necessary shall cause the Guarantor to
provide its consent, to the terms and conditions of this Agreement as the same
relate to the use of the Food Manager Tradenames by Hotel Manager and Owner in
connection with the Hotel. It is acknowledged that
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the failure of the Hotel to enjoy the continued use of the Food Manager
Tradenames for any reason other than Hotel Manager's or Owner's default
hereunder shall constitute an Event of Default by Food Manager under Article
10.1(a). It is further acknowledged and agreed that Hotel Manager and Owner
shall have the right to use the Food Manager Tradenames only in connection with
the Hotel and associated chain-wide advertising (as more particularly provided
in Article 6.2 below) and otherwise in accordance with the terms of this
Agreement.
(c) Food Manager agrees that during the term of this Agreement (and
during any Post-Termination Licensing Period, as such term is hereinafter
defined, and during the period referred to in Article 12.1(c), if applicable)
the Food Manager Tradenames shall be used in the Metropolitan Chicago area (as
more particularly described in Exhibit 5) exclusively in connection with the
Hotel, and neither Food Manager, the Guarantor nor any other NYRG affiliate
shall use, or license, or otherwise permit anyone else to use, the Food Manager
Tradenames in connection with any other restaurant (or other food and beverage
operation) in the Metropolitan Chicago area. It is agreed that the use of the
Food Manager Tradenames by the Hotel shall be non-exclusive, and, except within
the Metropolitan Chicago area, Food Manager, the Guarantor and NYRG (and their
respective affiliates) may use, and license others to use, the Food Manager
Tradenames for any purpose whatsoever, including, without limitation, in
connection with other
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businesses outside of the Metropolitan Chicago area. Further, nothing in this
Agreement shall restrict NYRG, the Guarantor, Food Manager or any of their
respective affiliates from (i) opening or operating any restaurant in the
Metropolitan Chicago area under a name other than a Food Manager Tradename, (ii)
opening or operating additional restaurants under the Food Manager Tradenames
outside of the Metropolitan Chicago area without the participation of Hotel
Manager or Owner, or (iii) advertising within the Metropolitan Chicago area for
restaurants operated under the Food Manager Tradenames outside of the
Metropolitan Chicago area. Provided, however, that nothing herein shall permit
NYRG, the Guarantor, Food Manager or any of their affiliates from using, or
licensing others to use, whether inside or outside the Metropolitan Chicago
area, any tradename which is used exclusively at the Hotel (other than the Food
Manager Tradenames themselves, to the extent permitted above), and any such
tradename used exclusively at the Hotel (other than the Food Manager Tradenames
as aforesaid) shall at all times be and remain the sole and exclusive property
of Hotel Manager or Owner (as the case may be). In addition, it is expressly
understood and agreed that all of Hotel Manager's tradenames (including, without
limitation, the names "Guest Quarters," "Doubletree" and "Doubletree Guest
Suites") shall at all times be and remain the sole and exclusive property of
Hotel Manager.
6.2 Advertising Materials. During the term of this Agreement (including
any Post-Termination Licensing Period and during the
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period referred to in Article l2.1(c), if applicable), Owner and Hotel Manager
shall have the right to utilize the Food Manager Tradenames in advertising
materials and other marketing efforts in connection with the Hotel (including,
without limitation, in Hotel Manager's chain-wide advertising and promotional
materials in connection with the Hotel). Any such advertising or promotional
materials which refer to the Food Manager Tradenames, or which otherwise refer
to restaurant operations conducted by the Guarantor, Food Manager or other NYRG
affiliates, other than listings by name of Hotel facilities in Hotel Manager's
brochures and the like, shall be subject to the prior approval of Food Manager,
which approval shall not be unreasonably withheld or delayed. During the term of
this Agreement (including any Post-Termination Licensing Period and during the
period referred to in Article 12.1(c), if applicable), NYRG, the Guarantor and
Food Manager (and their respective affiliates) shall have the right to advertise
the Hotel's restaurant and bistro in cooperative "multi-restaurant"
advertisements, provided that any such advertising shall be subject to the prior
approval of Hotel Manager, which approval shall not be unreasonably withheld or
delayed.
6.3 Rights Upon Termination.
(a) Subject to the provisions of subparagraphs (b) and (c) of this
Article 6.3 and of Article 12.1(c), upon the expiration of the term of this
Agreement or upon any sooner termination of
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this Agreement for any reason whatsoever, the Food Manager Tradenames shall not
thereafter be used in connection with the F&B Department or otherwise in
connection with the Hotel. In addition, at the request of Food Manager and at
Food Manager's expense, upon termination of this Agreement (or, if applicable,
following the end of the Post-Termination Licensing Period or, if applicable,
following the end of the period referred to in Article 12.1(c)), items of decor
in the Hotel restaurant and cafe bearing the distinctive and identifying colors
associated with the Food Manager Tradenames will be changed or replaced by Hotel
Manager, provided that (i) Owner approves such changes and/or replacements,
which approval shall not be unreasonably withheld, and (ii) Food Manager
deposits with Hotel Manager in advance sufficient funds to cover the cost of
such changes and/or replacements.
(b) In the event of a termination of this Agreement by reason of an
Event of Default by Food Manager under Article 10, or any termination pursuant
to Articles 2.3 or 2.4 hereof, Hotel Manager and Owner, at their sole
discretion, may elect to continue to retain the right to use the Food Manager
Tradenames (or any of them) for a period (the "Post-Termination Licensing
Period") of up to nine (9) months after the effective termination date for a
license fee of five percent (5%) of the portion of Total Hotel Sales generated
by the Trade Name Operations during such period. The provisions of this Article
6.3(b) shall continue in full force and effect during the Post-Termination
Licensing Period.
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(c) Notwithstanding anything to the contrary set forth herein,
following the termination of this Agreement (or, if applicable, following the
end of the Post-Termination Licensing Period or, if applicable, following the
end of the period referred to in Article 12.1(c)), Hotel Manager and Owner shall
have the right to continue to use disposable items and operating supplies
setting forth or otherwise containing the Food Manager Tradenames which are in
Hotel Manager's or Owner's possession or irrevocably ordered at the time of any
termination of this Agreement (including at the expiration of any
Post-Termination Licensing Period or of the period referred to in Article
12.1(c), if applicable) until such items are depleted or have passed their
useful lives. Provided, however, that Food Manager shall have the absolute right
to purchase any such disposable items and supplies upon notice to Hotel Manager
and Owner for a price equal to their original cost to the Hotel. The provisions
of this Article 6.3(c) shall survive any termination of this Agreement.
(d) Following the later of (i) the termination of this Agreement or
(ii), if applicable, the end of the Post-Termination Licensing Period or (iii),
if applicable, the end of the period referred to in Article 12.1(c), the
restrictions on the use of the Food Manager's Tradenames in the Metropolitan
Chicago area set forth in Article 6.1(c) above shall terminate, and Food
Manager, the Guarantor and/or NYRG (and their respective affiliates) shall have
the right to use, or license, or otherwise permit anyone else
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to use, the Food Manager Tradenames in connection with any other restaurant (or
other food and beverage operation) within (as well as outside of) the
Metropolitan Chicago area, without the consent or participation of Hotel Manager
or Owner.
ARTICLE 7
OPERATING ACCOUNT
7.1 Operating Account.
(a) All cash revenues derived from the Trade Name Operations and the
House F&B Operations shall be deposited in the Hotel bank account (the
"Operating Account") opened by Hotel Manager in the name of Owner. Hotel Manager
shall have absolute control of the Operating Accounting and checks or other
items of withdrawal shall be signed only by the designees of Hotel Manager,
acting singly or jointly.
(b) Hotel Manager from time to time during the term of this
Agreement shall pay from the Operating Account funds required to pay Permissible
Costs as and when such Permissible Costs are incurred in accordance with this
Agreement, which funds shall be paid within thirty (30) days after payment of
such funds is requested in writing by Food Manager or, if later, when payment is
otherwise due to third parties. Such written requests ("Requisitions") shall be
in such form and shall include such
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supporting documentation as Hotel Manager may reasonably require. In addition,
purchase orders shall be subject to the authorization and other requirements set
forth in paragraph (a) of Article 1.2. Notwithstanding anything to the contrary
contained in this Agreement, Hotel Manager shall have no obligation to advance
Permissible Costs or any of the Fees to Food Manager unless there are sufficient
funds in the Operating Account to make such payments, it being understood and
agreed that it shall be Owner's responsibility to provide sufficient funds to
the Operating Account for such purposes as set forth in Article 14 below.
ARTICLE 8
RENOVATION
8.1 Restaurant Renovation. The Hotel restaurant and lounge have been
renovated (the "Renovation") pursuant to plans and specifications which were
jointly developed by Hotel Manager and Food Manager, and approved by Owner. As
of the Execution Date, Food Manager has funded ten percent (10%) of the cost of
the Renovation (the "Food Manager's Renovation Contribution"). The balance of
the cost of the Renovation has been funded by Owner ("Owner's Renovation
Contribution").
8.2 Annual Renovation Amortization and Payments. The total cost of the
Renovation (the "Renovation Cost," which is $2,800,000), together with a fifteen
percent (15%) annual return on
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the outstanding balance thereof from time to time, will be amortized in seven
(7) equal annual installments ("Annual Renovation Amortization") of principal
and return thereon payable to Food Manager and credited to Owner, respectively,
in arrears on or before January 31 following the end of each of the first seven
(7) Years, on a pro rata basis, in the proportions which the Food Manager
Renovation Contribution and the Owner's Renovation Contribution, respectively,
bear to the total Renovation Cost. Accordingly, the Annual Renovation
Amortization will be $673,009 each year, Food Manager's proportionate share
thereof will be $67,301, and Owner's proportionate share thereof will be
$605,708. Provided, however, in the event that this Agreement is terminated for
any reason other than Hotel Manager's default hereunder prior to the end of the
seventh (7th) Year (i.e., prior to December 31, 2001), Food Manager's right to
receive its share of Annual Renovation Amortization will also terminate, except
(i) as otherwise provided in Article 2.5(a) above, and (ii) in any event Food
Manager will be entitled to receive a pro rata portion of its share of Annual
Renovation Amortization in respect of the Year in which this Agreement
terminates, pro rated to the effective termination date.
8.3 Subsequent Adjustment. Notwithstanding anything to the contrary
contained in the foregoing, the parties acknowledge that the $2,800,000
Renovation Cost set forth above is an estimate as of the date hereof and will be
subject to subsequent adjustment
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based upon a final accounting of the Renovation Cost to be made by Owner, Hotel
Manager and Food Manager. When the Renovation Cost is finally determined as
aforesaid, Food Manager and Owner will each contribute their proportionate share
(10% and 90%, respectively) of such cost in excess of $2,800,000, whereupon the
Renovation Cost, the Annual Renovation Amortization, and Food Manager's and
Owner's proportionate shares thereof will be appropriately adjusted to reflect
the actual total cost of the Renovation.
ARTICLE 9
INDEMNITY AND INSURANCE
9.1 Indemnity by Owner. Except to the extent caused by the negligence or
other wrongful act or omission of Food Manager or Food Manager's breach of this
Agreement, Owner agrees to defend, indemnify and hold harmless Food Manager (its
officers, directors, partners and employees) against and from any uninsured
liability for injury to persons or damage to property, either in and about the
Hotel or elsewhere, and for employment-related claims made by F&B Department
employees, arising in connection with the performance of this Agreement by Food
Manager, its agents, employees or independent contractors, provided that such
performance shall have been within the scope of Food Manager's authority under
this Agreement or shall have been pursuant to the express instructions of Owner,
Hotel Manager or any other duly authorized representative of Owner. For purposes
of this Article
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9.1, the parties agree that Food Manager shall be deemed to be uninsured with
respect to the deductible under any applicable insurance coverage of Owner, and
(if Owner is otherwise responsible to indemnify Food Manager under this Article
9.1 with respect to the liability in question) Owner shall indemnify Food
Manager (its officers, directors, partners and employees) for the amount of such
deductible. Food Manager agrees to cooperate with Owner in all reasonable ways
in carrying out Owner's responsibility hereunder and to notify Owner of all
losses of which Food Manager has knowledge.
9.2 Indemnity by Food Manager. Except to the extent caused by the
negligence or other wrongful act or omission of Owner or Owner's breach of this
Agreement, Food Manager shall defend, indemnify and hold harmless Owner (its
officers, directors, partners and employees) against and from, and shall
reimburse Owner (its officers, directors, partners and employees) for, all
uninsured claims (including, without limitation, employment-related claims made
by Food Manager Employees), damages, expenses (including, without limitation,
attorneys' fees) and liability of Owner (its officers, directors, partners or
employees) arising from (a) any breach by Food Manager of the terms of this
Agreement, (b) any negligent or other wrongful act or omission of Food Manager
or any of its employees or agents in the performance of Food Manager's duties
hereunder, or (c) any unauthorized acts of Food Manager or any of its employees
or agents. The foregoing indemnity provisions
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in favor of Owner shall apply with equal force to the benefit of Hotel Manager
and any other duly authorized representative(s) of Owner (and their respective
officers, directors, partners and employees). For purposes of this Article 9.2,
the parties agree that Owner, Hotel Manager and Owner's other representatives
shall be deemed to be insured with respect to the deductible under any
applicable insurance coverage of Owner and with respect to any insurance which
Owner is required to maintain under Article 9.3 below but fails to maintain; and
Food Manager shall not be required to indemnify Owner, Hotel Manager or other
representatives of Owner with respect to the amount of such deductible, or with
respect to the amount of an uninsured claim which Owner was required but failed
to insure against as aforesaid, even if Food Manager is otherwise responsible to
indemnify Owner, Hotel Manager and Owner's other representatives under this
Article 9.2 with respect to the liability in question. Provided further,
however, in the case of property damage to the Hotel or its contents caused by
the gross negligence of Food Manager or its employees, the preceding sentence
shall not apply to a deductible of up to $10,000 per occurrence under the
Owner's property damage insurance for the Hotel, and Food Manager shall be
responsible for property damage to the Hotel and/or its contents caused by the
gross negligence of Food Manager or any of its employees up to the amount of
such deductible or $10,000, whichever is less.
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9.3 Insurance Requirements. (a) At all times during the term of this
Agreement, Owner shall procure and maintain, as an Operating Cost of the Hotel,
(i) broad form commercial general liability insurance (including, but not
limited to, bodily injury liability, property damage liability, personal injury
liability, advertising injury liability, product liability, completed operations
and blanket contractual liability insurance, and any and all other liability
coverages as would normally be obtained by prudent owners of similar hotel
properties, provided such coverages are available to Owner at commercially
reasonable rates) for the benefit of Owner, Hotel Manager, Food Manager and NYRG
(or any successor thereto), as named or additional named insureds, in an amount
not less than $25,000,000 in respect of any one occurrence with an aggregate
amount limit of at least $25,000,000, subject to such deductibles as Owner deems
appropriate, and (ii) liquor liability insurance naming Owner, Hotel Manager,
Food Manager and the Guarantor (or any successor thereto) as named or additional
named insureds with single-limit coverage of at least $25,000,000 for each
occurrence, and with an aggregate annual limit of at least $25,000,000, subject
to such deductibles as Owner deems appropriate. (The parties acknowledge and
agree that Owner shall be responsible for covering the amount of any such
deductible with respect to any such liability insurance, as more particularly
provided in Articles 9.1 and 9.2 above.) Owner and Food Manager shall each
procure and maintain, as an Operating Cost of the Hotel, workers' compensation
insurance and any other statutorily required
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insurance for their respective employees who are stationed at the Hotel (which,
in the case of Food Manager, are the Food Manager Employees) in the amount
required by applicable law.
(b) During the term of this Submanagement Agreement, Owner, at its
expense, shall procure and maintain upon the Hotel, all food and beverage
supplies at the Hotel, and all equipment, fixtures, motors, machinery,
furnishings and furniture installed and owned or leased by Owner and used in
connection with the Hotel, including all alterations, rebuildings, replacements
and additions thereto, so-called "all risk" property damage insurance in an
amount equal to the "Full Insurable Value" thereof (as hereinafter defined),
subject, at the option of Owner, to commercially reasonable deductibles, but in
any event in an amount not less than that required to avoid the operation and
effect of any co-insurance provisions in said policies. As used herein, the term
"Full Insurable Value" shall mean actual replacement cost (exclusive of the cost
of excavation, foundations and footings below the lowest basement floor).
Insurance policies written with no co-insurance clause will satisfy the
foregoing requirements to carry insurance in an amount equal to "Full Insurable
Value" as aforesaid. In addition, Owner shall procure and maintain, at its
expense, business interruption insurance providing coverage for a period of
business interruption of no less than one year, in an amount mutually
satisfactory to Hotel Manager and Owner.
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(c) All insurance provided for under this Article 9.3 shall be
effected by policies issued by insurance companies of good reputation and of
sound financial responsibility. Such insurance may be carried under blanket
policies covering the Hotel and other locations provided such policies otherwise
comply with the requirements of this Article 9.3. Certificates of such insurance
coverage shall be delivered by Owner to Food Manager from time to time upon
request. All such policies of insurance shall provide that such policies shall
not be cancelled or materially changed without at least thirty (30) days prior
written notice to Food Manager. Owner shall use all reasonable efforts to cause
any policy which it is responsible to obtain under Article 9.3(b) to provide
that the insurer shall not have any rights of subrogation with respect to any
claim which Owner may have or acquire against Food Manager.
ARTICLE 10
DEFAULT AND TERMINATION
10.1 Events of Default. It shall be an event of default hereunder (an
"Event of Default") if any one or more of the following events shall occur:
(a) If a party (the "Defaulting Party," which term for the purposes
of this Article 10 may include Owner, Hotel Manager or
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Food Manager) shall be in default of any of its obligations under this
Agreement;
(b) If a party (the "Defaulting Party") shall voluntarily or
involuntarily be dissolved (except that if a party is a partnership and is
dissolved solely by reason of the death, insanity, disappearance, bankruptcy or
lack of legal capacity of one or more of its general partners and its remaining
partners, within 60 days, elect, pursuant the partnership agreement of such
partnership, to continue such partnership's business, then such party shall not
be considered as "dissolved" for the purposes hereof); apply for or consent to
the appointment of a receiver, trustee or liquidator of all or a substantial
part of its assets; file a voluntary petition in bankruptcy or otherwise
voluntarily avail itself of any federal or state laws for the relief of debtors;
admit in writing its inability to pay its debts as they become due; make a
general assignment for the benefit of creditors; file a petition or an answer
seeking reorganization or arrangement with creditors or to take advantage of any
insolvency law or file an answer admitting the material allegations of any
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding; or if an order, judgement or decree shall be entered by any court of
competent jurisdiction, in the application of any one or more creditors of such
Defaulting Party adjudicating it a bankrupt or insolvent or approving a petition
seeking reorganization or appointing a receiver, trustee or liquidator of
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all or a substantial part of its assets, and such order, judgment or decree
shall become final.
(c) If any of the events specified under clause (b) above shall
occur with respect to the Guarantor, in which event Food Manager shall be the
Defaulting Party.
10.2 Termination.
(a) Upon the occurrence of any Event of Default under clause (a)
of Article 10.1, the Non--Defaulting Party (as hereinafter defined) shall
have the right (exercisable by giving notice to the Defaulting Party to
terminate this Agreement if the Defaulting Party fails to remedy such Event
of Default within ten (10) days after its receipt of notice to remedy if such
default relates to the payment of a sum of money and, in all other cases,
within thirty (30) days after its receipt of notice to remedy; provided that
if such Event of Default be of a non-monetary nature and if it cannot
reasonably be remedied within said thirty (30) day period, then such thirty
(30) day period shall be deemed to be extended for such additional period as
may reasonably be required to remedy the same if the Defaulting Party shall
promptly commence to remedy upon receipt of notice from the other party (the
"Non--Defaulting Party") and shall continue therewith with due diligence.
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(b) This Agreement shall terminate automatically, without need for
notice or further action, upon the occurrence of an Event of Default under
clauses (b) or (c) of Article 10.1, unless the Non-Defaulting Party otherwise
elects.
(c) In the event that Food Manager is the Defaulting Party, the
Non-Defaulting Party hereunder shall, for purposes of this Article 10.2, be
deemed to be Hotel Manager. In the event that Hotel Manager or Owner is the
Defaulting Party, the Non-Defaulting Party hereunder shall, for purposes of this
Article 10.2, be deemed to be Food Manager. It is further agreed that Hotel
Manager shall not have the right to terminate this Agreement due to an Event of
Default by Owner hereunder.
(d) The election to terminate this Agreement shall not be exclusive,
and the parties shall have, cumulatively, with or without termination, any and
all other rights and remedies which may be provided at law or in equity.
Provided, however, in no event shall Owner, Hotel Manager or Food Manager ever
be liable for consequential damages hereunder.
(e) Notwithstanding anything to the contrary contained in this
Article 10 or otherwise in this Agreement, (i) Owner shall not be liable to Food
Manager for any Event of Default by Hotel Manager hereunder and (ii) Hotel
Manager shall not be liable to Food Manager for any Event of Default by Owner
hereunder (including
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any failure by Owner to provide funds as required under Article 14 below). In
either case, Food Manager shall have the right to terminate this Agreement
pursuant to Article 10.2 (a) or 10.2 (b), as applicable, but shall have no
other recourse against the other non-defaulting party; however, Food Manager
shall have recourse against the Defaulting Party (Owner or Hotel Manager, as the
case may be) as provided in Article 10.2(d).
ARTICLE 11
APPLICABLE LAW
11.1 Scope. The interpretation, validity and performance of this Agreement
shall be governed by the laws of Illinois. In the event any court or appropriate
judicial authority shall hold or declare that the law of another jurisdiction is
applicable, this Agreement shall remain enforceable under the laws of that
jurisdiction. If any of the terms and provisions hereof shall be held invalid or
unenforceable for any reason, such invalidity or unenforceability shall in no
event affect any of the other terms or provisions hereof, all such other terms
and provisions to be valid and enforceable to the fullest extent permitted by
law.
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ARTICLE 12
SUCCESSORS AND ASSIGNS
12.1 Assignment by Food Manager.
(a) Food Manager shall not have the right to sell, assign, pledge or
otherwise transfer this Management Agreement or its rights and interests
hereunder, nor shall any beneficial ownership interest in Food Manager be sold,
assigned, pledged or otherwise transferred (each of the foregoing being
hereinafter sometimes called a "Food Manager Transfer"), without the prior
written consent of Hotel Manager, except in accordance with the provisions of
this Article 12. A Food Manager Transfer shall also be deemed to have occurred
if Food Manager ceases to be a Stillman Entity (as hereinafter defined).
(b) Provided, however, without the consent of, but subject to prior
notice to, Hotel Manager, (A) Food Manager shall have the right to assign this
Agreement to (i) any successor or assignee of Food Manager which may result from
a merger, consolidation or reorganization with, or sale or assignment to, any
corporation, individual, partnership or other entity which shall acquire all or
substantially all of NYRG's business, provided that, in the reasonable judgment
of Hotel Manager, the successor or assignee has (or the principals of such
successor or assignee have) a good reputation and financial resources and food
and beverage
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operating experience reasonable and commensurate with NYRG's at the time of
transfer, or (ii) to any entity which is more than twenty percent (20%)
beneficially owned, directly or indirectly, and controlled by Stillman (as
hereinafter defined) or members of his immediate family and of which Stillman
himself is the Chief Executive Officer (a "Stillman Entity"); and (B) transfers
of beneficial ownership interests in Food Manager shall be permitted so long as
Food Manager remains a Stillman Entity. Provided further, however, for purposes
of this Article 12.1, Hotel Manager will agree to reduce or modify the
applicable requirements for a Stillman Entity if Hotel Manager is satisfied, in
its reasonable discretion (e.g., in the context of a proposed public offering by
Food Manager or a proposed assignee, as the case may be), that Stillman in fact
retains sufficient financial interest in, and control of, Food Manager or a
proposed assignee (as the case may be) to insure Stillman's continued
substantial involvement in and control of the operations of Food Manager or the
proposed assignee (as the case may be). As used herein, Stillman shall mean Alan
N. Stillman; provided, however, in the event of the death, incapacity or
retirement of Alan N. Stillman, Food Manager shall have the right to designate
one or more other individuals whose reputation and food and beverage operating
experience (collectively, if more than one) are commensurate with those of Alan
N. Stillman to act as the principal(s) and chief executive officer(s) of Food
Manager or a proposed assignee (as the case may be), and if Hotel Manager, in
its reasonable discretion, approves such designated individual(s),
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the term "Stillman" shall thereafter refer to such other person(s). Any
permitted assignee must assume and agree in writing to be bound by the terms of
this Agreement. No such assignment or transfer will relieve the Guarantor of its
continuing guaranty of the Food Manager's obligations under this Agreement, nor
deprive Hotel Manager or Owner of their continuing rights to use the Food
Manager Tradenames in connection with the Hotel as set forth in this Agreement.
(c) In the event of a Food Manager Transfer which is not permitted
under this Agreement and with respect to which Hotel Manager refuses to give its
consent, Hotel Manager may terminate this Agreement upon thirty (30) days
notice. In the event of such termination, Owner and Hotel Manager will have the
right to continue to use the Food Manager Tradenames, at no cost, for a period
equal to what would have been one-half of the remaining term of this Agreement.
(d) Food Manager warrants and represents that, as of the date
hereof, it is a Stillman Entity. From time to time upon request by Hotel
Manager, Food Manager shall furnish to Hotel Manager sufficient information with
regard to the ownership, management and control of Food Manager so as to enable
Hotel Manager to determine whether or not Food Manager remains a Stillman
Entity.
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ARTICLE 13
FORCE MAJEURE
13.1 Operation of Hotel. If at any time during the term hereof it becomes
necessary in Hotel Manager's reasonable opinion to cease operation of the Hotel
in order to protect the Hotel and/or the health, safety and welfare of the
guests, tenants, and/or employees of the Hotel for reasons of force majeure such
as, but not limited to, acts of war, insurrection, civil strife and commotion,
labor unrest or acts of God, then in such event Hotel Manager may close and
cease operation of all or part of the Hotel (including, without limitation, the
Trade Name Operations), reopening and commencing operation when Hotel Manager
deems that such may be done without jeopardy to the Hotel, its guests, tenants,
and employees.
13.2 Extension of Time. It is further understood and agreed that with
respect to any obligation to be performed by a party during the term of this
Agreement, such party shall in no event be liable for failure to do so when
prevented by any force majeure cause beyond the reasonable control of such party
such as strike, lockout, breakdown, accident, order or regulation of or by any
governmental authority, failure of supply or inability, by the exercise of
reasonable diligence, to obtain supplies, parts or employees necessary to
perform such obligation, or war or other emergency. The time within which such
obligation shall be
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performed shall be extended for a period of time equivalent to the delay from
such cause. The inability to fund monetary obligations hereunder shall in no
event be considered a force majeure event.
ARTICLE 14
COVENANTS OF OWNER
14.1 General. (a) Owner agrees to cooperate with Hotel Manager and with
Food Manager in every reasonable and proper way to permit and assist Food
Manager to carry out its responsibilities under this Agreement, including,
without limitation, to enable Food Manager to operate the F&B Department in
accordance with the Operational Standards.
14.2 Funding. Owner shall timely provide all funds, both initially and
throughout the term of this Agreement, as shall be necessary to perform and
satisfy Owner's covenants and responsibilities under this Agreement, including,
without limitation, funds necessary to pay all Permissible Costs (as provided in
Article 7.1), the compensation of Food Manager hereunder (as provided in Article
5) and Owner's Renovation Contribution (as provided in Article 8).
Notwithstanding anything to the contrary herein contained, Hotel Manager shall
not be obligated to provide its own funds for any purpose under this Agreement.
-50-
<PAGE>
14.3 Restriction on Hiring Food Manager Employees. Without the consent of
Food Manager, Owner will not hire any Food Manager Employee to work at the Hotel
for a period of twelve (12) months after such Food Manager Employee ceases to
work for Food Manager at the Hotel.
ARTICLE 15
GENERAL PROVISIONS
15.1 Authorization. Hotel Manager represents that it has full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof. Food Manager represents that it has full power and authority to execute
this Agreement and to be bound by and perform the terms hereof. On request each
party shall furnish the other evidence of such authority.
15.2 Formalities. Any change to or modification of this Agreement must be
in writing signed by both parties hereto and consented to by Owner. This
Agreement shall be executed in one or more counterparts, each of which shall be
deemed an original. The captions for each Article are intended for convenience
only.
15.3 Consents. Except as otherwise expressly provided in this Agreement,
wherever in this Agreement it is provided that an act or proposed act of Hotel
Manager or Food Manager is subject to the consent or approval of the other, such
consent or approval shall
-51-
<PAGE>
not be unreasonably withheld or delayed. If pursuant to this Agreement, the
approval or consent ("consent") of one party hereto is required for any act or
matter contemplated by the other party, the party desiring such consent shall
give to the party whose consent is desired, notice specifying in reasonable
detail, the matter to which consent is requested.
15.4 Notices. All notices required to be given under the terms of this
Agreement or which any of the parties may desire to give hereunder shall be in
writing and delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid, or by a recognized overnight delivery
service, delivery charges prepaid, addressed as follows or sent by telecopier to
the telecopier numbers listed below (with a copy sent by hand, mail or overnight
delivery service as aforesaid and addressed as follows):
-52-
<PAGE>
(a) If to Hotel Manager:
Doubletree Partners
c/o Doubletree Hotels Corporation
410 North 44th Street
Suite 700
Phoenix, Arizona 85008
Attn: Richard M. Kelleher, President
Telecopier No. (602) 220-6785
with a copy to:
Rubin and Rudman
50 Rowes Wharf
Boston, MA 02110
Attn: Harold Stahler, Esq.
Telecopier No. (617) 439-9556
(b) If to Food Manager:
Mrs. Parks Management Company, L.L.C.
c/o The New York Restaurant Group
1114 First Avenue
New York, New York 10021
Attn: Alan N. Stillman
Telecopier No. (212) 355-0120
-53-
<PAGE>
with a copy to:
Handsman and Kaminsky
609 Fifth Avenue
Sixth Floor
New York, New York 10017
Attn: Edward A. Kaminsky, Esq.
Telecopier No. (212) 750-4699
(c) If to Owner:
Chicago HSR Limited Partnership
c/o General Electric Investment Corporation
P.O. Box 7900
Stamford, Connecticut 06904
Attn: David W. Wiederecht
Telecopier No. (203) 326-2497
or to such other address as the party to whom such notice is directed may from
time to time designate by written notice in like manner to the other parties
hereto. Any notices given by Food Manager, Hotel Manager or Owner hereunder
shall be given to both of the other parties named herein.
15.5 Entire Agreement. This Agreement constitutes the entire understanding
among the parties with respect to the subject matter hereof and no amendment,
modification or alteration of the terms
-54-
<PAGE>
hereof shall be effective or binding unless the same be in writing and signed by
all of the parties hereto.
15.6 Waivers. No default of any party hereunder shall be deemed to be
waived by any other party, unless such waiver is made in writing.
15.7 Relationship. Food Manager is an independent contractor. Neither this
Agreement nor the operation of the F&B Department as contemplated hereby shall
be deemed to create any partnership or joint venture between or among Owner,
Food Manager and Hotel Manager. Without limitation of any other provisions
hereof, Food Manager is not the legal representative or agent of Hotel Manager
or Owner or their respective partners for any purpose whatsoever, and Food
Manager does not have any right or authority to assume or create any obligation
of any kind, express or implied, on behalf of, or to in any way bind, Hotel
Manager, Owner or their respective partners, except that purchase orders made by
Food Manager in accordance with Article 1.2(a) above shall be binding on Owner.
15.8 Overdue Payments. Any payment due to Food Manager, Hotel Manager or
Owner under this Agreement which is not paid within ten (10) days of the due
date thereof shall bear interest from the date due until paid in full at a rate
equal to the greater of (x) twelve percent (12%) per annum or (y) two percent
(2%) over the rate of interest announced by The First National Bank of Boston at
its Head
-55-
<PAGE>
Office as its commercial base rate, as the same may be changed from time to
time, but in no event shall such rate of interest (either (x) or (y)) exceed the
highest rate of interest permitted by law. Notwithstanding anything to the
contrary contained in this Agreement, Food Manager, Hotel Manager and Owner each
acknowledges and agrees that all Fees, reimbursements and other amounts due and
payable by Food Manager, Hotel Manager or Owner under the terms of this
Agreement on or before the Execution Date either have been timely paid or are
being fully reconciled and shall be paid with reasonable promptness.
15.9 Attorneys' Fees. In the event of any action or proceeding brought by
Food Manager, Hotel Manager or Owner under this Agreement, the prevailing party
shall be entitled to recover the fees of its attorneys and all other expenses
which may be incurred in such action or proceeding in such amount as the court
may adjudge reasonable.
-56-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective the day and year first above written.
FOOD MANAGER: HOTEL MANAGER:
MRS. PARKS MANAGEMENT DOUBLETREE PARTNERS
COMPANY, L.L.C.
By: Samantha Hotel Corporation,
its managing partner
By: /s/ Alan N. Stillman, By: /s/ Richard M. Kelleher
-------------------------------- -----------------------------------
Alan N. Stillman Richard M. Kelleher
President President
-57-
<PAGE>
CONSENT AND JOINDER
The undersigned, CHICAGO HSR LIMITED PARTNERSHIP, a Delaware limited
partnership, hereby consents to the execution and delivery of the foregoing
Submanagement Agreement and agrees to join in and be bound by the Submanagement
Agreement for the purposes of performing the obligations of Owner under and
otherwise being bound by (A) the Owner's agreements not to unreasonably withhold
its consent set forth in the last sentence of Article 1.3 and in the last
sentence of Article 6.3(a), (B) Article 2.5(a)(i) and (iii), (C) Article 2.5(b),
(D) the last four sentences of Article 4.2(b), and (E) Articles 4.2(c), 4.2(d),
4.2(e), 9, 14, 15.8 and 15.9 thereof. All liabilities and obligations which
Owner may have under the Submanagement Agreement shall be satisfied only out of
the assets of the Hotel and no limited or general partners of Owner shall have
any personal liability with respect to the Submanagement Agreement.
Owner represents that it has full power and authority to execute this
Consent and Joinder. On request of Food Manager or Hotel Manager, Owner shall
furnish evidence of such authority.
OWNER
CHICAGO HSR LIMITED
PARTNERSHIP
By: Chicago GQ Corporation,
its General Partner
By: /s/ David W. Wiederecht
-------------------------------
David W. Wiederecht
President
-58-
<PAGE>
EXHIBIT 1
PURCHASE ORDER PROCEDURES
(Article 1.2 (a))
A. Policy - Purchase orders shall be issued for all purchases from any vendor
with the exception of ongoing food and beverage purchasing.
All purchase orders require the signature of the Hotel's General Manager.
Any purchase over $1,000 is to be signed by the Hotel Manager's Regional
Controller and any purchase over $5,000 is to be signed by the Hotel
Manager's Senior Vice President of Operations.
Purchase orders will be issued through the Hotel Manager's Systems and
Control Manager at the Hotel; and once appropriate signatures have been
received, a purchase order number will be assigned.
B. Food and Beverage Purchases - Due to the frequency of food and beverage
purchases, it is not practical to utilize purchase orders for ongoing
purchases. It is, however, expected that Food Manager will obtain
quotations for all purchases on a consistent basis and that quotes are
matched to final invoices upon delivery and maintained for six (6) weeks.
C. Open Purchase Orders - At the end of each month, Food Manager shall
prepare an open purchase order list and forward the same to Hotel
Manager's Regional Accounting Office (presently located in Cincinnati,
Ohio). This list shall contain all purchase orders for items that have
been received but have not been processed for payment. This procedure will
allow Hotel Manager to ensure that all expenses are accrued for the month
in which the purchase was realized.
<PAGE>
EXHIBIT 2
GUEST QUARTERS - CHICAGO
STATEMENT OF INCOME
GL0322 PERIOD-12 FISCAL 1994
1/15/95 PAGE 1
19.34.01 12/01/94 - 12/31/94
<TABLE>
<CAPTION>
CURRENT PERIOD
- -------------------------------------------------------------------------------------------------
ACTUAL % BUDGET % LAST YEAR %
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <S>
STATISTICS
10,695 10,695 10,695 TOTAL ROOMS AVAIL
5,901 5,301 5,406 PAID ROOMS OCC.
55.2 49.6 50.6 % OF OCCUPANCY
121.28 117.98 114.64 AVERAGE RATE
MEMO STATISTICS
INCLUDING COMPS:
6,133 5,301 5,406 TTL ROOMS OCC.
57.3 49.6 50.6 % OF OCCUPANCY
REVENUES
715,653 62.6 625,436 66.0 619,766 64.3 ROOMS
298,927 26.2 237,273 25.0 256,272 26.6 FOOD & BEVERAGE
18,656 1.6 22,793 2.4 13,473 1.4 TELEPHONE
47,773 4.2 46,451 4.9 39,969 4.2 MINOR OPER DEPTS
61,542 5.4 16,081 1.7 33,898 3.5 RENT & OTHER
1,142,551 100.0 948,034 100.0 963,398 100.0 TOTAL REVENUES
OPERATING COSTS
155,737 21.8 158,457 25.3 167,176 27.0 ROOMS
280,729 93.9 195,596 82.4 208,238 81.3 FOOD & BEVERAGE
17,781 95.3 15,731 69.0 20,592 152.8 TELEPHONE
54,568 114.2 41,325 89.0 43,732 109.4 MINOR OPER DEPTS
4,394 7.1 6,796 42.3 5,516 16.3 RENT & OTHER
513,210 44.9 417,905 44.1 445,254 46.2 TOTAL OPER COST
629,341 55.1 530,129 55.9 518,144 53.8 OPRERATING PROFIT
UNDISTRIB OPER. EXP.
112,404 9.8 104,045 11.0 104,945 10.9 ADMINISTRATIVE
14,232 - 1.3 119,985 12.7 107,621 11.2 MARKETING
82,036 7.2 67,557 7.1 56,638 5.9 PROPERTY MAINT
27,170 2.4 45,080 4.8 32,054 3.3 ENERGY
207,378 18.2 336,667 35.5 301,257 31.3 TOTAL UNDISTRIB
421,963 36.9 193,462 20.4 216,887 22.5 GROSS OPER. PROFIT
41,477 3.6 37,791 4.0 38,792 4.0 MANAGEMENT FEES
380,486 33.3 155,671 16.4 178,095 18.5 INCOME BEF FIX CHG.
153,642 13.5 90,519 9.6 106,493 11.1 RENT TAXES & INS.
447,394 39.2 423,657 44.7 432,406 44.9 INTEREST
37,734 - 3.3 1,500 .2 16,585 - 1.7 OWNERS EXPENSE
182,817 - 16.0 360,005 - 38.0 344,219 - 35.7 INC BEF DEPR/AMORT
393,560 34.5 277,659 28.8 DEP & AMORT.
576,376 - 50.5 360,005 - 38.0 621,878 - 64.6 INCOME BEFORE TAXES
447,394 39.2 423,657 44.7 432,406 44.9 ADD: INTEREST
393,560 34.5 277,659 28.8 ADD: DEPR & AMORT
36,529 - 3.2 33,070 - 3.5 33,552 - 3.5 MINUS: RESERVES
228,049 20.0 30,582 3.2 54,635 5.7 NET OPER INCOME
<CAPTION>
YEAR TO DATE
- -------------------------------------------------------------------------------------------------
ACTUAL % BUDGET % LAST YEAR %
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STATISTICS
TOTAL ROOMS AVAIL 125,925 125,925 125,925
PAID ROOMS OCC. 82,060 87,518 85,366
% OF OCCUPANCY 65.2 69.5 67.8
AVERAGE RATE 125.61 121.45 112.76
MEMO STATISTICS
INCLUDING COMPS:
TTL ROOMS OCC. 84,688 87,518 85,366
% OF OCCUPANCY 67.3 69.5 67.8
REVENUES
ROOMS 10,307,269 69.1 10,628,999 69.7 9,625,652 68.8
FOOD & BEVERAGE 3,410,601 22.9 3,460,898 22.7 3,231,142 23.1
TELEPHONE 311,557 2.1 401,649 2.6 360,262 2.6
MINOR OPER DEPTS 525,725 3.5 518,418 3.4 496,863 3.6
RENT & OTHER 363,717 2.4 246,800 1.6 281,340 2.0
TOTAL REVENUES 14,918,870 100.0 15,256,764 100.0 13,995,258 100.0
OPERATING COSTS
ROOMS 2,156,306 20.9 2,275,823 21.4 2,166,383 22.5
FOOD & BEVERAGE 2,510,903 73.6 2,468,256 71.3 2,221,046 68.7
TELEPHONE 201,159 64.6 215,317 53.6 199,212 55.3
MINOR OPER DEPTS 475,481 90.4 483,490 93.3 492,185 99.1
RENT & OTHER 82,681 22.7 112,222 45.5 99,747 35.5
TOTAL OPER COST 5,426,531 36.4 5,555,108 36.4 5,178,574 37.0
OPRERATING PROFIT 9,492,339 63.6 9,701,656 63.6 8,816,685 63.0
UNDISTRIB OPER. EXP.
ADMINISTRATIVE 1,274,368 8.5 1,320,549 8.7 1,257,525 9.0
MARKETING 1,521,126 10.2 1,757,727 11.5 1,641,623 11.7
PROPERTY MAINT 824,084 5.5 807,603 5.3 779,239 5.6
ENERGY 413,671 2.8 547,480 3.6 508,212 3.6
TOTAL UNDISTRIB 4,033,248 27.0 4,433,359 29.1 4,186,600 29.9
GROSS OPER. PROFIT 5,459,091 36.6 5,268,297 34.5 4,630,085 33.1
MANAGEMENT FEES 592,937 4.0 608,358 4.0 557,938 4.0
INCOME BEF FIX CHG. 4,866,154 32.6 4,659,939 30.5 4,072,147 29.1
RENT TAXES & INS. 1,263,332 8.5 1,097,708 7.2 1,135,628 8.1
INTEREST 5,224,907 35.0 5,083,884 33.3 5,053,279 36.1
OWNERS EXPENSE 16,870 - .1 18,000 .1 22,916 .2
INC BEF DEPR/AMORT 1,605,215 - 10.8 1,539,653 - 10.1 2,139,676 - 15.3
DEP & AMORT. 3,095,631 20.8 3,232,884 23.1
INCOME BEFORE TAXES 4,700,846 - 31.5 1,539,653 - 10.1 5,372,560 - 38.4
ADD: INTEREST 5,224,907 35.0 5,083,884 33.3 5,053,279 36.1
ADD: DEPR & AMORT 3,095,631 20.8 3,232,884 23.1
MINUS: RESERVES 518,820 - 3.5 532,315 - 3.5 425,969 - 3.0
NET OPER INCOME 3,100,872 20.8 3,011,916 19.7 2,487,634 17.8
</TABLE>
<PAGE>
GUEST QUARTERS - CHICAGO
FOOD DEPARTMENT
GL0322 PERIOD-12 FISCAL 1994
1/15/95 PAGE 5
19.34.01 12/01/94 - 12/31/94
<TABLE>
<CAPTION>
CURRENT PERIOD
- -------------------------------------------------------------------------------------------------
ACTUAL % BUDGET % LAST YEAR %
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <S>
REVENUE
91,026 42.2 77,444 46.4 78,700 43.3 BANQUETS
45,315 27.2 50,290 27.6 RESTAURANT
95,353 44.2 16,774 10.1 16,947 9.3 LOUNGE-PRIMARY
16,357 7.6 16,032 9.6 14,453 7.9 ROOM SERVICE
6,109 - 2.8 2,196 - 1.2 ALLOWANCES
196,626 91.2 155,565 93.2 158,194 86.9 NET REVENUES
OTHER INCOME
10,086 4.7 3,216 1.9 7,088 3.9 BANQUET A/V
2,321 1.4 4,583 2.5 BANQUET ITEMS
3,645 1.7 3,252 2.0 4,756 2.6 OTHER INCOME
5,306 2.5 2,560 1.5 7,345 4.0 PUBLIC ROOM RENTAL
19,038 8.8 11,349 6.8 23,772 13.1 NET OTHER INCOME
215,664 100.0 166,914 100.0 181,966 100.0 TOTAL REVENUES
COST OF SALES
91,448 46.5 38,113 24.5 52,949 33.5 COST OF FOOD
4,378 - 2.2 8,340 - 5.3 LESS - EMPL MEALS
87,070 44.3 38,113 24.5 44,609 28.2 COS - FOOD
OTHER COSTS OF SALES
2,742 27.2 385 7.0 830 7.1 BANQUET A/V
127 2.3 840 7.2 OTHER EQUIPMENT
2,742 27.2 512 9.3 1,670 14.3 OTH COST OF SALE
125,852 58.4 128,289 76.9 135,687 74.6 GROSS PROFIT
PAYROLL & REL EXP.
97,893 45.4 69,009 41.3 73,712 40.5 SALARIES & WAGES
24,072 11.2 28,325 17.0 23,342 12.8 EMPLOYEE BENEFITS
121,965 56.6 97,334 58.3 97,054 53.3 TOT. PAYROLL EXP.
OTHER EXPENSES
2,401 1.1 622 .4 467 .3 BANQUET EXPENSE
367 .2 CHINA
6,913 3.2 1,400 .8 2,090 1.2 CLEANING SUPPLIES
1,520 .7 1,300 .8 1,685 .9 CONTRACTED SERVICE
1,885 .9 400 .2 351 .2 DECORATIONS
GLASSWARE
731 .3 311 .2 367 .2 KITCHEN FUEL
3,040 1.4 3,507 2.1 3,283 1.8 LAUNDRY
550 .3 169 .1 LICENSE & INSPECT
109 .1 LINEN
469 .3 MENUS & BEV LIST
3,120 1.5 MISCELLANEOUS
851 .4 380 .2 62 MUSIC & ENTERTAIN
960 .5 777 .5 639 .4 OPERATING SUPPLIES
981 .5 466 .3 1,116 .6 PRINT & STATIONARY
1,047 .5 PROMO/COMP FOOD
SILVERWARE
500 .2 311 .2 300 .2 TELEPHONE
1,863 .9 1,200 .7 1,435 .8 UNIFORMS
35 322 .2 UTENSILS
26,324 12.2 11,224 6.7 12,755 7.0 TOTAL OTHER EXP
148,289 68.8 108,558 65.0 109,809 60.4 TOTAL DEPT EXP
22,436 - 10.4 19,731 11.8 25,879 14.2 DEBT PROFIT/LOSS
<CAPTION>
YEAR TO DATE
- ----------------------------------------------------------------------------------------------------------------
ACTUAL % BUDGET % LAST YEAR %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
BANQUETS 1,191,454 45.7 1,138,177 44.3 1,043,759 44.0
RESTAURANT 390,726 15.0 592,388 23.0 533,638 22.5
LOUNGE-PRIMARY 381,549 14.7 249,068 9.7 218,707 9.2
ROOM SERVICE 222,319 8.5 237,684 9.2 225,232 9.5
ALLOWANCES 32,357 - 1.2 23,685 - 1.0
NET REVENUES 2,153,690 82.7 2,217,317 86.2 1,997,651 84.2
OTHER INCOME
BANQUET A/V 242,478 9.3 158,551 6.2 176,204 7.4
BANQUET ITEMS 52,594 2.0 53,689 2.1 59,361 2.5
OTHER INCOME 47,241 1.8 47,798 1.9 46,815 2.0
PUBLIC ROOM RENTAL 108,931 4.2 95,005 3.7 92,955 3.9
NET OTHER INCOME 451,244 17.3 355,043 13.8 375,334 15.8
TOTAL REVENUES 2,604,935 100.0 2,572,360 100.0 2,372,985 100.0
COST OF SALES
COST OF FOOD 702,856 32.6 543,235 24.5 592,178 29.6
LESS - EMPL MEALS 68,503 - 3.2 98,188 - 4.9
COS - FOOD 634,352 29.5 543,235 24.5 493,990 24.7
OTHER COSTS OF SALES
BANQUET A/V 54,141 18.4 19,021 9.0 32,735 13.9
OTHER EQUIPMENT 9,532 3.2 2,946 1.4 3,716 1.6
OTH COST OF SALE 63,673 21.6 21,967 10.4 36,450 15.5
GROSS PROFIT 1,906,909 73.2 2,007,158 78.0 1,842,545 77.7
PAYROLL & REL EXP.
SALARIES & WAGES 857,640 32.9 823,478 32.0 741,948 31.3
EMPLOYEE BENEFITS 317,900 12.2 335,005 13.0 272,394 11.5
TOT. PAYROLL EXP. 1,175,540 45.1 1,158,483 45.0 1,014,342 42.8
OTHER EXPENSES
BANQUET EXPENSE 15,136 .6 8,864 .3 8,415 .4
CHINA 6,578 .3 10,200 .4 7,000 .3
CLEANING SUPPLIES 32,820 1.3 19,952 .8 18,462 .8
CONTRACTED SERVICE 4,653 .2 5,900 .2 7,894 .3
DECORATIONS 4,800 .2 4,404 .2 4,628 .2
GLASSWARE 2,057 .1 4,400 .2 4,424 .2
KITCHEN FUEL 4,986 .2 4,430 .2 4,355 .2
LAUNDRY 41,968 1.6 41,483 1.6 40,565 1.7
LICENSE & INSPECT 3,293 .1 6,600 .3 6,403 .3
LINEN 4,518 .2 6,700 .3 4,408 .2
MENUS & BEV LIST 128 3,700 .1 3,459 .2
MISCELLANEOUS 8,270 .3 5,886 .3
MUSIC & ENTERTAIN 5,550 .2 4,560 .2 3,564 .2
OPERATING SUPPLIES 12,397 .5 11,078 .4 6,539 .3
PRINT & STATIONARY 4,316 .2 6,648 .3 7,254 .3
PROMO/COMP FOOD 1,313 .1
SILVERWARE 5,080 .2 7,000 .3 5,082 .2
TELEPHONE 3,849 .2 4,430 .2 2,546 .1
UNIFORMS 13,924 .5 15,700 .6 21,071 .9
UTENSILS 2,369 .1 2,470 .1
TOTAL OTHER EXP 178,004 6.8 166,049 6.5 164,425 6.9
TOTAL DEPT EXP 1,353,543 52.0 1,324,532 51.5 1,178,766 49.7
DEBT PROFIT/LOSS 553,365 21.2 682,626 26.5 663,779 28.0
</TABLE>
<PAGE>
GUEST QUARTERS - CHICAGO
BEVERAGE DEPARTMENT
GL0322 PERIOD-12 FISCAL 1994
1/15/95 PAGE 1
19.34.01 12/01/94 - 12/31/94
<TABLE>
<CAPTION>
CURRENT PERIOD
- -------------------------------------------------------------------------------------------------
ACTUAL % BUDGET % LAST YEAR %
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <S>
REVENUE
32,837 39.4 27,182 38.6 23,746 32.0 BANQUET
5,211 7.4 7,615 10.3 RESTAURANT
37,161 44.6 23,907 34.0 27,346 36.8 LOUNGE PRIMARY
12,366 14.9 11,927 17.0 12,287 16.5 HONOR BAR - BEVG
2,874 3.5 2,132 3.0 4,038 5.4 ROOM SERVICE
1,974 - 2.4 726 - 1.0 ALLOWANCES
83,263 100.0 70,359 100.0 74,306 100.0 NET REVENUE
OTHER INCOME
NET OTHER INCOME
83,263 100.0 70,359 100.0 74,306 100.0 TOTAL REVENUES
COST OF SALES
24,701 29.7 14,071 20.0 13,061 17.6 COST OF BEVERAGE
24,701 29.7 14,071 20.0 13,061 17.6 NET COST OF SALE
58,562 70.3 56,288 80.0 61,245 82.4 GROSS PROFIT BEV
PAYROLL & REL. EXP.
14,282 17.2 16,678 23.7 21,468 28.9 SALARIES & WAGES
3,052 3.7 7,184 10.2 7,488 10.1 EMPLOYEE BENEFITS
17,334 20.8 23,862 33.9 28,956 39.0 TOT. PAYROLL EXP
OTHER EXPENSES
CLEANING SUPPLIES
45 .1 35 .1 CONTRACTED SERVICE
1,000 1.4 DECORATIONS
GLASSWARE
451 .5 1,350 1.9 1,048 1.4 LICENSE & INSPECT
MENUS & BEV LISTS
425 .6 498 .7 MISCELLANEOUS
5,460 7.8 6,360 8.6 MUSIC & ENTERTAIN
500 .7 699 .9 OPERATING SUPPLIES
PRINT & STATIONARY
1,100 1.6 1,174 1.6 PROMO/COMP FOOD
99 .1 610 .9 356 .5 UNIFORMS
594 .7 10,480 14.9 10,135 13.6 TOTAL OTHER EXP.
17,928 21.5 34,342 48.8 39,090 52.6 TOTAL DEPT. EXP.
40,634 48.8 21,946 31.2 22,155 29.8 DEPT PROFIT/LOSS
<CAPTION>
YEAR TO DATE
- ----------------------------------------------------------------------------------------------------------------
ACTUAL % BUDGET % LAST YEAR %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
BANQUET 198,197 24.6 232,147 26.1 214,493 25.0
RESTAURANT 42,337 5.3 68,120 7.7 112,768 13.1
LOUNGE PRIMARY 361,165 44.8 373,759 42.1 325,853 38.0
HONOR BAR - BEVG 188,439 23.4 182,904 20.6 189,186 22.1
ROOM SERVICE 26,543 3.3 31,608 3.6 32,107 3.7
ALLOWANCES 11,014 1.4 16,251 - 1.9
NET REVENUE 805,667 100.0 888,538 100.0 858,157 100.0
OTHER INCOME
NET OTHER INCOME
TOTAL REVENUES 805,667 100.0 888,538 100.0 858,157 100.0
COST OF SALES
COST OF BEVERAGE 169,932 21.1 177,701 20.0 165,653 19.3
NET COST OF SALE 169,932 21.1 177,701 20.0 165,653 19.3
GROSS PROFIT BEV 635,735 78.9 710,837 80.0 692,504 80.7
PAYROLL & REL. EXP.
SALARIES & WAGES 157,071 19.5 198,126 22.3 178,721 20.8
EMPLOYEE BENEFITS 58,275 7.2 85,560 9.6 70,033 8.2
TOT. PAYROLL EXP 215,346 26.7 283,686 31.9 248,754 29.0
OTHER EXPENSES
CLEANING SUPPLIES 223
CONTRACTED SERVICE 327 420 .1 110
DECORATIONS 1,000 .1
GLASSWARE 1,013 .1 3,550 .4 2,668 .3
LICENSE & INSPECT 11,633 1.4 16,200 1.8 15,746 1.8
MENUS & BEV LISTS 721 .1
MISCELLANEOUS 2,969 .4 5,100 .6 5,327 .6
MUSIC & ENTERTAIN 39,995 5.0 61,120 6.9 46,335 5.4
OPERATING SUPPLIES 2,750 .3 5,250 .6 4,526 .5
PRINT & STATIONARY 1,645 .2 2,200 .3 71
PROMO/COMP FOOD 9,954 1.2 14,300 1.6 14,510 1.7
UNIFORMS 3,770 .5 7,995 .9 7,197 .8
TOTAL OTHER EXP. 74,055 9.2 117,135 13.2 97,433 11.4
TOTAL DEPT. EXP. 289,402 35.9 400,821 45.1 346,187 40.3
DEPT PROFIT/LOSS 346,333 43.0 310,016 34.9 346,317 40.4
</TABLE>
<PAGE>
EXHIBIT 3
GROSS OPERATING PROFIT
(Articles 5.1(b) and 5.3(c))
"Gross Operating Profit" shall mean, with respect to each year of the term
of this Agreement, the amount, if any, by which Total Hotel Sales for such year
exceed Operating Costs for such year.
The term "Total Hotel Sales" shall be defined as all revenues and income
of any nature derived directly or indirectly from the Hotel or from the use or
operation thereof, including, without limitation, total room sales, food and
beverage sales (including, without limitation, sales from the Trade Name
Operations), telephone, telegraph and telex revenues, rental or other payments
from lessees, sublessees, and concessionaires (but not the gross receipts of
such lessees, sublessees or concessionaires) and the proceeds of business
interruption, use, occupancy or similar insurance. There shall be excluded from
Total Hotel Sales: (i) any gratuities or service charges added to a customer's
bill; (ii) any credits or refunds made to customers guests or patrons; (iii) any
sums and credits received by Owner for lost or damaged merchandise; (iv) any
sales taxes, excise taxes, gross receipt taxes, admission taxes, entertainment
taxes, tourist taxes or charges; (v) any proceeds from the sale or other
disposition of the Hotel, FF&E therein, or other capital assets; (vi) any
interest paid with respect to the Hotel's
3-1
<PAGE>
reserve funds, the Hotel's bank account, or any other deposit or investment of
Hotel funds; (vii) any fire and extended coverage insurance proceeds; (viii) any
condemnation awards; and (ix) any proceeds of financing or refinancing of the
Hotel. Total Hotel Sales shall be determined on an accrual basis and in
accordance with the Uniform System of Accounts or generally accepted accounting
principles, consistently applied.
"Operating Costs" shall mean the entire cost and expense of maintaining,
operating and supervising the operation of the Hotel. Operating Costs shall be
the sum of such costs or expenses which are normally charged as a cost of
operation under the Uniform System of Accounts, including, without limitation:
(i) the cost of operating supplies, wages, salaries and employee
fringe benefits, advertising and promotional expenses (including any
contribution to national advertising), administrative and general expenses of
the Hotel, the cost of any centralized services payable to Hotel Manager by
Owner, the cost of personnel training programs, utility and energy costs,
operating licenses and permits, grounds and landscaping maintenance costs;
(ii) all expenditures made for maintenance and repairs to keep the
Hotel in good condition and repair;
3-2
<PAGE>
(iii) basic management fee(s) due Hotel Manager;
(iv) reimbursable expenses due Hotel Manager;
(v) liability and workers' compensation insurance premiums; and
(vi) with respect to the first seven (7) Years, Annual Renovation
Amortization.
There shall be expressly excluded from Operating Costs the following:
(1) depreciation of the Hotel building, FF&E and Hotel operating equipment
(other than Annual Renovation Amortization as hereinabove provided);
(2) rental payments pursuant to any ground lease;
(3) debt service (interest and principal) on mortgages placed on the
Hotel;
(4) real estate taxes and assessments (including payments to tax escrow
accounts);
(5) payments for capital expenditures including, without
3-3
<PAGE>
limitation, payments into any reserve fund for the Hotel and payments for
replacements of FF&E, including, without limitation, amounts expended for F&B
Department FF&E repairs and replacements pursuant to Article 4.2(c);
(6) fire and extended coverage insurance premiums and premiums for any
other insurance (except premiums which are included in Operating Costs) carried
by Owner with respect to the Hotel;
(7) payments pursuant to any equipment leases or installment sales
agreements;
(8) any incentive management fee(s) due Hotel Manager;
(9) the Fees payable to Food Manager pursuant to Article 5; and
(10) such other costs or expenses which are normally treated as a capital
expenditure under the Uniform System of Accounts or generally accepted
accounting principles.
3-4
<PAGE>
Exhibit 5
[MAP OMITTED]
LAKE MICHIGAN
CHICAGO
<PAGE>
EXHIBIT 4
EXAMPLES OF THE CALCULATION AND PAYMENT OF
FOOD MANAGER'S FEES
(Article 5)
GUEST QUARTERS HOTEL-CHICAGO, ILLINOIS
MANAGEMENT CONTRACT BETWEEN MRS PARKS MANAGEMENT COMPANY, L.L.C.
AND D T PARTNERS
TERM 10 YEARS FROM FULL COMMENCEMENT DATE OF JANUARY 1 1995
- --------------------------------------------------------------------------------
BASE MANAGEMENT FEE
PERCENTAGE 15% OF TOTAL F&B DEPARTMENT REVENUE
CONTRACT REFERENCE SECTION 5.1
INTERPRETATION Total F & B Department Revenue shall mean the portion of
Total Hotel Sales derived from the sale of Food and
Beverages by the F & B Department and rental and other
miscellaneous income from the hotel's function rooms
- --------------------------------------------------------------------------------
DEPARTMENT PROFIT INCENTIVE FEE
PERCENTAGE A) FIRST YEAR - 15% OF EXCESS DEPARTMENT PROFITS COMPUTED
QUARTERLY
B) EACH YEAR THEREAFTER - 17.5% OF EXCESS DEPARTMENTAL
PROFITS COMPUTED QUARTERLY
CONTRACT REFERENCE SECTION 5.2
INTERPRETATION EXCESS DEPARTMENTAL PROFITS shall mean the excess of
Department Profits over Threshold Departmental Profits
THRESHOLD DEPARTMENTAL profits shall mean
(i) for the first year, $1,060.164 (being 105% of
Departmental Profits for calendar year 1993 which were
$1,009,580
(ii) for the second year, $1,113.172 (being 105% of
Threshold Departmental Profits for the 1st year)
(iii) for the third year, $1,168.831 (being 105% of the
Threshold Departmental Profits for the 2nd year)
(iv) of the fourth year, $1,227.273 (being 105% of
Threshold Departmental Profits for the 3rd year)
and
(v) for each year thereafter, $1,227.273 (being the same
as the fourth year)
DEPARTMENTAL PROFITS shall mean the profits attributable
to the F&B Department calculated in accordance with
Exhibit 2 of the Management Agreement.
In calculating Profits for each year, there shall be a
deduction for the excess (Advertising and Promotional
Excess) if any of
(i) the Advertising and Promotional costs actually
incurred by the Hotel in respect of the F&B Department
over
(ii) $30,000 (the *Advertising and Promotional Threshold
amount - being the historical advertising and promotion
expenditure level for the Hotel fairly allocable to the F
& B Department, which have not been and will not be,
charged against the Department Profits).
For the first Seven (7) years the calculation of
Departmental Profits shall also include a deduction for
ANNUAL RENOVATION AMORTIZATION
ANNUAL RENOVATION AMORTIZATION - The Renovation Cost plus
15% Annual Return on the outstanding balance will be
amortized in 7 equal installments of principal and return
thereon payable to Food Manager credited to Owner
respectively. In arrears at the end of each of the first
seven (7) years. on a pro rata basis. In proportions which
the Food Manager Renovation Contribution and the Owner's
Renovation Contribution bear the total Renovation Cost
Approximate Renovation Cost $2,800,000
Food Manager's Contribution $280,000
Food Manager's proportionate share would be 10%
Annual Renovation Amortization $673,009
<PAGE>
GUEST QUARTERS HOTEL-CHICAGO, ILLINOIS
MANAGEMENT CONTRACT BETWEEN MRS PARKS MANAGEMENT COMPANY, L.L.C.
AND D. PARTNERS
TERM 10 YEARS FROM FULL COMMENCEMENT DATE OF JANUARY 1, 1995
- --------------------------------------------------------------------------------
G.O.P. INCENTIVE FEE:
PERCENTAGE A) FIRST YEAR - 2.5% OF EXCESS G.O.P. COMPUTED QUARTERLY
B) EACH YEAR THEREAFTER - 5% OF EXCESS G.O.P. COMPUTED
QUARTERLY
CONTRACT REFERENCE: SECTION 5.3
INTERPRETATION: EXCESS G.O.P.: shall mean the excess of G.O.P. over
Threshold G.O.P.
THRESHOLD G.O.P.: shall mean
(i) for the first year, $4,275,752 (being 105% of G.O.P.
for calendar year 1993, which were $4,072,145)
(ii) for the second year, $4,489,540 (being 105% of
Threshold G.O.P. for the 1st year)
(iii) for the third year, $4,714,017 (being 105% of
Threshold G.O.P. for the 2nd year)
(iv) for the forth year, $4,949,718 (being 105% of
Threshold G.O.P. for the 3rd year.)
and
(v) for each year thereafter, $4,949, 718 (being the
same as the fourth year)
GROSS OPERATING PROFIT " shall mean the amount by which "
TOTAL HOTEL SALES " exceed "OPERATING COSTS". For the
first seven (7) years the calculation of Gross Operating
Profits shall include a deduction for Annual Renovation
Amortization.
Total Hotel Sales is defined as all revenues and income of
any nature derived directly or indirectly from the
operation of the hotel. There shall be excluded from Total
Sales the following:
(i) any gratuities or service charges added to a
customers bill;
(ii) any credits or refunds made to customers, guests or
patrons;
(iii) any sums and credits received by Owner for lost or
damaged merchandise;
(iv) any sales taxes, excise taxes, gross receipt taxes,
admission taxes, entertainment taxes, tourist taxes or
charges;
(v) any proceeds from the sale or other disposition of
the Hotel, FF&E, or other capital assets;
(vi) any interest paid with respect to the Hotel's
reserve fund, the Hotel's bank account, or any other
deposit or investment of Hotel funds;
(vii) any fire and extended coverage insurance proceeds
(other than business interruption insurance proceeds);
(viii) any condemnation awards; and
(ix) any proceeds of financing or refinancing of the
Hotel.
OPERATING COSTS": shall mean the entire cost and expense
of maintain, operating and supervising the operation of
the Hotel, including Annual Renovation Amortization for
the first seven years. Excluded from Operating Costs shall
be:
1) depreciation and amortizations.
2) rental payments pursuant to any ground lease.
3) debt service (interest and principal) on mortgages.
4) real estate taxes and assessments.
5) payments for the capital expenditures including,
without limitations, payments into any reserve fund and
payment for replacements of FF&E (including, without
limitation, amounts specified in Section 4.2(c).
6) fire and extended coverage premiums.
7) payments pursuant to any equipment leases.
8) any incentive fee(s) due Hotel Manager.
9) the fees payable to Food Manager pursuant to Article
5.
10) such other cost or expenses which are normally
treated as capital expenditure.
<PAGE>
[ILLEGIBLE] QUARTERS HOTEL CHICAGO, ILLINOIS
MRS PARKS MANAGEMENT COMPANY, L.L.C.
[ILLEGIBLE] THE MONTH OF: MARCH 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
APRIL 95
CURRENT MONTH REFORECAST
MANAGEMENT FEE CALCULATION YTD ACTUALS TOTAL YEAR
- -------------------------- ----------- ----------
<S> <C> <C>
TOTAL FOOD REVENUE $748,353 $5,124,365
TOTAL BEVERAGE REVENUE $270,256 $2,332,772
TOTAL F&B OTHER INCOME $83,334 $480,780
---------- ----------
TOTAL F&B DEPARTMENTAL SERVICES $1,101,943 $7,937,917
MANAGEMENT FEE PERCENTAGE 1.50% 1.50%
---------- ----------
MANAGEMENT FEE DUE $16,529 $119,069
[ILLEGIBLE] FEES BOOKED TO DATE $15,520
----------
MANAGEMENT FEE TO BE BOOKED $1,009
----------
- -----------------------------------------------------------------------------------------------------------------------------------
APRIL 95
CURRENT MONTH REFORECAST
DEPARTMENTAL PROFIT INCENTIVE FEE CALCULATION: YTD ACTUALS TOTAL YEAR
- ---------------------------------------------- ----------- ----------
Departmental Profits:
Food Revenue $748,353 $5,124,365
Beverage Revenue $270,256 $2,332,772
F&B Other Revenue $83,334 $480,780
---------- ----------
[illegible} Revenue $1,101,943 $7,937,917
Total Food Department Expenses $1,107,229 $4,620,612
Total Beverage Departmental Expenses $184,813 $946,531
Total F&B Other Expenses $12,708 $50,057
---------- ----------
Total F&B Departmental Expenses $1,304,750 $5,617,200
Total F&B advertising and Promotional Expense $17,685 $151,618
[illegible]: Advertising and Promotional Threshold
Amount # of Months 3 ($7,500) ($30,000) $30,000
---------- ----------
$10,185 $121,618
Annual Renovation Amortization # of Months 3 $185,150 $740,600
---------- ----------
Total Departmental Profits ($398,142) $1,458,499
[illegible]: Threshold Departmental Profits # of Months 3 $265,041 $1,060,164
---------- ----------
[illegible] Departmental Profits ($663,183) $398,335
Departmental Profit Incentive Fee % First Year 15%
and Thereafter 17.5% 15% 15%
---------- ----------
Departmental Profit Incentive Fee Due: $0 $59,750
[illegible] Fees Booked: $0
----------
Departmental Profit Incentive Fee to be Booked: $0
----------
- ------------------------------------------------------------------------------------------------------------------------------------
APRIL 95
Total G.O.P. INCENTIVE FEE CALCULATION: CURRENT MONTH REFORECAST
- --------------------------------------- YTD ACTUALS TOTAL YEAR
----------- ----------
Total Hotel Sales (from Hotel Management Fee Calculation) $3,351,765 $20,224,555
Total Hotel Operating Costs: **
Department Operating Costs $1,965,652 $8,807,050
Undistributed Expenses $1,097,161 $4,445,088
Hotel Manager's Management Fee $132,725 $807,751
Annual Renovation Amortization (First 7 years only) $185,150 $740,600
[illegible] Back: Food Manager's Management Fee $16,529 $119,069
----------- ----------
Hotel Adjusted G.O.P. ($12,394) $5,543,135
[illegible] Threshold G.O.P. # of Months 3 $1,068,938 $4,275,752
----------- ----------
Excess G.O.P. over Threshold ($1,081,332) $1,267,383
G.O.P. Incentive Fee % (First Year 2.5% Thereafter 5%) 2.5% 2.5%
----------- ----------
G.O.P. Incentive Fee $0 $31,685
Excess Incentive Fees Booked: $0
-----------
G.O.P. Incentive Fee to be Booked: $0
-----------
** Does not include Food Manager's Departmental Profits Incentive Fee
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
14-Feb-95
GUEST QUARTERS CHICAGO
<TABLE>
<CAPTION>
Consolidated Report Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95
=================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statistics:
-Total Room Nights Avail. 10,695 9,660 10,695 10,350 10,695 10,350 10,695 10,695
-Total Revenue Rooms Occup. 5,211 5,304 5,691 6,041 7,624 7,104 7,722 7,111
-Occupancy Percentage 48.72% 54.91% 55.74% 58.37% 71.29% 68.64% 72.20% 66.49%
-Average Daily Rate $119.99 $121.11 $119.46 $121.81 $140.95 $143.50 $126.88 $135.00
Revenues
Rooms 625,247 642,367 712,124 735,835 1,074,603 1,019,424 979,767 959,985
Food 235,934 261,224 302,298 405,713 475,783 463,912 472,168 500,030
Beverage 74,751 105,015 122,277 197,881 230,670 233,653 226,968 237,327
F & B Other 29,276 31,504 50,871 56,752 44,907 39,766 50,842 42,979
Telephone 23,604 23,994 22,499 24,077 29,645 29,654 30,005 29,683
Minor Operating 51,435 51,780 64,603 67,777 72,968 70,738 72,797 71,151
--------- --------- --------- --------- --------- --------- --------- ---------
Total Revenues 1,040,247 1,115,884 1,274,672 1,488,035 1,928,576 1,857,147 1,832,547 1,841,155
--------- --------- --------- --------- --------- --------- --------- ---------
Operating Costs
Rooms $168,301 $162,668 $176,838 $180,798 $214,734 $198,793 $213,043 $205,088
Food 292,582 285,784 354,555 348,276 385,070 409,534 383,912 385,932
Beverage 38,702 45,117 50,975 69,948 80,768 78,986 78,111 80,757
F & B Other 3,329 3,554 5,332 6,261 4,381 3,764 5,607 4,730
Telephone 17,203 16,784 16,688 16,995 18,887 18,581 18,911 18,755
Minor Operating 39,946 38,076 44,253 45,348 48,828 48,703 52,073 48,164
--------- --------- --------- --------- --------- --------- --------- ---------
Total Operating Costs 560,064 551,982 648,641 667,626 752,668 758,361 751,656 743,426
--------- --------- --------- --------- --------- --------- --------- ---------
Total Net Dept. Income 480,183 563,902 626,031 820,409 1,175,908 1,098,786 1,080,891 1,097,729
--------- --------- --------- --------- --------- --------- --------- ---------
Undistributed Operating Expenses
Administrative & General 109,085 109,273 111,289 116,113 131,031 127,797 125,173 133,354
Marketing 159,495 139,255 145,317 141,479 156,371 155,591 144,346 131,884
Repairs & Maintenance 71,818 70,668 72,588 71,895 71,876 75,853 72,805 70,853
Energy 44,700 45,400 42,900 43,300 43,500 46,600 49,300 56,000
--------- --------- --------- --------- --------- --------- --------- ---------
Total Undist. Exp. 385,098 364,596 372,094 372,787 402,778 405,841 391,623 392,091
--------- --------- --------- --------- --------- --------- --------- ---------
Gross Operating Profit 95,085 199,306 253,937 447,622 773,130 692,945 689,268 705,638
--------- --------- --------- --------- --------- --------- --------- ---------
Basic Management Fee 41,610 44,635 50,987 59,521 77,143 74,286 73,302 73,646
Incentive Mgmt. Fee 0 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- --------- ---------
GOP After Mgmt. & Incent. Fees 53,476 154,671 202,950 388,100 695,987 618,659 615,966 631,992
--------- --------- --------- --------- --------- --------- --------- ---------
Fixed Charges
Rent, Taxes & Insurance 108,937 108,937 108,937 108,937 108,937 108,937 108,937 108,937
Interest 449,591 424,132 452,242 444,656 454,933 447,368 457,666 459,048
Owner's Expenses 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200
--------- --------- --------- --------- --------- --------- --------- ---------
Income Before Dep. & Amort. (506,253) (379,598) (359,429) (166,693) 130,917 61,154 48,163 62,807
--------- --------- --------- --------- --------- --------- --------- ---------
Depreciation & Amort. 247,268 247,468 247,268 247,268 247,268 247,268 247,268 247,268
--------- --------- --------- --------- --------- --------- --------- ---------
Income After Dep. & Amort. (753,521) (626,866) (606,697) (413,961) (116,351) (186,114) (199,105) (184,461)
--------- --------- --------- --------- --------- --------- --------- ---------
Add: Interest 449,591 424,132 452,242 444,656 454,933 447,368 457,666 459,048
Add: Dep. & Amortization 247,268 247,268 247,268 247,268 247,268 247,268 247,268 247,268
Less: Reserves 36,409 39,056 44,614 52,081 67,500 65,000 82,465 82,852
--------- --------- --------- --------- --------- --------- --------- ---------
Net Operating Income (93,070) 5,478 48,199 225,882 518,350 443,521 423,364 439,003
========= ========= ========= ========= ========= ========= ========= =========
<CAPTION>
Consolidated Report Sep-95 Oct-95 Nov-95 Dec-95 Totals %
==================================================================
<S> <C> <C> <C> <C> <C> <C>
Statistics:
-Total Room Nights Avail. 10,350 10,695 10,350 10,695 125,925
-Total Revenue Rooms Occup. 8,289 8,799 8,419 5,651 83,236
-Occupancy Percentage 80.09% 82.27% 81.34% 52.84% 66.10%
-Average Daily Rate $135.99 $137.30 $438.97 $121.95 $131.48
Revenues
Rooms 1,127,221 1,208,103 1,169,988 689,139 $10,943,803 54.3%
Food 517,174 576,402 501,857 472,921 5,185,416 25.7%
Beverage 238,198 245,802 237,381 242,849 2,392,772 11.9%
F & B Other 54,737 31,259 30,686 17,201 480,780 2.4%
Telephone 39,048 41,348 39,466 25,286 358,309 1.8%
Minor Operating 79,167 75,952 68,810 55,671 802,849 4.0%
--------- --------- --------- --------- ----------- -----
Total Revenues 2,055,545 2,178,866 2,048,188 1,503,067 $20,163,929 100.0%
--------- --------- --------- --------- ----------- -----
Operating Costs
Rooms $219,255 $226,151 $221,602 $179,101 2,366,373 21.6%
Food 442,710 420,039 391,901 424,582 4,524,877 87.3%
Beverage 80,910 82,889 80,492 83,142 850,797 35.6%
F & B Other 6,253 2,625 2,743 1,478 50,057 10.4%
Telephone 21,403 21,935 21,408 17,943 225,494 62.9%
Minor Operating 54,077 52,246 47,962 41,457 561,132 69.9%
--------- --------- --------- --------- ----------- -----
Total Operating Costs 824,608 805,886 766,108 747,703 $8,578,729 42.5%
--------- --------- --------- --------- ----------- -----
Total Net Dept. Income 1,230,937 1,372,980 1,282,080 755,364 $11,585,200 57.5%
--------- --------- --------- --------- ----------- -----
Undistributed Operating Expenses
Administrative & General 134,028 134,879 129,154 123,225 1,484,401 7.4%
Marketing 148,194 144,992 138,450 140,818 1,746,193 8.7%
Repairs & Maintenance 70,690 72,943 71,974 72,234 866,197 4.3%
Energy 52,700 34,400 34,400 34,400 527,600 2.6%
--------- --------- --------- --------- ----------- -----
Total Undist. Exp. 405,612 387,213 373,979 370,678 $4,624,391 22.9%
--------- --------- --------- --------- ----------- -----
Gross Operating Profit 825,325 985,767 908,101 384,686 $6,960,809 34.5%
--------- --------- --------- --------- ----------- -----
Basic Management Fee 82,222 87,155 81,928 60,123 806,557 4.0%
Incentive Mgmt. Fee 0 0 0 0 0 0.0%
--------- --------- --------- --------- ----------- -----
GOP After Mgmt. & Incent. Fees 743,103 898,612 826,173 324,564 6,154,252 30.5%
--------- --------- --------- --------- ----------- -----
Fixed Charges
Rent, Taxes & Insurance 108,937 108,937 108,937 108,937 1,307,246 6.5%
Interest 451,514 461,844 454,332 464,683 5,422,009 26.9%
Owner's Expenses 1,200 1,200 1,200 1,200 14,400 0.1%
--------- --------- --------- --------- ----------- -----
Income Before Dep. & Amort. 181,452 326,631 261,704 (250,257) (589,403) -2.9%
--------- --------- --------- --------- ----------- -----
Depreciation & Amort. 247,268 247,268 247,268 247,268 2,967,216 14.7%
--------- --------- --------- --------- ----------- -----
Income After Dep. & Amort. (65,816) 79,363 14,436 (497,525) (3,556,619) -17.6%
--------- --------- --------- --------- ----------- -----
Add: Interest 451,514 461,844 454,332 464,683 5,422,009 26.9%
Add: Dep. & Amortization 247,268 247,268 247,268 247,268 2,967,216 14.7%
Less: Reserves 92,500 98,049 92,168 67,638 820,331 4.1%
--------- --------- --------- --------- ----------- -----
Net Operating Income 540,467 690,426 623,867 146,788 4,012,275 19.9%
========= ========= ========= ========= =========== =====
</TABLE>
<PAGE>
23-Jan-95
GUEST QUARTERS CHICAGO
<TABLE>
<CAPTION>
Food Department Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95
============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
311079 Room Service 12,800 18,437 23,108 17,990 21,062 19,625 20,789 23,794 20,530
311037 PARK AVENUE CAFE 39,000 78,000 78,000 144,000 162,000 180,000 180,000 180,000 180,000
311037 MRS. PARKS TAVERN 89,901 86,795 107,594 122,396 142,784 158,268 160,176 179,369 169,904
311037 COFEE CART 2,761 2,811 3,159 3,201 4,040 3,765 4,092 3,768 4,393
311037 Food Outlet #4 0 0 0 0 0 0 0 0 0
311037 Food Outlet #5 0 0 0 0 0 0 0 0 0
311037 Food Outlet #6 0 0 0 0 0 0 0 0 0
311037 Food Outlet #7 0 0 0 0 0 0 0 0 0
311037 Food Outlet #8 0 0 0 0 0 0 0 0 0
311037 Food Outlet #9 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- -------
Subtotal Regular 144,462 186,043 211,861 287,587 329,886 361,658 365,057 366,930 374,827
Banquet 91,472 75,181 90,437 118,126 145,897 102,254 107,111 113,100 142,347
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Food Revenues 235,934 261,224 302,298 405,713 475,793 463,912 472,168 500,030 517,174
------- ------- ------- ------- ------- ------- ------- ------- -------
311100 Cost of Food 68,420 75,754 87,666 113,599 133,219 129,895 132,207 140,008 144,808
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Gross Profit 167,514 185,470 214,632 292,114 342,564 334,017 339,961 360,022 372,366
------- ------- ------- ------- ------- ------- ------- ------- -------
Expenses
Salaries & Wages 133,757 121,854 134,168 135,341 139,936 134,498 139,959 138,901 141,932
311396 Benefits 42,165 52,263 51,585 51,790 58,812 50,395 56,765 50,536 57,338
311355 Bonuses 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- -------
Salaries, Benefits & Bonuses 175,922 174,117 185,754 187,131 198,748 184,894 196,123 189,438 199,170
------- ------- ------- ------- ------- ------- ------- ------- -------
Other Expenses
311415 Banquet Expense 746 705 867 1,009 1,285 1,194 1,276 1,226 1,369
311425 MGMT INCENTIVE 0 0 40,250 0 0 40,250 0 0 40,250
311428 China 943 1,044 1,209 1,622 1,903 1,355 1,988 2,000 2,068
311436 Contract Services 707 783 906 1,217 1,427 1,391 1,416 1,500 1,551
311444 Decorations 497 470 578 673 857 796 851 817 913
311465 ADVERTISING EXPENSE 0 0 0 0 0 0 0 0 0
311478 Glassware 471 522 604 811 951 927 944 1,000 1,034
311489 CHARGEBACK EXPENSE 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333
311493 Kitchen Fuel 497 470 578 673 857 796 851 817 913
311501 Laundry Allocation 5,032 5,050 5,462 5,310 5,650 5,328 5,350 5,620 5,658
311506 Licenses & Inspections 746 705 367 1,009 1,285 1,914 1,276 1,226 1,369
311508 Linen 746 705 367 1,009 1,285 1,914 1,276 1,226 1,369
311518 Menus & Bev List 497 470 578 673 857 796 851 817 913
311520 BASE MGT FEE 3,539 3,918 4,534 6,085 7,136 6,958 7,082 7,500 7,757
311522 Music & Entertainment 497 470 578 673 857 796 851 817 913
311528 Paper & Plastics 235 261 302 405 475 463 472 500 517
311546 Promotional Beverage 2,000 2,000 2,500 3,000 3,000 4,000 4,000 4,000 4,000
311547 Promotional Food 4,000 4,000 5,000 6,000 6,000 8,000 8,000 8,000 8,000
311549 Purchasing 0 0 0 0 0 0 0 0 0
311557 Security Allocation 0 0 0 0 0 0 0 0 0
311562 Silverware 471 522 604 811 951 927 944 1,000 1,034
311567 Operating Supplies 2,831 3,134 3,627 4,868 5,709 5,566 5,566 6,000 6,206
311574 Telephone 497 470 578 673 857 796 851 817 913
311592 Uniforms 1,742 1,646 2,025 2,356 3,000 2,788 2,978 2,862 3,196
311594 Utensils 248 235 289 336 428 398 425 408 456
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Other Expenses 35,275 35,913 81,136 47,546 53,103 94,746 55,581 56,486 98,732
------- ------- ------- ------- ------- ------- ------- ------- -------
<CAPTION>
Food Department Oct-95 Nov-95 Dec-95 Totals %
=========================================================
<S> <C> <C> <C> <C> <C> <C>
Revenues
311079 Room Service 23,708 19,680 15,960 $237,483 4.6%
311037 PARK AVENUE CAFE 180,000 180,000 180,000 1,761,000 34.0%
311037 MRS. PARKS TAVERN 178,630 173,459 161,609 1,730,884 33.4%
311037 COFEE CART 4,663 4,462 2,995 44,110 0.9%
311037 Food Outlet #4 0 0 0 0 0.0%
311037 Food Outlet #5 0 0 0 0 0.0%
311037 Food Outlet #6 0 0 0 0 0.0%
311037 Food Outlet #7 0 0 0 0 0.0%
311037 Food Outlet #8 0 0 0 0 0.0%
311037 Food Outlet #9 0 0 0 0 0.0%
------- ------- ------- ---------- ----
Subtotal Regular 387,001 377,601 360,564 3,773,477 72.8%
Banquet 189,401 124,256 112,357 1,411,939 27.2%
------- ------- ------- ---------- ----
Total Food Revenues 576,402 501,957 472,921 $5,185,416 100.0%
------- ------- ------- ---------- ----
311100 Cost of Food 161,392 140,519 132,417 1,459,904 28.2%
------- ------- ------- ---------- ----
Total Gross Profit 415,010 361,338 340,504 $3,725,512 71.8%
------- ------- ------- ---------- ----
Expenses
Salaries & Wages 143,848 138,682 140,967 $1,643,142 31.7%
311396 Benefits 51,715 55,123 55,622 634,111 12.2%
311355 Bonuses 0 0 0 0 0.0%
------- ------- ------- ---------- ----
Salaries, Benefits & Bonuses 195,563 193,805 198,589 $2,277,253 43.9%
------- ------- ------- ---------- ----
Other Expenses
311415 Banquet Expense 1,621 1,338 1,220 13,856 0.3%
311425 MGMT INCENTIVE 0 0 40,250 161,000 3.1%
311428 China 2,305 2,007 1,891 20,735 0.4%
311436 Contract Services 1,729 1,505 1,418 15,550 0.3%
311444 Decorations 1,080 892 813 9,237 0.2%
311465 ADVERTISING EXPENSE 0 0 0 0 0.0%
311478 Glassware 1,152 1,003 945 10,364 0.2%
311489 CHARGEBACK EXPENSE 8,333 8,333 8,333 99,996 1.9%
311493 Kitchen Fuel 1,080 892 813 9,237 0.2%
311501 Laundry Allocation 5,690 5,633 5,534 65,317 1.3%
311506 Licenses & Inspections 1,621 1,338 1,220 13,856 0.3%
311508 Linen 1,621 1,338 1,220 13,856 0.3%
311518 Menus & Bev List 1,080 892 813 9,237 0.2%
311520 BASE MGT FEE 8,646 7,527 7,093 77,775 1.5%
311522 Music & Entertainment 1,080 892 813 9,237 0.2%
311528 Paper & Plastics 576 501 472 5,179 0.1%
311546 Promotional Beverage 4,000 4,000 4,000 40,500 0.8%
311547 Promotional Food 8,000 8,000 8,000 81,000 1.6%
311549 Purchasing 0 0 0 0 0.0%
311557 Security Allocation 0 0 0 0 0.0%
311562 Silverware 1,152 1,003 945 10,364 0.2%
311567 Operating Supplies 6,916 6,022 5,675 62,220 1.2%
311574 Telephone 1,080 892 813 9,237 0.2%
311592 Uniforms 3,782 3,123 2,848 32,346 0.6%
311594 Utensils 540 446 447 4,656 0.1%
------- ------- ------- ---------- ----
Total Other Expenses 63,084 57,577 95,576 $774,755 14.9%
------- ------- ------- ---------- ----
</TABLE>
<PAGE>
GUEST QUARTERS CHICAGO
<TABLE>
<CAPTION>
Food Department (continued) Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95
==============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Food Dept. Exp. 211,197 210,030 266,889 234,677 251,851 279,639 251,705 245,924 297,902
------- ------- ------- ------- ------- ------- ------- ------- -------
Departmental Profit (43,683) (24,560) (52,257) 57,437 90,713 54,378 88,256 114,098 74,464
------- ------- ------- ------- ------- ------- ------- ------- -------
311270 Public Room Rental 5,460 6,255 14,272 14,765 11,520 12,295 12,568 9,726 11,335
311262 Banquet Other 6,054 4,109 9,205 13,165 6,002 5,669 10,010 8,366 12,560
311228 Audio/Visual 14,129 18,224 23,276 24,193 21,210 17,543 24,038 20,385 24,941
311229 Banq Gratuity Recovery 3,633 2,916 4,118 4,629 6,175 4,259 4,226 4,502 5,901
311262 Room Srv. Del. Chrg 0 0 0 0 0 0 0 0 0
311262 Bev Entertainment Chg. 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Other Income 29,276 31,504 50,871 56,752 44,907 39,766 50,842 42,979 54,737
------- ------- ------- ------- ------- ------- ------- ------- -------
311136 Cost of Sales - AV 2,119 2,733 3,491 3,628 3,181 2,631 3,605 3,057 3,741
311136 Cost of Sales - Banq. Other 1,210 821 1,841 2,633 1,200 1,133 2,002 1,673 2,512
------- ------- ------- ------- ------- ------- ------- ------- -------
Food Department Profit (17,736) 3,390 (6,718) 107,928 131,239 90,390 133,491 152,347 122,948
======= ======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
Food Department (continued) Oct-95 Nov-95 Dec-95 Totals %
=====================================================
<S> <C> <C> <C> <C> <C> <C>
Total Food Dept. Exp. 258,647 251,382 292,165 $3,052,008 58.9%
------- ------- ------- ---------- ----
Departmental Profit 156,363 109,956 48,339 $673,504 13.0%
------- ------- ------- ---------- ----
311270 Public Room Rental 7,560 9,091 3,669 118,546 2.3%
311262 Banquet Other 4,045 5,886 4,498 89,569 1.7%
311228 Audio/Visual 12,109 10,442 3,860 214,350 4.1%
311229 Banq Gratuity Recovery 7,545 5,267 5,174 58,345 1.1%
311262 Room Srv. Del. Chrg 0 0 0 0 0.0%
311262 Bev Entertainment Chg. 0 0 0 0 0.0%
------- ------- ------- ---------- ----
Total Other Income 31,259 30,686 17,201 $480,780 9.3%
------- ------- ------- ---------- ----
311136 Cost of Sales - AV 1,816 1,566 579 32,147 0.6%
311136 Cost of Sales - Banq. Other 809 1,177 899 17,910 0.3%
------- ------- ------- ---------- ----
Food Department Profit 184,997 137,899 64,062 $1,104,227 21.3%
======= ======= ======= ========== ====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Food Department - Revenues:
Room Service
Room Serv Cvs - BRK NA 417 849 894 785 915 852 849 853 829
Room Serv Cvs - /OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Room Serv AC. - BRK NA 7.04 7.04 7.04 7.04 7.04 7.04 7.04 7.07 7.04
Total Covers 417 849 894 785 915 852 849 853 829
Total Revenue 2,935 5,974 6,295 5,529 6,441 6,001 5,980 6,033 5,835
Room Serv Cvs - LUNCH NA 156 106 60 30 38 36 39 36 41
Room Serv Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Room Serv AC. - LUNCH NA 6.56 6.56 6.56 6.56 6.56 6.56 6.56 6.56 6.56
Total Covers 156 106 60 30 38 36 39 36 41
Total Revenue 1,026 696 391 198 250 233 253 233 272
Room Serv Cvs - DIN NA 677 902 1,133 846 991 924 1,004 1,209 995
Room Serv Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Room Serv AC. - DIN NA 13.05 13.05 14.50 14.50 14.50 14.50 14.50 14.50 14.50
Total Covers 677 902 1,133 846 991 924 1,004 1,209 995
Total Revenue 8,840 11,767 16,423 12,263 14,371 13,391 14,556 17,529 14,423
Total Room Service Covers 1,251 1,856 2,086 1,661 1,944 1,812 1,892 2,098 1,865
311079 Total Room Service Revenue $12,801 $18,437 $23,109 $17,990 $21,062 $19,625 $20,739 $23,795 $20,530
Average Check $10.24 $9.93 $11.08 $10.83 $10.83 $10.83 $10.99 $11.34 $11.01
Room Service AM Covers 573 955 954 816 953 888 888 889 870
Room Service PM Covers 677 902 1,133 846 991 924 1,004 1,209 995
-------------------------------------------------------------------------------------------------------------------------
PARK AVENUE CAFE
Outlet #1 Cvs - BRK NA 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - /OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. - BRK NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - LUNCH NA 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. - LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - BRUNCH NA 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. - BRUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - OTHLUN NA 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. - OTHLUN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - DIN NA 1,500 3,000 3,000 4,000 4,500 5,000 5,000 5,000 5,000
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. - DIN NA 26.00 26.00 26.00 36.00 36.00 36.00 36.00 36.00 36.00
Total Covers 1,500 3,000 3,000 4,000 4,500 5,000 5,000 5,000 5,000
Total Revenue 39,000 78,000 79,000 144,000 162,000 180,000 180,000 180,000 180,000
<CAPTION>
Data File Oct-95 Nov-95 Dec-95 Totals
====================================================================
<S> <C> <C> <C> <C> <C>
Food Department - Revenues:
Room Service
Room Serv Cvs - BRK 1,672 1,094 735 10,745
Room Serv Cvs - /OR 0.0 0.0 0.0 0
Room Serv AC. - BRK 7.04 7.04 7.04 $7.04
Total Covers 1,672 1,094 735 10,745
Total Revenue 11,770 7,705 5,172 75,670
Room Serv Cvs - LUNCH 264 337 396 1,538
Room Serv Cvs - /OR 0.0 0.0 0.0 0
Room Serv AC. - LUNCH 6.56 6.56 6.56 $6.56
Total Covers 264 337 396 1,538
Total Revenue 1,732 2,209 2,595 10,088
Room Serv Cvs - DIN 704 674 565 10,622
Room Serv Cvs - /OR 0.0 0.0 0.0 0
Room Serv AC. - DIN 14.50 14.50 14.50 $14.28
Total Covers 704 674 565 10,622
Total Revenue 10,207 9,766 8,194 151,730
Total Room Service Covers 2,640 2,105 1,695 22,905
311079 Total Room Service Revenue $23,708 $19,680 $15,961 $237,487
Average Check $8.98 $9.35 $9.41 $10.37
Room Service AM Covers 1,936 1,431 1,130 12,283
Room Service PM Covers 704 674 565 10,622
--------------------------------------------------------------------
PARK AVENUE CAFE
Outlet #1 Cvs - BRK 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0
Outlet #1 AC. - BRK 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #1 Cvs - LUNCH 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0
Outlet #1 AC. - LUNCH 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #1 Cvs - BRUNCH 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0
Outlet #1 AC. - BRUNCH 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #1 Cvs - OTHLUN 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0
Outlet #1 AC. - OTHLUN 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #1 Cvs - DIN 5,000 5,000 5,000 51,000
Outlet #1 Cvs - /OR 0.0 0.0 0.0 1
Outlet #1 AC. - DIN 36.00 36.00 36.00 34.[ILLEGIBLE]
Total Covers 5,000 5,000 5,000 51,000
Total Revenue 180,000 180,000 180,000 1,751,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Outlet #1 Cvs -SURF& T NA 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. -SURF & T NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs -OTHDIN NA 0 0 0 0 0 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #1 AC. -OTHDIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Total Outlet 1 Covers 1,500 3,000 3,000 4,000 4,500 5,000 5,000 5,000 5,000
Total Outlet 1 Revenue $39,000 $78,000 $79,000 $144,000 $162,000 $180,000 $180,000 $180,000 $180,000
Average Check $26.00 $26.00 $26.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00
- ------------------------------------------------------------------------------------------------------------------------------
MRS. PARKS TAVERN
Outlet #2 Cvs -BRK NA 2,658 2,281 2,742 2,900 3,736 3,552 2,934 3,200 2,901
Outlet #2 Cvs - /OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #2 AC. -BRK NA 8.24 8.24 8.24 8.24 8.24 8.24 8.24 8.24 8.24
Total Covers 2,658 2,281 2,742 2,900 3,736 3,552 2,934 3,200 2,901
Total Revenue 21,902 18,795 22,594 23,896 30,785 29,268 24,176 26,369 23,904
Outlet #2 Cvs -LUNCH NA 2,000 2,000 2,500 2,750 3,000 3,500 4,000 4,500 4,000
Outlet #2 Cvs -/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #2 AC. -LUNCH NA 14.00 14.00 14.00 14.00 14.00 14.00 14.00 14.00 14.00
Total Covers 2,000 2,000 2,500 2,750 3,000 3,500 4,000 4,500 4,000
Total Revenue 28,000 28,000 35,000 38,500 42,000 49,000 56,000 63,000 56,000
Outlet #2 Cvs - DIN NA 2,500 2,500 2,500 3,000 3,500 4,000 4,000 4,500 4,500
Outlet #2 Cvs -/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #2 AC. -DIN NA 16.00 16.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00
Total Covers 2,500 2,500 2,500 3,000 3,500 4,000 4,000 4,500 4,500
Total Revenue 40,000 40,000 50,000 60,000 70,000 80,000 80,000 90,000 90,000
Total Outlet 2 Covers 7,158 6,781 7,742 8,650 10,236 11,052 10,934 12,200 11,401
Total Outlet 2 Revenue $89,902 $86,795 $107,594 $122,396 $142,785 $158,268 $160,176 $179,368 $169,904
Average Check $12.56 $12.80 $13.90 $14.15 $13.95 $14.32 $14.65 $14.70 $14.90
- ------------------------------------------------------------------------------------------------------------------------------
COFFEE CART
Outlet #3 Cvs - BRK NA 5,211 5,304 5,961 6,041 7,624 7,104 7,722 7,111 8,289
Outlet #3 Cvs - /OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #3 AC. -BRK NA 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53
Total Covers 5,211 5,304 5,961 6,041 7,624 7,104 7,722 7,111 8,289
Total Revenue 2,762 2,811 3,159 3,202 4,041 3,765 4,093 3,169 4,393
Outlet #3 Cvs -LUNCH NA 0 0 0 0 0 0 0 0 0
Outlet #3 Cvs -/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #3 AC. -LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #3 Cvs -DIN NA 0 0 0 0 0 0 0 0 0
Outlet #3 Cvs - /OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #3 AC. -DIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
<CAPTION>
Data File Oct-95 Nov-95 Dec-95 Totals
======================================================================
<S> <C> <C> <C> <C>
Outlet #1 Cvs -SURF& T 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0
Outlet #1 AC. -SURF & T 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #1 Cvs -OTHDIN 0 0 0 0
Outlet #1 Cvs - /OR 0.0 0.0 0.0 0
Outlet #1 AC. -OTHDIN 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Total Outlet 1 Covers 5,000 5,000 5,000 51,000
Total Outlet 1 Revenue $180,000 $180,000 $180,000 $1,761,000
Average Check $36.00 $36.00 $36.00 $[ILLEGIBLE]
- ----------------------------------------------------------------------
MRS. PARKS TAVERN
Outlet #2 Cvs -BRK 3,960 4,546 3,108 38,519
Outlet #2 Cvs - /OR 0.0 0.0 0.0 0
Outlet #2 AC. -BRK 8.24 8.24 8.24 $8.24
Total Covers 3,960 4,546 3,109 38,518
Total Revenue 32,630 37,459 25,610 317,388
Outlet #2 Cvs -LUNCH 4,000 4,000 4,000 40,250
Outlet #2 Cvs -/OR 0.0 0.0 0.0 0
Outlet #2 AC. -LUNCH 14.00 14.00 14.00 $14.00
Total Covers 4,000 4,000 4,000 40,250
Total Revenue 56,000 56,000 56,000 563,500
Outlet #2 Cvs - DIN 4,500 4,000 4,000 43,500
Outlet #2 Cvs -/OR 0.0 0.0 0.0 1
Outlet #2 AC. -DIN 20.00 20.00 20.00 $19.54
Total Covers 4,500 4,000 4,000 43,500
Total Revenue 90,000 80,000 80,000 850,000
Total Outlet 2 Covers 12,460 12,546 11,108 122,269
Total Outlet 2 Revenue $178,630 $173,459 $161,610 $1,730,988
Average Check $14.34 $13.83 $14.55 $14.16
COFFEE CART
Outlet #3 Cvs - BRK 8,799 8,419 5,651 83,236
Outlet #3 Cvs - /OR 0.0 0.0 0.0 1
Outlet #3 AC. -BRK 0.53 0.53 0.53 $0.53
Total Covers 8,799 8,419 5,651 83,236
Total Revenue 4,663 4,462 2,995 44,115
Outlet #3 Cvs -LUNCH 0 0 0 0
Outlet #3 Cvs -/OR 0.0 0.0 0.0 0
Oultet #3 AC. -LUNCH 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #3 Cvs -DIN 0 0 0 0
Outlet #3 Cvs - /OR 0.0 0.0 0.0 0
Outlet #3 AC. -DIN 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Outlet 3 Covers 5,211 5,304 5,961 6,041 7,624 7,104 7,222 7,111 8,289
Total Outlet 3 Revenue $2,762 $2,811 $3,159 $3,202 $4,041 $3,765 $4,093 $3,769 $4,393
Average Check $0.53 $0.53 $0.53 $0.53 $0.53 $0.53 $0.53 $0.53 $0.53
- ------------------------------------------------------------------------------------------------------------------------------------
Food Outlet #4
Outlet #4 Cvs-BRK NA 0 0 0 0 0 0 0 0 0
Outlet #4 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #4 AC.-BRK NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #4 Cvs-LUNCH NA 0 0 0 0 0 0 0 0 0
Outlet #4 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #4 AC.-LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #4 Cvs-DIN NA 0 0 0 0 0 0 0 0 0
Outlet #4 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #4 AC.-DIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Total Outlet 4 Covers 0 0 0 0 0 0 0 0 0
Total Outlet 4 Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Food Outlet #5
Outlet #5 Cvs-BRK NA 0 0 0 0 0 0 0 0 0
Outlet #5 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #5 AC.-BRK NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #5 Cvs-LUNCH NA 0 0 0 0 0 0 0 0 0
Outlet #5 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #5 AC.-LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Outlet #5 Cvs-DIN NA 0 0 0 0 0 0 0 0 0
Outlet #5 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #5 AC.-DIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
Total Outlet 5 Covers 0 0 0 0 0 0 0 0 0
Total Outlet 5 Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Food Outlet #6
Outlet #6 Cvs-BRK NA 0 0 0 0 0 0 0 0 0
Outlet #6 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet $6 AC.-BRK NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0 0
<CAPTION>
======================================================================================= ============
Data File Annual Oct-95 Nov-95 Dec-95 Totals
======================================================================================= ============
<S> <C> <C> <C> <C> <C>
Total Outlet 3 Covers 8,799 8,419 5,651 83,236
Total Outlet 3 Revenue $4,663 $4,462 $2,995 $44,115
Average Check $0.53 $0.53 $0.53 $0.53
- --------------------------------------------------------------------------------------- ------------
Food Outlet #4
Outlet #4 Cvs-BRK NA 0 0 0 0
Outlet #4 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet #4 AC.-BRK NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #4 Cvs-LUNCH NA 0 0 0 0
Outlet #4 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet #4 AC.-LUNCH NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #4 Cvs-DIN NA 0 0 0 0
Outlet #4 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet #4 AC.-DIN NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Total Outlet 4 Covers 0 0 0 0
Total Outlet 4 Revenue $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00
- --------------------------------------------------------------------------------------- ------------
Food Outlet #5
Outlet #5 Cvs-BRK NA 0 0 0 0
Outlet #5 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet #5 AC.-BRK NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #5 Cvs-LUNCH NA 0 0 0 0
Outlet #5 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet #5 AC.-LUNCH NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #5 Cvs-DIN NA 0 0 0 0
Outlet #5 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet #5 AC.-DIN NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Total Outlet 5 Covers 0 0 0 0
Total Outlet 5 Revenue $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00
- --------------------------------------------------------------------------------------- ------------
Food Outlet #6
Outlet #6 Cvs-BRK NA 0 0 0 0
Outlet #6 Cvs-/OR NA 0.0 0.0 0.0 0
Outlet $6 AC.-BRK NA 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Outlet #6 Cvs-LUNCH NA 0 0 0 0 0 0 0 0
Outlet #6 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #6 AC.-LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Outlet #6 Cvs-DIN NA 0 0 0 0 0 0 0 0
Outlet #6 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #6 AC.-DIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Total Outlet 6 Covers 0 0 0 0 0 0 0 0
Total Outlet 6 Revenue $0 $0 $0 $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Food Outlet #7
Outlet #7 Cvs-BRK NA 0 0 0 0 0 0 0 0
Outlet #7 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #7 AC.-BRK NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Outlet #7 Cvs-LUNCH NA 0 0 0 0 0 0 0 0
Outlet #7 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #7 AC.-LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Outlet #7 Cvs-DIN NA 0 0 0 0 0 0 0 0
Outlet #7 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #7 AC.-DIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Total Outlet 7 Covers 0 0 0 0 0 0 0 0
Total Outlet 7 Revenue $0 $0 $0 $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Outlet #8 Cvs-BRK NA 0 0 0 0 0 0 0 0
Outlet #8 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #8 AC.-BRK NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Outlet #8 Cvs-LUNCH NA 0 0 0 0 0 0 0 0
Outlet #8 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #8 AC.-LUNCH NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
Total Revenue 0 0 0 0 0 0 0 0
Outlet #8 Cvs-DIN NA 0 0 0 0 0 0 0 0
Outlet #8 Cvs-/OR NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Outlet #8 AC.-DIN NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0 0 0 0
<CAPTION>
======================================================================================================== ============
Data File Annual Sep-95 Oct-95 Nov-95 Dec-95 Totals
======================================================================================================== ============
<S> <C> <C> <C> <C> <C> <C>
Outlet #6 Cvs-LUNCH NA 0 0 0 0 0
Outlet #6 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #6 AC.-LUNCH NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #6 Cvs-DIN NA 0 0 0 0 0
Outlet #6 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #6 AC.-DIN NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Total Outlet 6 Covers 0 0 0 0 0
Total Outlet 6 Revenue $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00
- -------------------------------------------------------------------------------------------------------- ------------
Food Outlet #7
Outlet #7 Cvs-BRK NA 0 0 0 0 0
Outlet #7 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #7 AC.-BRK NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #7 Cvs-LUNCH NA 0 0 0 0 0
Outlet #7 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #7 AC.-LUNCH NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #7 Cvs-DIN NA 0 0 0 0 0
Outlet #7 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #7 AC.-DIN NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Total Outlet 7 Covers 0 0 0 0 0
Total Outlet 7 Revenue $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00
- -------------------------------------------------------------------------------------------------------- ------------
Outlet #8 Cvs-BRK NA 0 0 0 0 0
Outlet #8 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #8 AC.-BRK NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #8 Cvs-LUNCH NA 0 0 0 0 0
Outlet #8 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #8 AC.-LUNCH NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #8 Cvs-DIN NA 0 0 0 0 0
Outlet #8 Cvs-/OR NA 0.0 0.0 0.0 0.0 0
Outlet #8 AC.-DIN NA 0.00 0.00 0.00 0.00 $0.00
Total Covers 0 0 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Total Revenue 0 0 0 0
Total Outlet 8 Covers 0 0 0 0
Total Outlet 8 Revenue $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00
-----------------------------------------------------------------------------------------------------------------------------
Food Outlet #9
Outlet #9 Cvs-BRK NA 0 0 0 0
Outlet #9 Cvs-/OR NA 0.0 0.0 0.0 0.0
Outlet #9 AC.-BRK NA 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #9 Cvs-LUNCH NA 0 0 0 0
Outlet #9 Cvs-/OR NA 0.0 0.0 0.0 0.0
Outlet #9 AC.-LUNCH NA 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #9 Cvs-DIN NA 0 0 0 0
Outlet #9 Cvs-/OR NA 0.0 0.0 0.0 0.0
Outlet #9 AC.-DIN NA 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Total Outlet 9 Covers 0 0 0 0
Total Outlet 9 Revenue $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00
-----------------------------------------------------------------------------------------------------------------------------
Total Regular Covers 13,869 15,085 16,703 18,691
311037 Total Regular Food Revenue $131,664 $167,607 $188,753 $269,598
Average Check $9.49 $11.11 $11.30 $14.42
Total AM Covers (exc.RS) 9.869 9,585 11,203 11,691
Total PM Covers 4,000 5,500 5,500 7,000
-----------------------------------------------------------------------------------------------------------------------------
Banquet
Banquet Covers -BRK NA 288 106 179 121
Banquet Covers /OR NA 0.0 0.0 0.0 0.0
Banquet Avg.Chk. -BRK NA 12.72 12.72 12.72 12.72
Total Covers 288 106 179 121
311008 Total Revenue 2,651 1,349 2,275 1,537
Banquet Covers -LUNCH NA 1,928 1,273 1,311 1,102
Banquet Covers /OR NA 0.0 0.0 0.0 0.0
Banquet Avg.Chk-LUNCH NA 22.50 22.50 22.50 29.50
Total Covers 1928.0 1,273 1,311 1,102
311009 Total Revenue 43,382 28,642 29,507 32,523
Banquet Covers -DINNER NA 521.0 212 596 423
Banquet Covers /OR NA 0.0 0.0 0.0 0.0
Banquet AvgChk-Dinner NA 30.00 30.00 30.00 38.00
Total Covers 521.0 212 596 423
311010 Total Revenue 15,633 6,365 17,883 16,069
Banquet Covers-RECEPT NA 208 477 179 544
Banquet Covers /OR NA 0.0 0.0 0.0 0.0
Banquet AvgChk-RECEPT NA 18.00 18.00 18.00 28.00
<CAPTION>
====================================================================================================================================
Data File May-95 Jun-95 Jul-95 Aug-95 Sep-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Total Revenue 0 0 0 0 0
Total Outlet 8 Covers 0 0 0 0 0
Total Outlet 8 Revenue $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00
-----------------------------------------------------------------------------------------------------------------------------
Food Outlet #9
Outlet #9 Cvs-BRK 0 0 0 0 0
Outlet #9 Cvs-/OR 0.0 0.0 0.0 0.0 0.0
Outlet #9 AC.-BRK 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #9 Cvs-LUNCH 0 0 0 0 0
Outlet #9 Cvs-/OR 0.0 0.0 0.0 0.0 0.0
Outlet #9 AC.-LUNCH 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Outlet #9 Cvs-DIN 0 0 0 0 0
Outlet #9 Cvs-/OR 0.0 0.0 0.0 0.0 0.0
Outlet #9 AC.-DIN 0.00 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0 0
Total Revenue 0 0 0 0 0
Total Outlet 9 Covers 0 0 0 0 0
Total Outlet 9 Revenue $0 $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00 $0.00
-----------------------------------------------------------------------------------------------------------------------------
Total Regular Covers 22,360 23,156 23,656 24,311 24,698
311037 Total Regular Food Revenue $309,825 $342,034 $344,269 $363,137 $354,297
Average Check $13.81 $14.77 $14.55 $14.94 $14.35
Total AM Covers (exc.RS) 14,360 14,156 14,656 14,911 15,190
Total PM Covers 8,000 9,000 9,000 9,500 9,500
-----------------------------------------------------------------------------------------------------------------------------
Banquet
Banquet Covers -BRK 229 89 386 450 497
Banquet Covers /OR 0.0 0.0 0.0 0.0 0.0
Banquet Avg.Chk. -BRK 12.72 12.72 12.72 14.50 12.72
Total Covers 229 29 386 450 497
311008 Total Revenue 2,009 1,130 4,911 6,525 6,326
Banquet Covers -LUNCH 1,601 924 1,776 1,850 2,072
Banquet Covers /OR 0.0 0.0 0.0 0.0 0.0
Banquet Avg.Chk-LUNCH 29.50 29.50 28.50 28.50 24.50
Total Covers 1,601 924 1,776 1,850 2,072
311009 Total Revenue 47,231 27,244 50,618 52,725 50,770
Banquet Covers -DINNER 1,067 710 309 825 481
Banquet Covers /OR 0.0 0.0 0.0 0.0 0.0
Banquet AvgChk-Dinner 30.00 38.00 38.00 38.00 38.00
Total Covers 1,067 710 309 825 481
311010 Total Revenue 32,021 26,995 9,266 31,350 18,276
Banquet Covers-RECEPT 915 213 77 250 497
Banquet Covers /OR 0.0 0.0 0.0 0.0 0.0
Banquet AvgChk-RECEPT 18.00 28.00 19.00 36.00 19.00
<CAPTION>
================================================================================================ ==============
Data File Oct-95 Nov-95 Dec-95 Totals
================================================================================================ ==============
<S> <C> <C> <C> <C> <C>
Total Revenue 0 0 0 0
Total Outlet 8 Covers 0 0 0 0
Total Outlet 8 Revenue $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00
-----------------------------------------------------------------------------------------------------------------------------
Food Outlet #9
Outlet #9 Cvs-BRK 0 0 0 0
Outlet #9 Cvs-/OR 0.0 0.0 0.0 0.0
Outlet #9 AC.-BRK 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #9 Cvs-LUNCH 0 0 0 0
Outlet #9 Cvs-/OR 0.0 0.0 0.0 0.0
Outlet #9 AC.-LUNCH 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Outlet #9 Cvs-DIN 0 0 0 0
Outlet #9 Cvs-/OR 0.0 0.0 0.0 0.0
Outlet #9 AC.-DIN 0.00 0.00 0.00 0.00
Total Covers 0 0 0 0
Total Revenue 0 0 0 0
Total Outlet 9 Covers 0 0 0 0
Total Outlet 9 Revenue $0 $0 $0 $0
Average Check $0.00 $0.00 $0.00 $0.00
----------------------------------------------------------------------------------------- --------------------------------
Total Regular Covers 26,259 25,965 21,759 256,504
311037 Total Regular Food Revenue $363,294 $357,921 $344,605 $3,536,003
Average Check $13.84 $13.70 $15.84 $13.79
Total AM Covers (exc.RS) 16,759 16,965 12,759 162,004
Total PM Covers 9,000 9,000 9,000 94,000
----------------------------------------------------------------------------------------- --------------------------------
Banquet
Banquet Covers -BRK 616 105 679 3,664
Banquet Covers /OR 0.0 0.0 0.0 0
Banquet Avg.Chk. -BRK 1272 1272 12.72 $12.94
Total Covers 616 105 678 3,664
311008 Total Revenue 7,835 1,339 8,626 47,412
Banquet Covers -LUNCH 2,024 1,347 622 17,830
Banquet Covers /OR 0.0 0.0 0.0 0
Banquet Avg.Chk-LUNCH 22.50 28.50 22.50 25.83
Total Covers 2,024 1,347 622 17,930
311009 Total Revenue 45,535 38,391 13,986 460,554
Banquet Covers -DINNER 2,112 925 849 9,030
Banquet Covers /OR 0.0 0.0 0.0 0
Banquet AvgChk-Dinner 30.00 36.00 30.00 $32.78
Total Covers 2,112 926 848 9,030
311010 Total Revenue 63,353 33,339 25,430 295,980
Banquet Covers-RECEPT 1,496 1,010 1,500 7367.0
Banquet Covers /OR 0.0 0.0 0.0 0
Banquet AvgChk-RECEPT 18.00 24.00 26.00 $21.75
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Total Covers 208.0 477 179 544
311007 Total Revenue 3752.0 8,592 3,219 15,223
Banquet Covers COF BRK NA 2606.0 3,023 3,755 3,625
Banquet Covers /OR NA 0.0 0.0 0.0 0.0
Banquet AvgChk COF BRK NA 10.00 10.00 10.00 14.56
Total Covers 2,606 3,023 3,755 3,625
311007 Total Revenue 26,055 30,233 37,554 52,774
Total Banquet Covers 5,472 5,092 6,021 5,814
Total Banquet Revenue $91,473 $75,181 $90,438 $118,127
Average Check $16.72 $14.77 $15.02 $20.32
Total AM Banquet Covers 4,742 4,402 5,246 4,848
Total PM Banquet Covers 730 690 775 967
-----------------------------------------------------------------------------------------------------------------------------
Total All Food Revenue $235,937 $261,225 $302,300 $405,714
Total All Covers 20,591 22,033 24,810 26,167
-----------------------------------------------------------------------------------------------------------------------------
Other Revenues:
311270 Public Room Rental N/A 5,460 6,255 14,272 14,765
311262 Banquet Other N/A 6,054 4,109 9,205 13,165
311228 Audio/Visual N/A 14,129 18,224 23,276 24,193
311229 Banq Gratuity Recover 3.5% NA NA NA NA
311262 Room Srv. Del.Chrg 0 0 0 0 0
311262 Bev Entertainment Chg 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------------
Food Department - Cost of Sales:
311100 Food Cost % NA 29.00% 29.00% 29.00% 28.00%
311136 Audio/Visual Cost % NA 15.00% 15.00% 15.00% 15.00%
311136 Banquet Other Cost % NA 20.00% 20.00% 20.00% 20.00%
-----------------------------------------------------------------------------------------------------------------------------
Food Department - Payroll
Roga Service/Restaurant
Restaurant Manager
Minimum Hours/Week Required 114.00 114.00 96.00 114.00
Adequate to covers of -----) 99999.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 504 456 425 488
Maximum monthly hours allowed 750 750 750 750
Hourly Wage $15.00 $15.00 $15.00 $15.00
Asst. Restaurant Manager
Minimum Hours/Week Required 112.00 112.00 112.00 112.00
Adequate to covers of -----) 99999.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 496.0 448 496 480
Maximum monthly hours allowed 1,500 1,500 1,500 1,500
Hourly Wage $12.78 $12.78 $12.78 $12.78
Room Service Supervisor
Minimum Hours/Week Required 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
<CAPTION>
====================================================================================================================================
Data File May-95 Jun-95 Jul-95 Aug-95 Sep-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Total Covers 915 213 77 250 497
311007 Total Revenue 16,468 5,967 1,390 6,500 8,952
Banquet Covers COF BRK 4,727 2,557 4,093 1,000 4,145
Banquet Covers /OR 0.0 0.0 0.0 0.0 0.0
Banquet AvgChk COF BRK 10.00 16.00 10.00 16.00 14.00
Total Covers 4,727 2,557 4,093 1,000 4,145
311007 Total Revenue 47,269 40,919 40,927 16,000 58,023
Total Banquet Covers 8,539 4,493 6,641 4,375 7,692
Total Banquet Revenue $145,897 $102,255 $107,112 $113,100 $142,348
Average Check $17.09 $22.76 $16.13 $25.85 $18.51
Total AM Banquet Covers 6,557 3,570 6,255 3,300 6,714
Total PM Banquet Covers 1,982 924 386 1,075 978
-----------------------------------------------------------------------------------------------------------------------------
Total All Food Revenue $475,795 $463,914 $472,170 $500,032 $517,175
Total All Covers 32,843 29,461 32,189 30,784 34,247
-----------------------------------------------------------------------------------------------------------------------------
Other Revenues:
311270 Public Room Rental 11,520 12,295 12,568 9,726 11,335
311262 Banquet Other 6,002 5,669 10,010 8,366 12,560
311228 Audio/Visual 21,210 17,543 24,038 20,385 24,941
311229 Banq Gratuity Recover NA NA NA NA NA
311262 Room Srv. Del.Chrg 0 0 0 0 0
311262 Bev Entertainment Chg 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------------
Food Department - Cost of Sales:
311100 Food Cost % 28.00% 28.00% 28.00% 28.00% 28.00%
311136 Audio/Visual Cost % 15.00% 15.00% 15.00% 15.00% 15.00%
311136 Banquet Other Cost % 20.00% 20.00% 20.00% 20.00% 20.00%
-----------------------------------------------------------------------------------------------------------------------------
Food Department - Payroll
Roga Service/Restaurant
Restaurant Manager
Minimum Hours/Week Required 114.00 112.00 114.00 112.00 114.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 504 403 504 496 488
Maximum monthly hours allowed 750 750 750 750 750
Hourly Wage $15.00 $15.00 $15.00 $15.00 $15.00
Asst. Restaurant Manager
Minimum Hours/Week Required 112.00 112.00 112.00 112.00 112.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 496 480 496 496 480
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500
Hourly Wage $12.78 $12.78 $12.78 $12.78 $12.78
Room Service Supervisor
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
<CAPTION>
=============================================================================================== ==============
Data File Oct-95 Nov-95 Dec-95 Totals
=============================================================================================== ==============
<S> <C> <C> <C> <C> <C>
Total Covers 1,496 1,010 1,500 7,367
311007 Total Revenue 26,925 24,247 39,000 160,236
Banquet Covers COF BRK 4,575 2,694 1,800 39,608
Banquet Covers /OR 0.0 0.0 0.0 0
Banquet AvgChk COF BRK 10.00 10.00 14.00 $11.60
Total Covers 4,575 2,694 1,808 38,608
311007 Total Revenue 45,755 26,941 25,316 447,766
Total Banquet Covers 10,823 6,083 5,456 76,500
Total Banquet Revenue $189,402 $124,256 $112,358 $1,411,946
Average Check $17.50 $20.43 $20.59 $18.46
Total AM Banquet Covers 7,215 4,146 3,108 60,103
Total PM Banquet Covers 3,608 1,936 2,348 16,397
---------------------------------------------------------------------------------------- -------------
Total All Food Revenue $576,404 $501,857 $472,924 $5,185,437
Total All Covers 39,721 34,152 28,910 355,909
---------------------------------------------------------------------------------------- -------------
Other Revenues:
311270 Public Room Rental 7,560 9,091 3,669 118,516
311262 Banquet Other 4,045 5,886 4,498 89,569
311228 Audio/Visual 12,109 10,442 3,860 214,350
311229 Banq Gratuity Recover NA NA NA NA
311262 Room Srv. Del.Chrg 0 0 0 0
311262 Bev Entertainment Chg 0 0 0 0
---------------------------------------------------------------------------------------- -------------
Food Department - Cost of Sales:
311100 Food Cost % 28.00% 28.00% 28.00%
311136 Audio/Visual Cost % 15.00% 15.00% 15.00%
311136 Banquet Other Cost % 20.00% 20.00% 20.00%
---------------------------------------------------------------------------------------- -------------
Food Department - Payroll
Roga Service/Restaurant
Restaurant Manager
Minimum Hours/Week Required 112.00 114 114
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 496 488 504 5,933
Maximum monthly hours allowed 750 750 750 0.070
Hourly Wage $15.00 $15.00 $15.00
Asst. Restaurant Manager
Minimum Hours/Week Required 112.00 112.00 112.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 496 480 496 5,940
Maximum monthly hours allowed 1,500 1,500 1,500 0.070
Hourly Wage $12.78 $12.78 $12.78
Room Service Supervisor
Minimum Hours/Week Required 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 0 0 0 0
Maximum monthly hours allowed 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00
Hostess/Cashier
Minimum Hours/Week Required 112.00 112.00 112.00 112.00
Adequate to covers of -----) 0.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 496.0 448 496 480
Maximum monthly hours allowed 750 750 750 750
Hourly Wage $7.00 $7.00 $7.00 $7.00
Food Server - AM
Minimum Hours/Week Required 446.00 446.00 446.00 446.00
Adequate to covers of -----) 100.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 1975.0 1,784 1,975 1,911
Maximum monthly hours allowed 3,000 3,000 3,000 3,000
Hourly Wage $3.25 $3.25 $3.25 $3.25
Food Server - PM
Minimum Hours/Week Required 1150.00 1150.00 1150.00 1300.00
Adequate to covers of -----) 100.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 5,092 4,600 5,092 5,571
Maximum monthly hours allowed 9,500 9,500 9,500 9,500
Hourly Wage $3.00 $3.00 $3.00 $3.00
Dining Room Busser
Minimum Hours/ Weeks Required 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 0 0 0 0
Maximum monthly hours allowed 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00
Room Service Server
Minimum Hours/Week Required 232.00 232.00 232.00 232.00
Adequate to covers of -----) 100.00 xx xx xx
Covers where max needed: 0.00 xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0
Total Hours for the Month 1,027 928 1,027 994
Maximum monthly hours allowed 1,500 1,500 1,500 1,500
Hourly Wage $3.95 $3.95 $4.00 $4.05
Room Service Operator
<CAPTION>
====================================================================================================================================
Data File May-95 Jun-95 Jul-95 Aug-95 Sep-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00
Hostess/Cashier
Minimum Hours/Week Required 112.00 112.00 112.00 112.00 112.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 496 480 496 496 480
Maximum monthly hours allowed 750 750 750 750 750
Hourly Wage $7.00 $7.00 $7.00 $7.00 $7.00
Food Server - AM
Minimum Hours/Week Required 446.00 446.00 446.00 446.00 446.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 1,975 1,911 1,975 1,975 1,911
Maximum monthly hours allowed 3,000 3,000 3,000 3,000 3,000
Hourly Wage $3.25 $3.25 $3.25 $3.25 $3.25
Food Server - PM
Minimum Hours/Week Required 1300.00 1400.00 1400.00 1500.00 1500.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 5,757 6,000 6,200 6,642 6,428
Maximum monthly hours allowed 9,500 9,500 9,500 9,500 9,500
Hourly Wage $3.00 $3.00 $3.00 $3.00 $3.00
Dining Room Busser
Minimum Hours/ Weeks Required 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00
Room Service Server
Minimum Hours/Week Required 232.00 232.00 232.00 232.00 232.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 1,027 994 1,027 1,027 994
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500
Hourly Wage $4.05 $4.05 $4.05 $4.05 $4.05
Room Service Operator
<CAPTION>
================================================================================================ ==============
Data File Oct-95 Nov-95 Dec-95 Totals
================================================================================================ ==============
<S> <C> <C> <C> <C> <C>
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 0 0 0 0
Maximum monthly hours allowed 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00
Hostess/Cashier
Minimum Hours/Week Required 112.00 112.00 112.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 496 480 496 5,840
Maximum monthly hours allowed 750 750 750 0.070
Hourly Wage $7.00 $7.00 $7.00
Food Server - AM
Minimum Hours/Week Required 446.00 446.00 446.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 1,975 1,911 1,975 23,253
Maximum monthly hours allowed 3,000 3,000 3,000 0.279
Hourly Wage $3.25 $3.25 $3.25
Food Server - PM
Minimum Hours/Week Required 1600.00 1600.00 1600.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 7,085 6,857 7,085 72,407
Maximum monthly hours allowed 9,500 9,500 9,500 0.970
Hourly Wage $3.00 $3.00 $3.00
Dining Room Busser
Minimum Hours/ Weeks Required 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 0 0 0 0
Maximum monthly hours allowed 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00
Room Service Server
Minimum Hours/Week Required 232.00 232.00 232.00
Adequate to covers of -----) xx xx xx
Covers where max needed: xx xx xx
Incremental Hrs./Cover xx xx xx
Incremental Hrs. for the Mon. 0 0 0
Total Hours for the Month 1,027 994 1,027 12,073
Maximum monthly hours allowed 1,500 1,500 1,500 0.145
Hourly Wage $4.05 $4.05 $4.10
Room Service Operator
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx xx xx
Covers where max needed 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Busser - AM
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Busser - PM
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Room Service/Restaurant - Total Wages
311304 Restaurant Manager $7,560 $6,840 $6,375 $7,320 $7,560 $7,200
311304 Asst. Restaurant Manager 6,339 5,725 6,339 6,134 6,339 6,134
311304 Room Service Supervisor 0 0 0 0 0 0
311317 Hostess/Cashier 3,472 3,136 3,472 3,360 3,472 3,360
311319 Food Server - AM 6,419 5,798 6,419 6,211 6,419 6,211
311319 Food Server - PM 15,276 13,800 15,276 16,713 17,271 18,000
311321 Dining Room Busser 0 0 0 0 0 0
311344 Room Service Server 4,057 3,666 4,108 4,026 4,159 4,026
311345 Room Service Operator 0 0 0 0 0 0
311321 Busser - AM 0 0 0 0 0 0
311321 Busser - PM 0 0 0 0 0 0
------- ------- ------- ------ ------- -------
Total Room Serv./Rest. Wages $43,122 $38,965 $41,989 43,764 $45,220 $44,931
------- ------- ------- ------ ------- -------
Banquet - Hours per Week
Banquet Manager
Minimum Hours/Week Required 38.00 32.00 40.00 38.00 38.00 40.00
Adequate to covers of -----) 100.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 128 177 162 168 171
Maximum monthly hours allowed 350 350 350 350 350 350
Hourly Wage $13.63 $13.63 $13.63 $13.63 $13.63 $13.63
Asst. Banquet Manager
Minimum Hours/Week Required 51.00 51.00 62.00 81.00 74.00 71.00
<CAPTION>
=========================================================================================================================== ========
Data File Annual Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
=========================================================================================================================== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Busser - AM
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Busser - PM
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Room Service/Restaurant - Total Wages
11304 Restaurant Manager $7,560 $7,440 $7,320 $7,440 $7,320 $7,560 $97,495
11304 Asst. Restaurant Manager 6,339 6,339 6,134 6,339 6,134 6,339 74,635
11304 Room Service Supervisor 0 0 0 0 0 0 0
11317 Hostess/Cashier 3,472 3,472 3,360 3,472 3,360 3,472 40,980
11319 Food Server - AM 6,419 6,419 6,211 6,419 6,211 6,419 75,572
11319 Food Server - PM 18,600 19,926 19,284 21,255 20,571 21,255 217,227
11321 Dining Room Busser 0 0 0 0 0 0 0
11344 Room Service Server 4,159 4,159 4,026 4,159 4,026 4,211 48,781
11345 Room Service Operator 0 0 0 0 0 0 0
11321 Busser - AM 0 0 0 0 0 0 0
11321 Busser - PM 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- --------
Total Room Serv./Rest. Wages $46,549 $47,755 $46,335 $49,084 $47,622 $49,255 $544,591
------- ------- ------- ------- ------- ------- --------
Banquet - Hours per Week
Banquet Manager
Minimum Hours/Week Required 30.00 40.00 38.00 40.00 38.00 38.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 132 177 162 177 162 168 1,952
Maximum monthly hours allowed 350 350 350 350 350 350 0.023
Hourly Wage $13.63 $13.63 $13.63 $13.63 $13.63 $13.63
Asst. Banquet Manager
Minimum Hours/Week Required 67.00 67.00 77.00 71.00 60.00 53.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Adequate to covers of -----) 100.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 225 204 274 347 327 304
Maximum monthly hours allowed 500 500 500 500 500 500
Hourly Wage $5.00 $5.15 $5.15 $5.15 $5.15 $5.15
Banquet Supervisor
Minimum Hours/Week Required 38.00 55.00 58.00 58.00 50.00 58.00
Adequate to covers of -----) 100.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 220 256 248 221 248
Maximum monthly hours allowed 500 500 500 500 500 500
Hourly Wage $4.59 $4.59 $4.59 $4.59 $4.59 $4.77
Banquet Server - AM
Minimum Hours/Week Required 120.00 110.00 138.00 146.00 150.00 110.00
Adequate to covers of -----) 100.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 531 440 611 625 664 471
Maximum monthly hours allowed 950 950 950 950 950 950
Hourly Wage $4.46 $4.46 $4.46 $4.46 $4.46 $4.52
Banquet Server - PM
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Banquet Utility 95.00 140.00 160.00 180.00 100.00 165.00
Minimum Hours/Week Required 100.00 xx xx xx xx xx
Adequate to covers of -----) 0.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0 0 0 0 0 0
Incremental Hrs. for the Mon. 420 560 708 771 841 707
Total Hours for the Month 1,500 1,500 1,500 1,500 1,500 1,500
Maximum monthly hours allowed $6.24 $6.26 $6.31 $6.31 $6.31 $6.31
Hourly Wage
Banquet - Total Wages
311305 Banquet Manager $2,290 $1,745 $2,413 $2,208 $2,290 $2,331
311305 Asst. Banquet Manager 1,125 1,051 1,411 1,787 1,684 1,566
311305 Banquet Supervisor 771 1,010 1,175 1,138 1,014 1,183
311323 Banquet Server - AM 2,368 1,962 2,725 2,788 2,961 2,129
311323 Banquet Server - PM 0 0 0 0 0 0
311324 Banquet Utility 2,621 3,506 4,467 4,865 5,307 4,461
----- ----- ----- ----- ----- -----
Total Banquet Wages $9,175 $9,273 $12,191 12,786 $13,256 $11,669
<CAPTION>
=========================================================================================================================== ========
Data File Annual Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
=========================================================================================================================== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 296 296 330 314 257 234 3,408
Maximum monthly hours allowed 500 500 500 500 500 500 0.041
Hourly Wage $5.15 $5.15 $5.15 $5.15 $5.15 $5.15
Banquet Supervisor
Minimum Hours/Week Required 55.00 55.00 62.00 55.00 50.00 38.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 243 243 265 243 214 168 2,737
Maximum monthly hours allowed 500 500 500 500 500 500 0.033
Hourly Wage $4.77 $4.77 $4.77 $4.77 $4.77 $4.77
Banquet Server - AM
Minimum Hours/Week Required 120.00 122.00 170.00 165.00 140.00 136.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 531 540 728 730 600 602 7,073
Maximum monthly hours allowed 950 950 950 950 950 950 0.085
Hourly Wage $4.52 $4.52 $4.52 $4.52 $4.52 $4.52
Banquet Server - PM
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Banquet Utility 160.00 166.00 300.00 195.00 180.00 140.00
Minimum Hours/Week Required xx xx xx xx xx xx
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover 0 0 0 0 0 0
Incremental Hrs. for the Mon. 708 735 1,285 863 771 620 8,989
Total Hours for the Month 1,500 1,500 1,500 1,500 1,500 1,500 0.108
Maximum monthly hours allowed $6.31 $6.37 $6.37 $6.44 $6.49 $6.49
Hourly Wage
Banquet - Total Wages
11305 Banquet Manager $1,799 $2,413 $2,208 $2,413 $2,208 $2,290 $26,606
11305 Asst. Banquet Manager 1,524 1,524 1,700 1,617 1,324 1,205 17,517
11305 Banquet Supervisor 1,159 1,159 1,264 1,159 1,021 801 12,855
11323 Banquet Server - AM 2,400 2,441 3,349 3,800 2,712 2,721 31,856
11323 Banquet Server - PM 0 0 0 0 0 0 0
11324 Banquet Utility 4,467 4,682 8,185 5,558 5,004 4,024 57,147
----- ----- ----- ----- ----- ----- ------
Total Banquet Wages $11,350 $12,219 $16,706 $14,046 $12,260 $11,041 $145,981
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Kitchen & Stewarding
Executive Chef
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) 0.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
TAVERN CHEF
Minimum Hours/Week Required 38.00 38.00 32.00 38.00 38.00 40.00
Adequate to covers of -----) 9999.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 152 141 162 168 171
Maximum monthly hours allowed 500 500 500 500 500 500
Hourly Wage $15.62 $15.62 $15.62 $15.62 $15.62 $15.62
Sous Chef
Minimum Hours/Week Required 114.00 114.00 112.00 114.00 114.00 112.00
Adequate to covers of -----) 9999.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 504 456 496 488 504 480
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500
Hourly Wage $15.87 $15.87 $15.87 $15.87 $15.87 $15.87
Banquet Chef (based on total banq covers)
Minimum Hours/Week Required 38.00 38.00 32.00 38.00 38.00 40.00
Adequate to covers of -----) 9999.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 152 141 162 168 171
Maximum monthly hours allowed 500 500 500 500 500 500
Hourly Wage $12.42 $12.42 $12.42 $12.42 $12.42 $12.42
Butcher/Saucier
Minimum Hours/Week Required 38.00 38.00 32.00 38.00 38.00 40.00
Adequate to covers of -----) 9999.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
Incremental Hrs./Cover 0.00 xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 152 141 162 168 171
Maximum monthly hours allowed 350 350 350 350 350 350
Hourly Wage $12.50 $12.50 $12.50 $12.50 $12.50 $12.50
AM Cook (based on total AM covers)
Minimum Hours/Week Required 200.00 200.00 200.00 200.00 200.00 200.00
Adequate to covers of -----) 100.00 xx xx xx xx xx
Covers where max needed: 0.00 xx xx xx xx xx
<CAPTION>
=========================================================================================================================== ========
Data File Annual Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
=========================================================================================================================== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kitchen & Stewarding
Executive Chef
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0 0 0 0 0 0 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
TAVERN CHEF
Minimum Hours/Week Required 38.00 40.00 38.00 32.00 38.00 38.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 177 162 141 162 168 1,940
Maximum monthly hours allowed 500 500 500 500 500 500 0.023
Hourly Wage $15.62 $15.62 $15.62 $15.62 $15.62 $15.62
Sous Chef
Minimum Hours/Week Required 114.00 104.00 114.00 104.00 114.00 114.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 504 460 488 460 488 504 5,832
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500 0.070
Hourly Wage $15.87 $15.87 $15.87 $15.87 $15.87 $15.87
Banquet Chef (based on total banq covers)
Minimum Hours/Week Required 38.00 32.00 38.00 40.00 38.00 38.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 141 162 177 162 168 1,940
Maximum monthly hours allowed 500 500 500 500 500 500 0.023
Hourly Wage $12.42 $12.42 $12.42 $12.42 $12.42 $12.42
Butcher/Saucier
Minimum Hours/Week Required 38.00 32.00 38.00 40.00 38.00 38.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 141 162 177 162 168 1,940
Maximum monthly hours allowed 350 350 350 350 350 350 0.023
Hourly Wage $12.50 $12.50 $12.50 $12.50 $12.50 $12.50
AM Cook (based on total AM covers)
Minimum Hours/Week Required 200.00 200.00 200.00 200.00 200.00 200.00
Adequate to covers of -----) xx xx xx xx xx xx
Covers where max needed: xx xx xx xx xx xx
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 885 800 885 857 885 857
Maximum monthly hours allowed 3,000 3,000 3,000 3,000 3,000 3,000
Hourly Wage $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
PM Cook (based on total PM covers)
Minimum Hours/Week Required 700.00 700.00 700.00 700.00 700.00 700.00
Adequate to covers of -----) 100.xx xx xx xx xx xx
Covers where max needed: 0.xx xx xx xx xx xx
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 3,100 2,800 3,100 3,000 3,100 3,000
Maximum monthly hours allowed 4,500 4,500 4,500 4,500 4,500 4,500
Hourly Wage $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
PASTRY
Minimum Hours/Week Required 196.00 196.00 192.00 196.00 196.00 186.00
Adequate to covers of -----) 100.xx xx xx xx xx xx
Covers where max needed: 0.xx xx xx xx xx xx
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 868 784 850 840 868 797
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500
Hourly Wage $11.66 $11.66 $11.66 $11.66 $11.66 $11.66
Kitchen Utility
Minimum Hours/Week Required 224.00 224.00 224.00 224.00 224.00 224.00
Adequate to covers of -----) 100.xx xx xx xx xx xx
Covers where max needed: 0.xx xx xx xx xx xx
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 992 896 992 960 992 960
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500
Hourly Wage $6.25 $6.25 $6.25 $6.25 $6.25 $6.25
Night Utility
Minimum Hours/Week Required 224.00 224.00 224.00 224.00 224.00 224.00
Adequate to covers of -----) 100.xx xx xx xx xx xx
Covers where max needed: 0.xx xx xx xx xx xx
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 992 896 992 960 992 960
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500
Hourly Wage $6.25 $6.25 $6.25 $6.25 $6.25 $6.25
Receiver/Clerk
Minimum Hours/Week Required 40.00 40.00 40.00 40.00 40.00 40.00
Adequate to covers of -----) 100.xx xx xx xx xx xx
Covers where max needed: 0.xx xx xx xx xx xx
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 177 160 177 171 177 171
Maximum monthly hours allowed 350 350 350 350 350 350
Hourly Wage $8.32 $8.32 $8.32 $8.32 $8.32 $8.32
Stewarding Manager
<CAPTION>
=========================================================================================================================== ========
Data File Annual Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
=========================================================================================================================== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 885 885 857 885 857 885 10,423
Maximum monthly hours allowed 3,000 3,000 3,000 3,000 3,000 3,000 0.125
Hourly Wage $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
PM Cook (based on total PM covers)
Minimum Hours/Week Required 700.00 700.00 700.00 700.00 700.00 700.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 3,100 3,100 3,000 3,100 3,000 3,100 36,500
Maximum monthly hours allowed 4,500 4,500 4,500 4,500 4,500 4,500 0.439
Hourly Wage $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
PASTRY
Minimum Hours/Week Required 196.00 192.00 196.00 192.00 196.00 196.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 868 850 840 850 840 868 10,123
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500 0.122
Hourly Wage $11.66 $11.66 $11.66 $11.66 $11.66 $11.66
Kitchen Utility
Minimum Hours/Week Required 224.00 224.00 224.00 224.00 224.00 224.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 992 992 960 992 960 992 11,680
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500 0.140
Hourly Wage $6.25 $6.25 $6.25 $6.25 $6.25 $6.25
Night Utility
Minimum Hours/Week Required 224.00 224.00 224.00 224.00 224.00 224.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 992 992 960 992 960 992 11,680
Maximum monthly hours allowed 1,500 1,500 1,500 1,500 1,500 1,500 0.140
Hourly Wage $6.25 $6.25 $6.25 $6.25 $6.25 $6.25
Receiver/Clerk
Minimum Hours/Week Required 40.00 40.00 40.00 40.00 40.00 40.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 177 177 171 177 171 177 2,083
Maximum monthly hours allowed 350 350 350 350 350 350 [ILLEGIBLE]
Hourly Wage $8.32 $8.32 $8.32 $8.32 $8.32 $8.32
Stewarding Manager
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum Hours/Week Required 38.00 38.00 32.00 38.00 38.00 40.00
Adequate to covers of -----) 99999.xx xx xx xx xx xx
Covers where max needed: 0.xx xx xx xx xx xx
Incremental Hrs./Cover 0.xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 152 141 162 168 171
Maximum monthly hours allowed 350 350 350 350 350 350
Hourly Wage $11.20 $11.20 $11.20 $11.20 $11.20 $11.20
Kitchen and Stewarding - Total Wages
311302 Executive Chef $0 $0 $0 $0 $0 $0
311318 Kitchen Manager 2,624 2,374 2,202 2,530 2,624 2,671
311318 Sous Chef 7,998 7,237 7,872 7,745 7,998 7,618
311318 Banquet Chef 2,087 1,888 1,751 2,012 2,087 2,124
311318 Butcher/Saucier 2,100 1,900 1,763 2,025 2,100 2,138
311318 AM Cook 7,965 7,200 7,965 7,713 7,965 7,713
311318 PM Cook 27,900 25,200 27,900 27,000 27,900 27,000
311326 Pantry 10,121 9,141 9,911 9,794 10,121 9,293
311318 Kitchen Utility 6,200 5,600 6,200 6,000 6,200 6,000
311318 Night Utility 6,200 5,600 6,200 6,000 6,200 6,000
311308 Receiver/Clerk 1,473 1,331 1,473 1,423 1,473 1,423
311308 Stewarding Manager 1,882 1,702 1,579 1,814 1,882 1,915
------- -------- -------- ------ -------- --------
Total Kitchen & Steward Wages $76,549 $69,174 $74,816 $74,057 $76,549 $73,894
------- -------- -------- ------ -------- --------
F&B Management - Hours per Week
Food & Beverage Director 0 0 0 0 0 0
Asst. Food & Bev. Director 38 38 40 38 38 32
F&B Secretary 38 38 40 38 38 32
F&B Management - Hours per Month
Food & Beverage Director 0 0 0 0 0 0
Asst. Food & Bev. Director 168 152 177 162 168 137
F&B Secretary 168 152 177 162 168 137
Total F&B Management - Hrs/Mo. 336 304 354 324 336 274
F&B Management - Wages per Hour
Food & Beverage Director 0.00 0.00 0.00 0.00 0.00 0.00
Asst. Food & Bev. Director 19.23 19.23 19.23 19.23 19.23 19.23
F&B Secretary 10.00 10.00 10.00 10.00 10.00 10.00
F&B Management - Total Wages
311301 Food & Beverage Director $0 $0 $0 $0 $0 $0
311301 Asst. Food & Bev. Director 3,230 2,922 3,403 3,115 3,230 2,634
311301 F&B Secretary 1,680 1,520 1,770 1,620 1,680 1,370
------- -------- -------- ------ -------- --------
Total F&B Management Wages $4,910 $4,442 $5,173 $4,735 $4,910 $4,004
------- -------- -------- ------ -------- --------
Total Food Salary & Wages 133,757 $121,854 $134,168 35,341 $139,936 $134,498
======= ======== ======== ====== ======== ========
Bonuses 0 0 0 0 0 0
---------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Food Department -Expenses:
311415 Banquet Expense 0 746 705 867 1,009 1,285
<CAPTION>
=========================================================================================================================== ========
Data File Annual Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
=========================================================================================================================== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Minimum Hours/Week Required 38.00 32.00 38.00 40.00 38.00 38.00
Adequate to covers of -----) xx xx xx xx xx
Covers where max needed: xx xx xx xx xx
Incremental Hrs./Cover xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0
Total Hours for the Month 168 141 162 177 162 168 1,940
Maximum monthly hours allowed 350 350 350 350 350 350 0.023
Hourly Wage $11.20 $11.20 $11.20 $11.20 $11.20 $11.20
Kitchen and Stewarding - Total Wages
11302 Executive Chef $0 $0 $0 $0 $0 $0
11318 Kitchen Manager 2,624 2,765 2,530 2,202 2,530 2,624 30,303
11318 Sous Chef 7,998 7,300 7,745 7,300 7,745 7,998 92,554
11318 Banquet Chef 2,087 1,751 2,012 2,198 2,012 2,087 24,095
11318 Butcher/Saucier 2,100 1,763 2,025 2,213 2,025 2,100 24,250
11318 AM Cook 7,965 7,965 7,713 7,965 7,713 7,965 93,807
11318 PM Cook 27,900 27,900 27,000 27,900 27,000 27,900 328,500
11326 Pantry 10,121 9,911 9,794 9,911 9,794 10,121 118,034
11318 Kitchen Utility 6,200 6,200 6,000 6,200 6,000 6,200 73,000
11318 Night Utility 6,200 6,200 6,000 6,200 6,000 6,200 73,000
11308 Receiver/Clerk 1,473 1,473 1,423 1,473 1,423 1,473 17,331
11308 Stewarding Manager 1,882 1,579 1,814 1,982 1,814 1,882 21,728
-------- -------- ------- -------- -------- -------- ----------
Total Kitchen & Steward Wages $76,549 $74,807 $74,057 $75,545 $74,057 $76,549 $896,601
-------- -------- ------- -------- -------- -------- ----------
F&B Management - Hours per Week
Food & Beverage Director 0 0 0 0 0 0
Asst. Food & Bev. Director 38 32 38 40 38 32
F&B Secretary 38 32 38 40 38 32
F&B Management - Hours per Month
Food & Beverage Director 0 0 0 0 0 0 0
Asst. Food & Bev. Director 168 141 162 177 162 141 1,915
F&B Secretary 168 141 162 177 162 141 1,915
Total F&B Management - Hrs/Mo. 336 282 324 354 324 282 3,830
F&B Management - Wages per Hour
Food & Beverage Director 0.00 0.00 0.00 0.00 0.00 0.00
Asst. Food & Bev. Director 19.23 19.23 19.23 19.23 19.23 19.23
F&B Secretary 10.00 10.00 10.00 10.00 10.00 10.00
F&B Management - Total Wages
11301 Food & Beverage Director $0 $0 $0 $0 $0 $0 $0
11301 Asst. Food & Bev. Director 3,230 2,711 3,115 3,403 3,115 2,711 36,819
11301 F&B Secretary 1,680 1,410 1,620 1,770 1,620 1,410 19,150
-------- -------- ------- -------- -------- -------- ----------
Total F&B Management Wages $4,910 $4,121 $4,735 $5,173 $4,735 $4,121 $55,969
-------- -------- ------- -------- -------- -------- ----------
Total Food Salary & Wages $139,359 $138,901 141,832 $143,848 $138,682 $140,967 $1,643,142
======== ======== ======= ======== ======== ======== ==========
Bonuses 0 0 0 0 0 0
------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Food Department -Expenses:
11415 Banquet Expense 1,194 1,276 1,226 1,369 1,621 1,328 1,220
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311425 MGMT INCENTIVE 0 0 0 40,250 0
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311428 China 0 0 0 0 0
% of Food Sales NA 0.40% 0.40% 0.40% 0.40%
$/Cover NA 0.00 0.00 0.00 0.00
311436 Contract Services 0 0 0 0 0
% of Food Sales NA 0.30% 0.30% 0.30% 0.30%
$/Cover NA 0.00 0.00 0.00 0.00
311444 Decorations 0 497 470 578 673
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311465 ADVERTISING EXPENSE 0 0 0 0 0
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311478 Glassware 0 0 0 0 0
% of Food Sales NA 0.20% 0.20% 0.20% 0.20%
$/Cover NA 0.00 0.00 0.00 0.00
311489 CHARGE BACK EXPENSE ####### 0 0 0 0
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311493 Kitchen Fuel 0 497 470 578 673
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311506 Licenses & Inspection 0 746 705 867 1,009
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311508 Linen 0 746 705 867 1,009
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311518 Menus & Bev List 0 497 470 578 673
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311520 BASE MGMT FEE 0 0 0 0 0
% of Food Sales NA 1.50% 1.50% 1.50% 1.50%
$/Cover NA 0.00 0.00 0.00 0.00
311522 Music & Entertainment 0 497 470 578 673
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311528 Paper & Plastics 0 0 0 0 0
% of Food Sales NA 0.10% 0.10% 0.10% 0.10%
<CAPTION>
====================================================================================================================================
Data File May-95 Jun-95 Jul-95 Aug-95 Sep-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311425 MGMT INCENTIVE 0 40,250 0 0 40,250
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311428 China 0 0 0 0 0
% of Food Sales 0.40% 0.40% 0.40% 0.40% 0.40%
$/Cover 0.00 0.00 0.00 0.00 0.00
311436 Contract Services 0 0 0 0 0
% of Food Sales 0.30% 0.30% 0.30% 0.30% 0.30%
$/Cover 0.00 0.00 0.00 0.00 0.00
311444 Decorations 857 796 851 817 913
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311465 ADVERTISING EXPENSE 0 0 0 0 0
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311478 Glassware 0 0 0 0 0
% of Food Sales 0.20% 0.20% 0.20% 0.20% 0.20%
$/Cover 0.00 0.00 0.00 0.00 0.00
311489 CHARGE BACK EXPENSE 0 0 0 0 0
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311493 Kitchen Fuel 857 796 851 817 913
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311506 Licenses & Inspection 1,285 1,194 1,276 1,226 1,369
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311508 Linen 1,295 1,194 1,276 1,226 1,369
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311518 Menus & Bev List 857 796 851 817 913
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311520 BASE MGMT FEE 0 0 0 0 0
% of Food Sales 1.50% 1.50% 1.50% 1.50% 1.50%
$/Cover 0.00 0.00 0.00 0.00 0.00
311522 Music & Entertainment 857 796 851 817 913
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311528 Paper & Plastics 0 0 0 0 0
% of Food Sales 0.10% 0.10% 0.10% 0.10% 0.10%
<CAPTION>
================================================================================================ ==============
Data File Oct-95 Nov-95 Dec-95 Totals
================================================================================================ ==============
<S> <C> <C> <C> <C> <C>
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311425 MGMT INCENTIVE 0 0 40,250
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311428 China 0 0 0
% of Food Sales 0.40% 0.40% 0.40%
$/Cover 0.00 0.00 0.00
311436 Contract Services 0 0 0
% of Food Sales 0.30% 0.30% 0.30%
$/Cover 0.00 0.00 0.00
311444 Decorations 1,080 892 813
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311465 ADVERTISING EXPENSE 0 0 0
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311478 Glassware 0 0 0
% of Food Sales 0.20% 0.20% 0.20%
$/Cover 0.00 0.00 0.00
311489 CHARGE BACK EXPENSE 0 0 0
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311493 Kitchen Fuel 1,080 892 813
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311506 Licenses & Inspection 1,621 1,338 1,220
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311508 Linen 1,621 1,338 1,220
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311518 Menus & Bev List 1,080 892 813
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311520 BASE MGMT FEE 0 0 0
% of Food Sales 1.50% 1.50% 1.50%
$/Cover 0.00 0.00 0.00
311522 Music & Entertainment 1,080 892 813
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311528 Paper & Plastics 0 0 0
% of Food Sales 0.10% 0.10% 0.10%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$/Cover NA 0.00 0.00 0.00 0.00
311546 Promotional Beverage 0 2,000 2,000 2,500 3,000
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311547 Promotional Food 0 4,000 4,000 5,000 6,000
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311562 Silverware 0 0 0 0 0
% of Food Sales NA 0.20% 0.20% 0.20% 0.20%
$/Cover NA 0.00 0.00 0.00 0.00
311567 Operating Supplies 0 0 0 0 0
% of Food Sales NA 1.20% 1.20% 1.20% 1.20%
$/Cover NA 0.00 0.00 0.00 0.00
311574 Telephone 0 497 470 578 673
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311592 Uniforms 0 1,742 1,646 2,025 2,356
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
311594 Utensils 0 248 235 289 336
% of Food Sales NA 0.00% 0.00% 0.00% 0.00%
$/Cover NA 0.00 0.00 0.00 0.00
<CAPTION>
====================================================================================================================================
Data File May-95 Jun-95 Jul-95 Aug-95 Sep-95
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$/Cover 0.00 0.00 0.00 0.00 0.00
311546 Promotional Beverage 3,000 4,000 4,000 4,000 4,000
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311547 Promotional Food 6,000 8,000 8,000 8,000 8,000
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311562 Silverware 0 0 0 0 0
% of Food Sales 0.20% 0.20% 0.20% 0.20% 0.20%
$/Cover 0.00 0.00 0.00 0.00 0.00
311567 Operating Supplies 0 0 0 0 0
% of Food Sales 1.20% 1.20% 1.20% 1.20% 1.20%
$/Cover 0.00 0.00 0.00 0.00 0.00
311574 Telephone 857 796 851 817 913
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311592 Uniforms 3,000 2,788 2,978 2,862 3,196
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
311594 Utensils 428 398 425 408 456
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00 0.00 0.00
<CAPTION>
================================================================================================ ==============
Data File Oct-95 Nov-95 Dec-95 Totals
================================================================================================ ==============
<S> <C> <C> <C> <C> <C>
$/Cover 0.00 0.00 0.00
311546 Promotional Beverage 4,000 4,000 4,000
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311547 Promotional Food 8,000 8,000 8,000
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311562 Silverware 0 0 0
% of Food Sales 0.20% 0.20% 0.20%
$/Cover 0.00 0.00 0.00
311567 Operating Supplies 0 0 0
% of Food Sales 1.20% 1.20% 1.20%
$/Cover 0.00 0.00 0.00
311574 Telephone 1,080 892 813
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311592 Uniforms 3,782 3,123 2,848
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
311594 Utensils 540 446 447
% of Food Sales 0.00% 0.00% 0.00%
$/Cover 0.00 0.00 0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GUEST QUARTERS CHICAGO
Beverage Department Jan-95 Feb-95 Mar-95 Apr-95 May-95
====================================================================================
<S> <C> <C> <C> <C> <C> <C>
321079 Room Service 1,087 8,235 3,701 4,940 4,734
321023 PARK AVENUE CAFE 11,700 23,400 23,400 98,755 104,155
321023 MRS. PARKS TAVERN 35,750 53,022 56,022 67,225 74,222
321023 Bev. Outlet #3 13,961 12,199 11,922 12,806 17,001
321023 Bev. Outlet #4 0 0 0 0 0
321023 Bev. Outlet #5 0 0 0 0 0
321023 Bev. Outlet #6 0 0 0 0 0
321023 Bev. Outlet #7 0 0 0 0 0
321023 Bev. Outlet #8 0 0 0 0 0
321023 Bev. Outlet #9 0 0 0 0 0
321023 Manager's Reception 0 0 0 0 0
--------- ----------------- ------------ ------------ ------------
Total Regular Bev. Rev. 62,398 96,856 95,045 183,726 200,112
321006 Banquet 12,353 8,159 27,232 14,155 30,558
--------- ----------------- ------------ ------------ ------------
Total Beverage Revenue 74,751 105,015 122,277 197,881 230,670
--------- ----------------- ------------ ------------ ------------
321130 Cost of Beverage 15,697 22,053 25,678 41,555 48,440
--------- ----------------- ------------ ------------ ------------
Total Gross Profit 59,054 82,962 96,599 156,326 182,230
--------- ----------------- ------------ ------------ ------------
Expenses
Salaries & Wages 13,688 12,506 13,909 13,489 14,772
321396 Benefits 4,315 5,364 5,348 5,162 6,208
321355 Bonuses 0 0 0 0 0
--------- ----------------- ------------ ------------ ------------
Salaries, Benefits & Bonuses 18,002 17,869 19,257 18,651 20,979
--------- ----------------- ------------ ------------ ------------
Other Expenses 0 0 0 0 0
321415 Banquet Expense 0 0 0 0 0
321471 Bar Expense 0 0 0 0 0
321425 Contracted Labor 0 0 0 0 0
321428 Glassware 299 420 489 791 922
321436 Contracted Services 50 50 50 50 50
321444 Decorations 74 105 122 197 230
321465 Equipment Rentals 0 0 0 0 0
321489 Ice 0 0 0 0 0
321493 Kitchen Fuel 0 0 0 0 0
321501 Laundry Allocation 0 0 0 0 0
321502 Jazz Club Allocation 0 0 0 0 0
321506 Licenses & Inspections 1,420 1,995 2,323 3,759 4,382
321508 Linen 0 0 0 0 0
321518 Menus & Beverage List 74 105 122 197 230
321520 BASE MGMT FEE 1,121 1,575 1,834 2,968 3,460
321522 Music & Entertainment 0 0 0 0 0
321528 Paper & Plastics 0 0 0 0 0
321546 Promotional Beverage 0 0 0 0 0
321547 Promotional Food 0 0 0 0 0
321549 Purchasing 0 0 0 0 0
321557 Security Allocation 0 0 0 0 0
321567 Operating Supplies 598 840 978 1,583 1,845
321574 Telephone 0 0 0 0 0
321592 Uniforms 74 105 122 197 230
321594 Utensils 0 0 0 0 0
--------- ----------------- ------------ ------------ ------------
Total Other Expenses 3,710 5,195 6,040 9,742 11,349
--------- ----------------- ------------ ------------ ------------
<CAPTION>
GUEST QUARTERS CHICAGO
Beverage Department May-95 Jun-95 Jul-95 Aug-95 Sep-95
============================================================================
<S> <C> <C> <C> <C> <C> <C>
321079 Room Service 4,734 6,416 7,995 4,747 8,633
321023 PARK AVENUE CAFE 104,155 109,555 109,555 109,555 109,555
321023 MRS. PARKS TAVERN 74,222 80,402 80,397 75,272 79,397
321023 Bev. Outlet #3 17,001 17,831 15,366 32,212 15,334
321023 Bev. Outlet #4 0 0 0 0 0
321023 Bev. Outlet #5 0 0 0 0 0
321023 Bev. Outlet #6 0 0 0 0 0
321023 Bev. Outlet #7 0 0 0 0 0
321023 Bev. Outlet #8 0 0 0 0 0
321023 Bev. Outlet #9 0 0 0 0 0
321023 Manager's Reception 0 0 0 0 0
---------- ----------- ------------ ------------ ------------
Total Regular Bev. Rev. 200,112 214,204 213,313 221,786 211,919
321006 Banquet 30,558 19,449 13,655 15,541 26,279
---------- ----------- ------------ ------------ ------------
Total Beverage Revenue 230,670 233,653 226,968 237,327 238,198
---------- ----------- ------------ ------------ ------------
321130 Cost of Beverage 48,440 49,067 47,663 49,838 50,021
---------- ----------- ------------ ------------ ------------
Total Gross Profit 182,230 184,586 179,305 187,489 188,177
---------- ----------- ------------ ------------ ------------
Expenses
Salaries & Wages 14,772 13,403 13,702 14,110 13,652
321396 Benefits 6,208 5,022 5,581 5,134 5,519
321355 Bonuses 0 0 0 0 0
---------- ----------- ------------ ------------ ------------
Salaries, Benefits & Bonuses 20,979 18,424 19,282 19,243 19,171
---------- ----------- ------------ ------------ ------------
Other Expenses 0 0 0 0 0
321415 Banquet Expense 0 0 0 0 0
321471 Bar Expense 0 0 0 0 0
321425 Contracted Labor 0 0 0 0 0
321428 Glassware 922 934 907 949 952
321436 Contracted Services 50 50 50 50 50
321444 Decorations 230 233 226 237 238
321465 Equipment Rentals 0 0 0 0 0
321489 Ice 0 0 0 0 0
321493 Kitchen Fuel 0 0 0 0 0
321501 Laundry Allocation 0 0 0 0 0
321502 Jazz Club Allocation 0 0 0 0 0
321506 Licenses & Inspections 4,382 4,439 4,312 4,509 4,525
321508 Linen 0 0 0 0 0
321518 Menus & Beverage List 230 233 226 237 238
321520 BASE MGMT FEE 3,460 3,504 3,404 3,559 3,572
321522 Music & Entertainment 0 0 0 0 0
321528 Paper & Plastics 0 0 0 0 0
321546 Promotional Beverage 0 0 0 0 0
321547 Promotional Food 0 0 0 0 0
321549 Purchasing 0 0 0 0 0
321557 Security Allocation 0 0 0 0 0
321567 Operating Supplies 1,845 1,869 1,815 1,898 1,905
321574 Telephone 0 0 0 0 0
321592 Uniforms 230 233 226 237 238
321594 Utensils 0 0 0 0 0
---------- ----------- ------------ ------------ ------------
Total Other Expenses 11,349 11,495 11,166 11,676 11,718
---------- ----------- ------------ ------------ ------------
<CAPTION>
GUEST QUARTERS CHICAGO
Beverage Department Oct-95 Nov-95 Dec-95 Totals %
================================================ ================================
<S> <C> <C> <C> <C> <C> <C>
321079 Room Service 11,736 5,950 12,929 $81,103 3.4%
321023 PARK AVENUE CAFE 109,555 109,555 109,555 1,028,295 43.0%
321023 MRS. PARKS TAVERN 79,397 77,272 77,272 829,650 34.7%
321023 Bev. Outlet #3 18,917 18,353 12,601 198,403 8.3%
321023 Bev. Outlet #4 0 0 0 0 0.0%
321023 Bev. Outlet #5 0 0 0 0 0.0%
321023 Bev. Outlet #6 0 0 0 0 0.0%
321023 Bev. Outlet #7 0 0 0 0 0.0%
321023 Bev. Outlet #8 0 0 0 0 0.0%
321023 Bev. Outlet #9 0 0 0 0 0.0%
321023 Manager's Reception 0 0 0 0 0.0%
---------- ------------ ------------ ------------- -------
Total Regular Bev. Rev. 219,605 211,130 207,357 2,137,451 89.3%
321006 Banquet 26,197 26,251 35,492 255,321 10.7%
---------- ------------ ------------ ------------- -------
Total Beverage Revenue 245,802 237,381 242,849 $2,392,772 100.0%
---------- ------------ ------------ ------------- -------
321130 Cost of Beverage 51,618 49,850 50,998 502,478 21.0%
---------- ------------ ------------ ------------- -------
Total Gross Profit 194,184 187,531 191,851 $1,890,294 79.0%
---------- ------------ ------------ ------------- -------
Expenses
Salaries & Wages 14,108 13,570 14,484 $165,393 6.9%
321396 Benefits 5,072 5,394 5,715 $63,833 2.7%
321355 Bonuses 0 0 0 0 0.0%
---------- ------------ ------------ ------------- -------
Salaries, Benefits & Bonuses 19,180 18,963 20,199 $229,220 9.6%
---------- ------------ ------------ ------------- -------
Other Expenses 0 0 0 $0 0.0%
321415 Banquet Expense 0 0 0 0 0.0%
321471 Bar Expense 0 0 0 0 0.0%
321425 Contracted Labor 0 0 0 0 0.0%
321428 Glassware 983 949 971 9,566 0.4%
321436 Contracted Services 50 50 50 600 0.0%
321444 Decorations 245 237 242 2,386 0.1%
321465 Equipment Rentals 0 0 0 0 0.0%
321489 Ice 0 0 0 0 0.0%
321493 Kitchen Fuel 0 0 0 0 0.0%
321501 Laundry Allocation 0 0 0 0 0.0%
321502 Jazz Club Allocation 0 0 0 0 0.0%
321506 Licenses & Inspections 4,670 4,510 4,614 45,458 1.9%
321508 Linen 0 0 0 0 0.0%
321518 Menus & Beverage List 245 237 242 2,386 0.1%
321520 BASE MGMT FEE 3,687 3,560 3,642 35,886 1.5%
321522 Music & Entertainment 0 0 0 0 0.0%
321528 Paper & Plastics 0 0 0 0 0.0%
321546 Promotional Beverage 0 0 0 0 0.0%
321547 Promotional Food 0 0 0 0 0.0%
321549 Purchasing 0 0 0 0 0.0%
321557 Security Allocation 0 0 0 0 0.0%
321567 Operating Supplies 1,966 1,899 1,942 19,138 0.0%
321574 Telephone 0 0 0 0 0.0%
321592 Uniforms 245 237 242 2,386 0.1%
321594 Utensils 0 0 0 0 0.0%
---------- ------------ ------------ ------------- -------
Total Other Expenses 12,001 11,670 11,945 $117,906 4.9%
---------- ------------ ------------ ------------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GUEST QUARTERS CHICAGO
Beverage Department Jan-95 Feb-95 Mar-95 Apr-95 May-95
(continued) ===============================================================================
<S> <C> <C> <C> <C> <C> <C>
Total Expenses 21,712 23,064 25,297 28,393 32,328
---------- ---------------- ------------ -------------- -----------
Beverage Department Profit 37,342 59,898 71,302 127,933 149,902
========== ================ ============ ============== ===========
<CAPTION>
GUEST QUARTERS CHICAGO
Beverage Department May-95 Jun-95 Jul-95 Aug-95 Sep-95
(continued) ===========================================================================
<S> <C> <C> <C> <C> <C> <C>
Total Expenses 32,328 29,919 30,448 30,919 30,889
----------- ------------ ------------ ------------ ------------
Beverage Department Profit 149,902 154,667 148,857 156,570 157,288
=========== ============ ============ ============ ============
<CAPTION>
GUEST QUARTERS CHICAGO
Beverage Department Oct-95 Nov-95 Dec-95 Totals %
(continued) ========================================== ========================
<S> <C> <C> <C> <C> <C> <C>
Total Expenses 31,271 30,642 32,144 $347,026 14.5%
--------- ------------ ------------ ------------- -------
Beverage Department Profit 162,913 156,889 159,707 $1,543,268 64.5%
========= ============ ============ ============= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beverage Department - Revenues:
Room Sv. Bev. % of FS NA 2.80% 13.60% 5.70% 10.00% 8.00% 11.70% 13.20%
Room Sv. Bev. $ 0 365 2,864 1,192 1,571 1,525 2,060 2,625
Room Sv. Bev. $/oc. Room NA 0.07 0.54 0.20 0.26 0.20 0.29 0.34
PARK AVENUE CAFE
% of Food Sales NA 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
$ 0 0 0 0 55,555 55,555 55,555 55,555
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
MRS. PARKS TAVERN
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 35,750 53,022 56,022 67,225 74,222 80,402 80,397
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
MINI BAR
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0
$/Occupied Room NA 2.66 2.30 2.00 2.12 2.23 2.51 1.99
Bev. Outlet #4
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0 0 0 0
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #5
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0 0 0 0
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #6
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0 0 0 0
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #7
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0 0 0 0
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #8
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0 0 0 0
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #9
% of Food Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0 0 0 0
$/Occupied Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Mgr. Rec. $/occ. Room NA 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Banquet Bev. % of BFS NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Banquet Bev. $ 0 12,353 8,160 27,233 14,156 30,558 19,449 13,655
BEVERAGE COST % of BS NA 21.00% 21.00% 21.00% 21.00% 21.00% 21.00% 21.00%
<CAPTION>
================================================================================================== ===========
Data File Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
================================================================================================== ===========
<S> <C> <C> <C> <C> <C> <C> <C>
Beverage Department - Revenues:
Room Sv. Bev. % of FS 8.00% 14.60% 16.10% 9.70% 27.90%
Room Sv. Bev. $ 1,422 2,818 3,960 2,021 4,238
Room Sv. Bev. $/oc. Room 0.20 0.34 0.45 0.24 0.75
PARK AVENUE CAFE
% of Food Sales 30.00% 30.00% 30.00% 30.00% 30.00%
$ 55,555 55,555 55,555 55,555 55,555
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
MRS. PARKS TAVERN
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 75,272 78,397 79,397 77,272 72,272
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
MINI BAR
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$
$/Occupied Room 4.53 1.85 2.15 2.18 2.23
Bev. Outlet #4
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #5
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #6
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #7
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #8
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
Bev. Outlet #9
% of Food Sales 0.00% 0.00% 0.00% 0.00% 0.00%
$ 0 0 0 0 0
$/Occupied Room 0.00 0.00 0.00 0.00 0.00
Mgr. Rec. $/occ. Room 0.00 0.00 0.00 0.00 0.00
Banquet Bev. % of BFS 0.00% 0.00% 0.00% 0.00% 0.00%
Banquet Bev. $ 15,541 26,279 26,197 26,251 35,492
BEVERAGE COST % of BS 21.00% 21.00% 21.00% 21.00% 21.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beverage Department - Payroll
Food & Beverage Director
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) 0.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00% xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Beverage Manager/Supervisor
Minimum Hours/Week Required 38.00 38.00 40.00 38.00 38.00 40.00 32.00
Adequate to an occ% of ----) 100.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 168 152 177 162 168 171 141
Maximum monthly hours allowed 350.00 350.00 350.00 350.00 350.00 350.00 350.00
Hourly Wage $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
Bartender
Minimum Hours/Week Required 240.00 240.00 240.00 240.00 240.00 240.00 240.00
Adequate to an occ% of ----) 100.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 1,062 960 1,062 1,028 1,062 1,028 1,062
Maximum monthly hours allowed 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00
Hourly Wage $6.25 $6.25 $6.25 $6.25 $6.25 $6.25 $6.25
Mgr Reception Bartender
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) 0.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Service Bartender
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) 0.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Cocktail Servers
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) 0.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
<CAPTION>
================================================================================================== ===========
Data File Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
================================================================================================== ===========
<S> <C> <C> <C> <C> <C> <C> <C>
Beverage Department - Payroll
Food & Beverage Director
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.00
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00
Beverage Manager/Supervisor
Minimum Hours/Week Required 40.00 32.00 40.00 38.00 38.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 177 137 177 162 168 1,960
Maximum monthly hours allowed 350.00 350.00 350.00 350.00 350.00 0.024
Hourly Wage $9.00 $9.00 $9.00 $9.00 $9.00
Bartender
Minimum Hours/Week Required 240.00 240.00 240.00 240.00 240.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 1,062 1,028 1,062 1,028 1,062 12,506
Maximum monthly hours allowed 1500.00 1500.00 1500.00 1500.00 1500.00 0.150
Hourly Wage $6.25 $6.25 $6.25 $6.25 $6.25
Mgr Reception Bartender
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00
Service Bartender
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.000
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00
Cocktail Servers
Minimum Hours/Week Required 0.00 0.00 0.00 0.00 0.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Bar Utility
Minimum Hours/Week Required 40.00 40.00 40.00 40.00 40.00 40.00 40.00
Adequate to an occ% of ----) 100.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 177 160 177 171 177 171 177
Maximum monthly hours allowed 350.00 350.00 350.00 350.00 350.00 350.00 350.00
Hourly Wage $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00
Banquet Bartender
Minimum Hours/Week Required 19.00 22.00 22.00 26.00 55.00 20.00 26.00
Adequate to an occ% of ----) 100.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 84 88 97 111 243 85 115
Maximum monthly hours allowed 350.00 350.00 350.00 350.00 350.00 350.00 350.00
Hourly Wage $6.46 $6.46 $6.46 $6.46 $6.46 $6.46 $6.46
Honor Bar Attendant
Minimum Hours/Week Required 128.00 128.00 128.00 128.00 128.00 128.00 128.00
Adequate to an occ% of ----) 100.00% xx xx xx xx xx xx
Occupancy where max needed: 0.00% xx xx xx xx xx xx
Incremental Hrs. /Occ. Room 0.00 xx xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0 0 0
Total Hours for the Month 566 512 566 548 566 548 566
Maximum monthly hours allowed 800.00 800.00 800.00 800.00 800.00 800.00 800.00
Hourly Wage $6.95 $7.05 $7.05 $7.05 $7.05 $7.05 $7.05
Beverage - Total Hours 2,057 1,872 2,079 2,020 2,216 2,003 2,061
Beverage - Total Wages:
321301 Food & Beverage Director $0 $0 $0 $0 $0 $0 $0
321302 Beverage Manager/Super 1,512 1,368 1,593 1,458 1,512 1,539 1,269
321319 Bartender 6,638 6,000 6,638 6,425 6,638 6,425 6,638
321319 Mgr Reception Bartender 0 0 0 0 0 0 0
321319 Service Bartender 0 0 0 0 0 0 0
321334 Cocktail Servers 0 0 0 0 0 0 0
321319 Bar Utility 1,062 960 1,062 1,026 1,062 1,026 1,062
321304 Banquet Bartender 543 568 627 717 1,570 549 743
321345 Honor Bar Attendant 3,934 3,610 3,990 3,863 3,990 3,863 3,990
------- ------- ------- ------- ------- ------- -------
Total Beverage Wages $13,688 $12,506 $13,909 $13,489 $14,772 $13,403 $13,702
======= ======= ======= ======= ======= ======= =======
---------------------------------------------------------------------------------------------------------------------
Bonuses $ 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------------------------
Beverage Dept. - Other Expenses
321415 Banquet Expense 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
<CAPTION>
==================================================================================================== ===========
Data File Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
==================================================================================================== ===========
<S> <C> <C> <C> <C> <C> <C> <C>
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 0 0 0 0 0 0
Maximum monthly hours allowed 0.00 0.00 0.00 0.00 0.00
Hourly Wage $0.00 $0.00 $0.00 $0.00 $0.00
Bar Utility
Minimum Hours/Week Required 40.00 40.00 40.00 40.00 40.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 177 171 177 171 177 2083
Maximum monthly hours allowed 350.00 350.00 350.00 350.00 350.00 0.025
Hourly Wage $6.00 $6.00 $6.00 $6.00 $6.00
Banquet Bartender
Minimum Hours/Week Required 29.00 40.00 27.00 27.00 41.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 128 171 119 115 181 1,537
Maximum monthly hours allowed 350.00 350.00 350.00 350.00 350.00 0.018
Hourly Wage $6.46 $6.46 $6.46 $6.46 $6.46
Honor Bar Attendant
Minimum Hours/Week Required 128.00 128.00 128.00 128.00 128.00
Adequate to an occ% of ----) xx xx xx xx xx
Occupancy where max needed: xx xx xx xx xx
Incremental Hrs. /Occ. Room xx xx xx xx xx
Incremental Hrs. for the Mon. 0 0 0 0 0
Total Hours for the Month 566 548 566 548 566 6,666
Maximum monthly hours allowed 800.00 800.00 800.00 800.00 800.00 0.080
Hourly Wage $7.05 $7.05 $7.15 $7.15 $7.25
Beverage - Total Hours 2,110 2,055 2,101 2,024 2,154 24,752
Beverage - Total Wages:
321301 Food & Beverage Director $0 $0 $0 $0 $0 0
321302 Beverage Manager/Super 1,593 1,233 1,593 1,458 1,512 17,640
321319 Bartender 6,638 6,425 6,638 6,425 6,638 78,166
321319 Mgr Reception Bartender 0 0 0 0 0 0
321319 Service Bartender 0 0 0 0 0 0
321334 Cocktail Servers 0 0 0 0 0 0
321319 Bar Utility 1,062 1,026 1,062 1,026 1,062 12,498
321304 Banquet Bartender 827 1,105 769 743 1,169 9,929
321345 Honor Bar Attendant 3,990 3,863 4,047 3,918 4,104 47,163
------- ------- ------- ------- ------- --------
Total Beverage Wages $14,110 $13,652 $14,108 $13,570 $14,484 $165,393
======= ======= ======= ======= ======= ========
------------------------------------------------------------------------------------------
Bonuses $ 0 0 0 0 0
------------------------------------------------------------------------------------------
Beverage Dept. - Other Expenses
321415 Banquet Expense 0 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
321471 Bar Expense 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321425 Contracted Labor 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321428 Glassware 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
321436 Contracted Services 0 50 50 50 50 50 50 50 50
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321444 Decorations 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
321465 Equipment Rentals 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321489 Ice 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321493 Kitchen Fuel 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321502 Jazz Club Allocation 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321506 Licenses & Inspection 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90%
321508 Linen 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321518 Menus & Beverage List 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
321520 BASE MGMT FEE 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
321522 Music & Entertainment 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321528 Paper & Plastics 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321546 Promotional Beverage 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321547 Promotional Food 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
321567 Operating Supplies 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
321574 Telephone 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
<CAPTION>
========================================================================= ==========
Data File Sep-95 Oct-95 Nov-95 Dec-95 Totals
========================================================================= ==========
<S> <C> <C> <C> <C> <C>
321471 Bar Expense 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321425 Contracted Labor 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321428 Glassware 0 0 0 0
% of Bev. Sales 0.40% 0.40% 0.40% 0.40%
321436 Contracted Services 50 50 50 50
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321444 Decorations 0 0 0 0
% of Bev. Sales 0.10% 0.10% 0.10% 0.10%
321465 Equipment Rentals 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321489 Ice 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321493 Kitchen Fuel 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321502 Jazz Club Allocation 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321506 Licenses & Inspection 0 0 0 0
% of Bev. Sales 1.90% 1.90% 1.90% 1.90%
321508 Linen 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321518 Menus & Beverage List 0 0 0 0
% of Bev. Sales 0.10% 0.10% 0.10% 0.10%
321520 BASE MGMT FEE 0 0 0 0
% of Bev. Sales 1.50% 1.50% 1.50% 1.50%
321522 Music & Entertainment 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321528 Paper & Plastics 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321546 Promotional Beverage 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321547 Promotional Food 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
321567 Operating Supplies 0 0 0 0
% of Bev. Sales 0.80% 0.80% 0.80% 0.80%
321574 Telephone 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
Data File Annual Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
321592 Uniforms 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
321594 Utensils 0 0 0 0 0 0 0 0 0
% of Bev. Sales NA 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
<CAPTION>
========================================================================= =========
Data File Sep-95 Oct-95 Nov-95 Dec-95 Totals
========================================================================= =========
<S> <C> <C> <C> <C> <C>
321592 Uniforms 0 0 0 0
% of Bev. Sales 0.10% 0.10% 0.10% 0.10%
321594 Utensils 0 0 0 0
% of Bev. Sales 0.00% 0.00% 0.00% 0.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Food Statistics Summary: Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95
====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Room Service
Room Serv Covers 1,251 1,856 2,086 1,661 1,944 1,812 1,892
Room Serv Avg.Chk $10.24 $9.93 $11.08 $10.83 $10.83 $10.83 $10.99
Room Serv Revenue $12,801 $18,437 $23,108 $17,990 $21,062 $19,626 $20,789
PARK AVENUE CAFE
Outlet #1 Covers 1,500 3,000 3,000 4,000 4,500 5,000 5,000
Outlet #1 Avg. Chk $26.00 $26.00 $26.00 $36.00 $36.00 $36.00 $36.00
Outlet #1 Revenue $39,000 $78,000 $78,000 $144,000 $162,000 $180,000 $180,000
MRS. PARKS TAVERN
Outlet #2 Covers 7,158 6,781 7,742 8,650 10,236 11,052 10,934
Outlet #2 Avg. Chk $12.56 $12.80 $13.90 $14.15 $13.95 $14.32 $14.65
Outlet #2 Revenue $89,902 $86,795 $107,594 $122,396 $142,785 $158,268 $160,176
COFFEE CART
Outlet #3 Covers 5,211 5,304 5,961 6,041 7,624 7,104 7,722
Outlet #3 Avg.Chk $0.53 $0.53 $0.53 $0.53 $0.53 $0.53 $0.53
Outlet #3 Revenue $2,762 $2,811 $3,159 $3,202 $4,041 $3,765 $4,093
Food Outlet #4
Outlet #4 Covers 0 0 0 0 0 0 0
Outlet #4 Avg. Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #4 Revenue $0 $0 $0 $0 $0 $0 $0
Food Outlet #5
Outlet #5 Covers 0 0 0 0 0 0 0
Outlet #5 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #5 Revenue $0 $0 $0 $0 $0 $0 $0
Food Outlet #6
Outlet #6 Covers 0 0 0 0 0 0 0
Outlet #6 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #6 Revenue $0 $0 $0 $0 $0 $0 $0
Food Outlet #7
Outlet #7 Covers 0 0 0 0 0 0 0
Outlet #7 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #7 Revenue $0 $0 $0 $0 $0 $0 $0
Food Outlet #8
Outlet #8 Covers 0 0 0 0 0 0 0
Outlet #8 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #8 Revenue $0 $0 $0 $0 $0 $0 $0
Food Outlet #9
Outlet #9 Covers 0 0 0 0 0 0 0
Outlet #9 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #9 Revenue $0 $0 $0 $0 $0 $0 $0
Total Food Regular (excluding Banquets)
Total Reg. Covers - Reg 15,120 16,941 18,789 20,352 24,304 24,968 25,548
Total Reg. Avg.Chk. - Reg $9.55 $10.98 $11.28 $14.13 $13.57 $14.49 $14.29
Total Reg. Revenue - Reg $144,465 $186,044 $211,862 $287,588 $329,887 $361,659 $365,058
<CAPTION>
Food Statistics Summary: Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
=========================================================================== ============
<S> <C> <C> <C> <C> <C> <C>
Room Service
Room Serv Covers 2,098 1,865 2,640 2,105 1,695 22,905
Room Serv Avg.Chk $11.34 $11.01 $8.98 $9.35 $9.41 $10.37
Room Serv Revenue $23,795 $20,530 $23,708 $19,680 $15,961 $237,487
PARK AVENUE CAFE
Outlet #1 Covers 5,000 5,000 5,000 5,000 5,000 51,000
Outlet #1 Avg. Chk $36.00 $36.00 $36.00 $36.00 $36.00 $34.53
Outlet #1 Revenue $180,000 $180,000 $180,000 $180,000 $180,000 $1,761,000
MRS. PARKS TAVERN
Outlet #2 Covers 12,200 11,401 12,460 12,546 11,108 122,268
Outlet #2 Avg. Chk $14.70 $14.90 $14.34 $13.83 $14.55 $14.16
Outlet #2 Revenue $179,368 $169,904 $178,630 $173,459 $161,610 $1,730,888
COFFEE CART
Outlet #3 Covers 7,111 8,289 8,799 8,419 5,651 83,236
Outlet #3 Avg.Chk $0.53 $0.53 $0.53 $0.53 $0.53 $0.53
Outlet #3 Revenue $3,769 $4,393 $4,663 $4,462 $2,995 $44,115
Food Outlet #4
Outlet #4 Covers 0 0 0 0 0 0
Outlet #4 Avg. Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #4 Revenue $0 $0 $0 $0 $0 $0
Food Outlet #5
Outlet #5 Covers 0 0 0 0 0 0
Outlet #5 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #5 Revenue $0 $0 $0 $0 $0 $0
Food Outlet #6
Outlet #6 Covers 0 0 0 0 0 0
Outlet #6 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #6 Revenue $0 $0 $0 $0 $0 $0
Food Outlet #7
Outlet #7 Covers 0 0 0 0 0 0
Outlet #7 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #7 Revenue $0 $0 $0 $0 $0 $0
Food Outlet #8
Outlet #8 Covers 0 0 0 0 0 0
Outlet #8 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #8 Revenue $0 $0 $0 $0 $0 $0
Food Outlet #9
Outlet #9 Covers 0 0 0 0 0 0
Outlet #9 Avg.Chk $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Outlet #9 Revenue $0 $0 $0 $0 $0 $0
Total Food Regular (excluding Banquets)
Total Reg. Covers - Reg 26,409 26,555 28,899 28,070 23,454 279,409
Total Reg. Avg.Chk. - Reg $14.65 $14.12 $13.39 $13.45 $15.37 $13.51
Total Reg. Revenue - Reg $386,932 $374,828 $387,002 $377,601 $360,566 $3,773,491
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Food Statistics Summary: Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95
(continued) ====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Banquets (Breakfast, Lunch & Dinner)
Banquet Covers 2,658 1,591 2,086 1,646 2,897 1,723 2,471
Banquet Avg.Chk $23.20 $22.85 $23.80 $30.45 $28.36 $32.14 $26.22
Banquet Revenue $61,666 $36,356 $49,665 $150,129 $82,161 $55,369 $64,795
Banquets (Reception & Coffee Breaks)
Banquet Covers 2,814 3,501 3,934 4,168 5,642 2,771 4,170
Banquet Avg.Chk $10.59 $11.09 $10.36 $16.31 $11.38 $16.92 $10.15
Banquet Revenue $29,807 $38,825 $40,773 $67,997 $63,737 $46,886 $42,317
- ----------------------------------------------------------------------------------------------------------------------------------
Total Banquets
Banquet Covers 5,472 5,092 6,021 5,814 8,539 4,493 6,641
Banquet Avg.Chk $16.72 $14.77 $15.02 $20.32 $17.09 $22.76 $16.13
Banquet Revenue $91,473 $75,181 $90,438 $118,127 $145,897 $102,255 $107,112
- ----------------------------------------------------------------------------------------------------------------------------------
Total Food Department
Banquet Covers 20,591 22,033 24,810 26,167 32,843 29,461 32,189
Banquet Avg.Chk $11.46 $11.86 $12.18 $15.50 $14.49 $15.75 $14.67
Banquet Revenue $235,937 $261,225 $302,300 $405,714 $475,785 $463,914 $472,170
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Food Statistics Summary: Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Totals
(continued) =========================================================================== ============
<S> <C> <C> <C> <C> <C> <C>
Banquets (Breakfast, Lunch & Dinner)
Banquet Covers 3,125 3,051 4,751 2,378 2,147 30,525
Banquet Avg.Chk $28.59 $24.71 $24.57 $30.72 $22.37 $26.34
Banquet Revenue $90,600 $75,372 $116,722 $73,069 $48,041 $803,945
Banquets (Reception & Coffee Breaks)
Banquet Covers 1,250 4,642 6,071 3,704 3,308 45,975
Banquet Avg.Chk $18.00 $14.43 $11.97 $13.82 $19.44 $13.22
Banquet Revenue $22,500 $66,975 $72,680 $51,188 $64,316 $608,001
- ----------------------------------------------------------------------------------------------------- ------------
Total Banquets
Banquet Covers 4,375 7,692 10,823 6,083 5,456 76,500
Banquet Avg.Chk $25.85 $18.51 $17.50 $20.43 $20.59 $18.46
Banquet Revenue $113,100 $142,348 $189,402 $124,256 $112,358 $1,411,946
- ----------------------------------------------------------------------------------------------------- ------------
Total Food Department
Banquet Covers 30,784 34,247 39,721 34,152 28,910 355,909
Banquet Avg.Chk $16.24 $15.10 $14.51 $14.69 $16.36 $14.57
Banquet Revenue $500,032 $517,175 $576,404 $501,857 $472,924 $5,185,437
- ----------------------------------------------------------------------------------------------------- ------------
</TABLE>
<PAGE>
Exhibit 10.15
- --------------------------------------------------------------------------------
$15,000,000
LOAN AGREEMENT
Dated as of September 1, 1998
Between
THE NEW YORK RESTAURANT GROUP, INC.
and
FLEET BANK, N.A.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS .................................................. 1
1.1 Defined Terms ................................................ 1
1.2 Accounting Terms; UCC Terms .................................. 12
1.3 Certain Matters of Construction .............................. 12
SECTION 2. AMOUNT AND TERMS OF REVOLVING LOAN COMMITMENT
AND TERM LOAN ................................................ 12
2.1 Revolving Loan Commitment .................................... 12
2.2 Revolving Loan Note .......................................... 12
2.3 Procedure for Requesting Advances ............................ 13
2.4 Interest on the Revolving Loan Note .......................... 14
2.5 Restrictions with Respect to Working Capital Advances ........ 14
2.6 Term Loan .................................................... 14
2.7 Term Note .................................................... 14
2.8 Interest on the Term Note .................................... 14
2.9 Prepayment ................................................... 15
2.10 Interest Payments; Default Rate; Manner of Payments .......... 15
2.11 Additional Provisions regarding LIBOR Loans .................. 17
2.12 Indemnities .................................................. 19
2.13 Increased Costs .............................................. 20
2.14 [INTENTIONALLY OMITTED] ...................................... 20
2.15 Taxes ........................................................ 20
2.16 Use of Proceeds .............................................. 22
2.17 Letters of Credit ............................................ 22
SECTION 3. REPRESENTATIONS AND WARRANTIES ............................... 23
3.1 Financial Condition .......................................... 23
3.2 Due Existence and Authority; Compliance with Law ............. 23
3.3 Power and Authority; Authorization; Enforceable Obligations .. 24
3.4 Legal Bar .................................................... 24
3.5 No Material Litigation ....................................... 24
3.6 No Default ................................................... 25
3.7 No Burdensome Restrictions ................................... 25
3.8 Taxes ........................................................ 25
3.9 Federal Regulations .......................................... 25
3.10 Liens on Properties .......................................... 25
3.11 Security Interest ............................................ 25
3.12 Ownership, Leasehold Interests and Liens ..................... 26
3.13 Information .................................................. 26
3.14 Tradenames ................................................... 26
3.15 Solvency ..................................................... 26
3.16 Brokers ...................................................... 26
<PAGE>
3.17 Management Agreements ........................................ 26
3.18 Consents of Restaurant Owners ................................ 27
3.19 Leases ....................................................... 27
3.20 Environmental Compliance ..................................... 27
3.21 No Material Adverse Change ................................... 28
3.22 No Default under Revolving Loan .............................. 29
3.23 Leases ....................................................... 29
3.24 Year 2000 Compliance ......................................... 29
SECTION 4. CONDITIONS PRECEDENT ......................................... 30
4.1 Conditions to Initial Advance ................................ 30
4.2 Conditions to All Extensions of Credit ....................... 33
SECTION 5. AFFIRMATIVE COVENANTS ........................................ 34
5.1 Compliance with Laws, Etc .................................... 34
5.2 Preservation of Existence .................................... 34
5.3 Financial Information and Compliance Certificates ............ 34
5.4 Defaults ..................................................... 35
5.5 Insurance .................................................... 35
5.6 Preservation of Properties ................................... 35
5.7 Taxes ........................................................ 35
5.8 Notice of Litigation ......................................... 36
5.9 Alan Stillman ................................................ 36
5.10 Security Agreement and Projects .............................. 36
5.11 New Restaurants .............................................. 36
SECTION 6. FINANCIAL COVENANTS .......................................... 36
6.1 Covenants .................................................... 36
6.2 Financial Covenants related to Affiliates .................... 37
SECTION 7. NEGATIVE COVENANTS ........................................... 37
7.1 Indebtedness for Borrowed Money .............................. 37
7.2 Mergers and Sales of Assets .................................. 38
7.3 Loans; Investments ........................................... 38
7.4 Liens ........................................................ 38
7.5 Contingent Liabilities ....................................... 38
7.6 Sales of Receivables; Sale - Leasebacks ...................... 38
7.7 INTENTIONALLY OMITTED ........................................ 39
7.8 Nature of Business ........................................... 39
7.9 Accounting Changes ........................................... 39
7.10 Transactions with Affiliates ................................. 39
7.11 Operating Loss ............................................... 39
7.12 Dividends and Distributions .................................. 39
<PAGE>
SECTION 8. EVENTS OF DEFAULT ............................................ 40
SECTION 9. MISCELLANEOUS ................................................ 42
9.1 Notices ...................................................... 42
9.2 No Waiver; Cumulative Remedies ............................... 43
9.3 Survival of Representations and Warranties ................... 43
9.4 Payment of Expenses; Examination ............................. 43
9.5 Waiver of Jury Trial, Setoff and Counterclaim ................ 44
9.6 Waiver of Automatic Stay ..................................... 44
9.7 Modification and Waiver ...................................... 45
9.8 Severability ................................................. 45
9.9 Successors and Assigns ....................................... 45
9.10 Governing Law; Consent to Jurisdiction ....................... 45
9.11 Entire Agreement ............................................. 45
9.12 Interest Adjustment .......................................... 45
9.13 Rates ........................................................ 46
9.14 Section Titles ............................................... 46
9.15 Counterparts ................................................. 46
9.16 Taxes ........................................................ 46
9.17 Tax Treatment ................................................ 47
<PAGE>
LOAN AGREEMENT, dated as of September 1, 1998, between THE NEW YORK
RESTAURANT GROUP, INC., a Delaware corporation (the "Borrower"), with its chief
place of business at 1114 First Avenue, New York, New York 10021, and FLEET
BANK, N.A., a national banking association (the "Bank"), with a place of
business at 1185 Avenue of the Americas, New York, New York 10036.
In consideration of the mutual covenants hereinafter contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. In addition to the defined terms appearing above or
defined in subsequent Sections of this Agreement, as used herein the following
terms shall have the following meanings:
"Adjusted LIBOR Rate" shall mean, the LIBOR Rate, adjusted for any
increases in the LIBOR Reserve Percentage, plus the Applicable Margin with
respect to any LIBOR Interest Period.
"Adjusted Net Income" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, the aggregate income (or
loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period, which shall be an amount equal to revenues and other proper items of
income, less the aggregate for the Borrower and its Subsidiaries on a
consolidated basis of any and all items that are treated as expenses under GAAP
(including, without limitation, Federal, state and local income taxes).
"Adjusted Prime Rate" shall mean a per annum rate equal to 5/8 of one
percent in excess of the Prime Rate.
"Advance" shall mean an advance of funds made by the Bank to the Borrower
subject to and in accordance with the terms of Sections 2.1 and 4.2.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
<PAGE>
"Agreement" shall mean this Loan Agreement, as the same from time to time
may be amended, supplemented or modified, and any appendices, exhibits or
schedules hereto.
"Agreement Regarding Fees" shall mean the Agreement Regarding Fees dated
of even date herewith between the Bank and the Borrower.
"Applicable Margin" shall mean three hundred twenty-five (325) basis
points.
"Appraisal" shall mean an MAI appraisal of the value of a parcel of
Mortgaged Property, determined on an "as-is" fair market value basis or the
prospective fee simple or leasehold estimate, as the case may be, of market
value assuming completion per plans and specifications, performed by an
independent appraiser selected by the Bank who is not an employee of the
Borrower or any of its Subsidiaries, the form and substance of such appraisal
and the identity of the appraiser to be in accordance with regulatory laws and
policies (both regulatory and internal) applicable to the Bank, including,
without limitation, FIRREA, and otherwise acceptable to the Bank.
"Appraised Value" shall mean the fair market value of a parcel of
Mortgaged Property, determined by the most recent Appraisal of such parcel,
subject, however, to such changes or adjustments to the value determined thereby
as may be required by the appraisal department of the Bank in its good faith
business judgment.
"Availability" shall mean the amount, computed on a daily basis, by which
the Commitment exceeds the sum of the outstanding principal of the Loans and the
face amount of any outstanding Letters of Credit.
"Borrowing Notice" shall mean a written notice by the Borrower of any
requested Advance hereunder, substantially in the form attached hereto as
Exhibit A and as set forth in Section 2.3.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York are required or permitted by law to remain
closed, and on which the Bank's offices are open for business as usual.
"Capital Expenditures" shall mean for any period, the aggregate amount of
all payments made by any Person, directly or indirectly, for the purpose of
acquiring, constructing or maintaining fixed assets, real property or equipment
which, in accordance with GAAP, would be added as a debit to the fixed asset
account of such Person, including, without limitation, but without duplication,
all amounts paid or payable with respect to Capitalized Lease Obligations and
interest under Capitalized Leases which are required to be capitalized in
accordance with GAAP.
-2-
<PAGE>
"Capitalized Lease" shall mean any lease the obligations to pay rent or
other amounts under which constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations" shall mean as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CERCLA" shall have the meaning given in Section 3.19.
"Charges" shall have the meaning given in Section 9.12.
"Closing Date" shall mean the date of this Agreement.
"Commencement Date" shall have the meaning given in Section 2.12.
"Commitment" shall mean the obligation of the Bank to make the Revolving
Loan to the Borrower during the Commitment Period pursuant to the terms hereof
as such Commitment is described in Section 2.1, subject to increase or reduction
in accordance with the terms hereof.
"Commitment Letter" shall mean the letter agreement between the Borrower
and the Bank, dated as of August 7, 1998, as it may be amended from time to
time.
"Commitment Period" shall mean the period from and including the date
hereof to and including the Termination Date or such earlier date as the
Commitment shall terminate as provided in Section 8 or otherwise.
"Consolidated Fixed Charge Coverage Ratio" shall mean the ratio of (a)(i)
consolidated earnings, including management fee income generated by restaurants
managed, but not owned, by the Borrower or its Subsidiaries, before interest,
taxes, depreciation and amortization of the Borrower and its Subsidiaries, plus
(ii) any non-cash extraordinary or non-recurring charges, less (iii) Capital
Expenditures not funded by any external financing source, including, without
duplication, payments under any Capitalized Lease, computed in accordance with
GAAP, less (iv) income taxes paid less (v) dividends paid or declared, to (b)
the sum of (i) current payments on long-term debt, plus (ii) consolidated
interest.
"Construction Budget" shall mean the complete and detailed budget of all
direct and indirect costs which will be incurred in connection with construction
of the Improvements with respect to the Projects, which Construction Budget has
been approved by the Bank, in its sole discretion.
-3-
<PAGE>
"Construction Consultant" shall mean any outside construction consultant
engaged by the Bank at Borrower's cost and expense, which Construction
Consultant shall (i) verify that Improvements can be completed for the amount
available for such Project in the Construction Budget; (ii) advise the Bank as
to whether the final plans and specifications for a Project are satisfactory for
the completion of the Improvements; (iii) make monthly inspections and certify
that Improvements are being completed in accordance with the approved plans and
specifications; and (iv) review and approve construction contracts to be entered
into by the Borrower or any Subsidiary in connection with construction of any
Projects.
"Contractual Obligations" shall mean as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Conversion Date" shall mean the date of conversion of the Advances with
respect to a Project to a Term Loan pursuant to Section 2.6.
"Cost of Funds" shall mean the Bank's cost of funds as determined by the
Bank in its sole discretion.
"Default" shall mean the occurrence of any of the events specified in this
Agreement which would give rise to an "Event of Default", whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Designated Subsidiary" means a Subsidiary designated as such by the
Borrower and as to which the Bank has agreed in writing to, and not revoked,
such designation. As of the Closing Date, the Designated Subsidiaries are listed
on Schedule 2.
"Disputed Taxes" shall mean taxes the validity and amount of which are
being contested in good faith, and as to which no executable lien has been
entered, or if such a lien has been entered, the Borrower has established
segregated reserves reasonably satisfactory to the Bank with respect thereto.
"Dollars" and "$2" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to the Borrower and its Subsidiaries on
a consolidated basis for any period, the sum of (a) Adjusted Net Income, plus
(b) Interest Expense, plus (c) depreciation and amortization, plus (d) any
non-cash extraordinary or non-recurring charges, plus (e) Federal, state and
local income taxes, computed in accordance with GAAP.
"Environmental Engineer" shall mean a firm of independent professional
engineers or other scientists generally recognized as expert in the detection,
analysis and remediation of Hazardous Substances and related environmental
matters and reasonably acceptable to the Bank.
-4-
<PAGE>
"Environmental Laws" shall have the meaning given in Section 3.19(a).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall mean any of the events specified in this
Agreement under "Events of Default"; provided, that, any requirement for the
giving of notice, the lapse of time, or both, or any other condition, has been
satisfied.
"Fixed Rate Loan" shall mean a Term Loan bearing interest at a rate equal
to the Cost of Funds plus three and one quarter percent (3.25%) per annum.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a consistent basis.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing.
"Guarantee" of or by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness,
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"Hazardous Substances" shall have the meaning given in Section 3.19(b).
"Improvements" shall mean capital, base building and/or tenant
improvements consisting of rehabilitation, refurbishment, replacement and
improvements to the Mortgaged Property to be performed by the Borrower or any
Subsidiary in connection with any Project.
"Indebtedness" shall mean, with respect to any Person, (a) all obligations
of such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) except items in dispute, all obligations of
such Person for the deferred purchase price of property or services, except
current accounts payable arising in the ordinary course of business and not
overdue beyond 120 days, (d) all obligations of such Person under conditional
sale or other title retention
-5-
<PAGE>
agreements relating to property purchased by such Person, (e) all payment
obligations of such Person with respect to interest rate or currency protection
agreements, (f) all obligations of such Person as an account party under any
letter of credit or in respect of bankers' acceptances, (g) all obligations of
any third party secured by property or assets of such Person (regardless of
whether or not such Person is liable for repayment of such obligations), (h) all
Guarantees of such Person, and (i) all obligations of such Person upon which
interest charges are customarily paid.
"Indemnity Agreement" shall mean the Indemnity Agreement Regarding
Hazardous Materials made by the Borrower and each Subsidiary in favor of the
Bank, pursuant to which such parties agree to indemnify the Bank with respect to
Hazardous Substances and Environmental Laws, such Indemnity Agreement to be in
form and substance satisfactory to the Bank.
"Indemnity Period" shall have the meaning given in Section 2.12.
"Installment Payment Date" shall mean any date on which all or any
portion of the principal amount and the interest accrued on a Term Loan is due
and payable, as set forth in Section 2.7.
"Interest Expense" shall mean, with respect to the Borrower and its
Subsidiaries for the applicable period of determination thereof, the interest
expense of the Borrower and its Subsidiaries during such period determined on a
consolidated basis in accordance with GAAP, and shall in any event include,
without limitation, (a) the amortization of debt discounts, (b) the amortization
of all fees payable in connection with the incurrence of Indebtedness to the
extent required to be included in interest expense in accordance with GAAP, and
(c) the portion of any Capitalized Lease Obligation allocable to interest
expense.
"Interest Rate" shall mean, with respect to each Note, the applicable
rate of interest such Note shall bear from time to time pursuant to Sections
2.4, 2.8 and 2.10.
"Internal Revenue Code" shall mean the Internal Revenue Code, as amended
and regulations and rulings promulgated thereunder.
"Las Vegas Mortgage" shall have the meaning assigned to such term in
Section 4.1(j).
"Las Vegas Property" shall mean the leasehold interest in the Real
Property more particularly described on Schedule 2(A) as the "Las Vegas
Property".
"Leases" shall mean the leases, licenses and agreements, whether written
or oral, relating to the use or occupancy of the space in or on the Mortgaged
Property, which Leases have been approved by the Bank, in its sole discretion.
-6-
<PAGE>
"Letter of Credit" shall mean any Letter of Credit issued by the Bank for
the account the Borrower in accordance with Section 2.17, as the same may be
amended, supplemented or extended in accordance with its terms.
"LIBOR Interest Period" shall mean a certain period of 1, 2, 3, 4 or 6
months, selected by the Borrower, in connection with requesting an Adjusted
LIBOR Rate for a particular LIBOR Loan.
"LIBOR Loan" shall mean a Loan as to which the Borrower has requested and
the Bank has agreed, will bear interest at an Adjusted LIBOR Rate for an
applicable LIBOR Interest Period.
"LIBOR Rate" shall mean the per annum rate of interest quoted by the Bank
at approximately 9:00 a.m. New York time two (2) Business Days prior to the
first day of the relevant LIBOR Interest Period for the offering to leading
banks in the London interbank market of United States dollar deposits for such
LIBOR Interest Period in an amount similar to the principal amount of the
portion of the Loan selected by the Borrower to bear interest at such rate for
such LIBOR Interest Period.
"LIBOR Reserve Percentage" shall mean, with respect to any LIBOR Interest
Period, that percentage (expressed as a decimal) which is in effect on the day
the Adjusted LIBOR Rate is determined, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve System in New York
City with deposits exceeding one billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of the Bank to United States
residents). With respect to increases in the LIBOR Reserve Percentage, the
Adjusted LIBOR Rate shall be adjusted automatically on and as of the effective
date of any such increase.
"Lien" shall mean any mortgage, pledge, security interest, hypothecation,
assignment, deposit arrangement, encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the UCC or
comparable law of any jurisdiction), except for protective filings of financing
statements under the UCC or comparable law of any jurisdiction with respect to
any true leases of property by the Borrower or any of its Subsidiaries.
"Loan" or "Loans" shall mean any loan made by the Bank to the Borrower
hereunder, including an Advance under the Revolving Loan or a Term Loan.
-7-
<PAGE>
"Loan Documents" shall mean this Agreement and each document, agreement
and instrument executed in connection herewith or pursuant hereto, including,
without limitation, the Notes, the Subsidiaries' Guarantees, the Security
Agreement, the Indemnity Agreement, the Agreement Regarding Fees and the
Mortgages.
"Maturity Date" shall mean the date that all or a portion of the
outstanding principal balance of a Loan is due and payable pursuant to the terms
hereof, which shall include without limitation (a) with respect to the Revolving
Loan, the Termination Date, and (b) with respect to the Term Loan, the
Installment Payment Date and the final Maturity Date of the Term Loan.
"Maximum Rate" shall have the meaning given in Section 9.12.
"Mortgages" shall mean, collectively, the mortgages, deeds of trust and
other security agreement now or hereafter given from the Borrower or any
Subsidiary to the Bank encumbering the Real Properties and securing the Loan,
including, without limitation, the Las Vegas Mortgage, the New Orleans Mortgage,
and the Washington Mortgage, as the same may be modified, amended, extended,
replaced, consolidated or otherwise supplemented from time to time.
"Mortgaged Property" shall mean, collectively, the New Orleans Property,
the Las Vegas Property and the Washington Property, which is conveyed to and
accepted by the Bank as security for the Obligations in connection with the
Loans.
"Net Worth" shall mean the shareholders' equity, including preferred
stock, as reflected on the Borrower's balance sheet, less all intangibles (i.e.,
good will and other similar items), computed in accordance with GAAP.
"New Orleans Mortgage" shall have the meaning assigned to such term in
Section 4.1(j).
"New Orleans Property" shall mean the Real Property more particularly
described on Schedule 2(B) as the "New Orleans Property".
"Notes" shall mean collectively the Revolving Loan Note and the Term Note.
"Obligations" shall mean any and all sums owing under the Loan Documents
and all other obligations of the Borrower, direct or indirect, absolute or
contingent, joint, several or independent, now or hereafter existing, due or to
become due to, or held or to be held by the Bank, whether created directly or
acquired by assignment or otherwise.
"Offering" shall mean a public offering whereby securities of the Borrower
are sold to an underwriter for reoffering to the public pursuant to an effective
registration statement under the Securities Act.
-8-
<PAGE>
"Original Loan" shall mean that certain loan, made by the Bank to the
Borrower (formerly The New York Restaurant Group, L.L.C.) in the aggregate
principal amount of $8,000,000.00, pursuant to that certain Loan Agreement,
dated as of March 19, 1997, between the Borrower and the Bank.
"Other Taxes" shall have the meaning given in Section 2.15.
"Permitted Liens" shall mean (a) liens for taxes not yet due and payable,
and tax liens relating to taxes due and payable, the validity and amount of
which are being diligently contested in good faith and as to which the Borrower
has segregated adequate reserves to the reasonable satisfaction of the Bank;
provided, that, any liens for any amount in excess of $100,000 arising from the
failure of the Borrower or any Subsidiary to pay or withhold any employment
related tax obligations shall not be "Permitted Liens", (b) mechanic's,
worker's, materialmen's or other liens arising in the ordinary course of
business, (c) liens arising in connection with purchase money obligations;
provided such obligations arise in the ordinary course of business on ordinary
and customary terms, (d) those certain liens described in Schedule 1, (e) liens
existing on the personal property of any Subsidiary prior to it becoming a
Subsidiary of the Borrower, and (f) liens and encumbrances in favor of any one
or more landlord covering the machinery, equipment, furniture, furnishings,
fixtures, tools and motor vehicles related to the specific restaurant leased
from such landlord, but which liens and encumbrances do not cover any wine
inventory or art of the Borrower or any Subsidiary; provided, that, in no event
shall the sum of all such Permitted Liens described in clauses (a), (b), (c) and
(e) above exceed an aggregate of $1,000,000.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or any
other juridical entity, or a government or state or any agency or political
subdivision thereof.
"Plan" shall mean any plan of a type described in Section 4021(a) of
ERISA, and/or such other Sections of ERISA applicable to entities of a type such
as the Borrower, in respect of which the Borrower is an "employer" as defined in
Section 3(5) of ERISA, and/or such other Sections of ERISA applicable to the
Borrower.
"Post Default Rate" shall mean at any time a rate of interest equal to the
Prime Rate plus two percent (2%) per annum.
"Prime Loan" shall mean a Loan bearing interest at the Adjusted Prime
Rate.
"Prime Rate" shall mean the floating rate of interest per annum
established from time to time by the Bank as its "prime rate", which rate shall
not necessarily be the lowest rate offered by the Bank for commercial or other
types of loans.
"Project(s)" shall mean the development and construction of new
restaurants by the Borrower and/or its Subsidiaries in New Orleans, Louisiana
and Las Vegas, Nevada. New
-9-
<PAGE>
restaurant development and construction by the Borrower and/or its Subsidiaries
in Washington, D.C. is subject to (i) the Borrower maintaining its consolidated
earnings as set forth in Section 6.1(c) for the third and fourth fiscal quarters
of 1998 and (ii) the completion of the development, construction and opening of
the new restaurants in New Orleans, Louisiana and Las Vegas, Nevada.
"Project Availability" shall mean 90% of the Construction Budget with
respect to a specific Project, less the face amount of any Letter of Credit
issued with respect to such Project.
"Project Costs" shall mean, with respect to any Project, the acquisition,
development and start-up costs payable to third parties not affiliated with the
Borrower with respect to such Project (including, without limitation, lease
acquisition costs, the cost of leasehold improvements, trademarks, tradenames,
liquor and other licenses, wine, art and management contracts).
"Rate Determination Day" shall have the meaning given in Section 2.8(b).
"Real Properties" shall mean the real properties listed on Schedule 2(D)
and all other real property and interests in real property now owned or
hereafter acquired by the Borrower or the Subsidiaries. Real Property shall
include, without limitation, (i) land, (ii) any and all rights, easements,
licenses and privileges appurtenant thereto, (iii) any and all improvements from
time to time located thereon, (iv) any and all fixtures, equipment, machinery,
appliances, furniture, furnishings and other tangible personal property now or
hereafter attached thereto, installed therein or used or intended to be used in
connection therewith (other than personal property of tenants) and (v) in the
case of a Real Property held in whole or in part pursuant to a ground lease,
such leasehold estate.
"Release" shall have the meaning given in Section 3.19(c)(iii).
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requirements of Law" shall mean, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Revolving Loan" shall mean the Advances made during the Commitment Period
pursuant to Section 2.1. The Revolving Loan may include one or more LIBOR Loans
from time to time.
"Revolving Loan Note" shall mean the Note referred to in Section 2.2,
substantially in the form attached hereto as Exhibit B.
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"Sale" shall mean the sale or sales of (i) all or substantially all of the
assets of the Borrower or (ii) in excess of 50% of the voting securities of the
Borrower to an individual or other legal entity.
"Securities Act" shall mean the Securities Act of 1933, as amended and
regulations and rulings promulgated thereunder.
"Security Agreement" shall mean the Amended and Restated Security
Agreement, dated as of the date hereof, by the Borrower and its Subsidiaries
which are parties thereto, substantially in the form attached hereto as Exhibit
C.
"Stepdown Default" shall have the meaning given in Section 2.10.
"Subsidiaries' Guaranty" shall mean the unconditional Guaranty by the
Borrower's Subsidiaries which are parties thereto of the Borrower's obligations
with respect to the Loans, substantially in the form attached hereto as Exhibit
D.
"Subsidiary" shall mean as of any date each of the Borrower's then
existing, direct or indirect, corporate, limited liability company or
partnership subsidiaries. A list of the Borrower's current Subsidiaries is
attached hereto as Schedule 2.
"Tax Credit" shall have the meaning given in Section 2.15.
"Taxes" shall have the meaning given in Section 2.15.
"Termination Date" shall mean July 31, 1999 or, if such date is not a
Business Day, the Business Day next succeeding such date.
"Term Loan" shall mean a Loan made pursuant to Section 2.6. A Term Loan
may be a Prime Loan or a Fixed Rate Loan.
"Term Note" shall have the meaning given in Section 2.7.
"UCC" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Washington Mortgage" shall have the meaning assigned to such term in
Section 4.1(j).
"Washington Property" shall mean the leasehold interest in the Real
Property more particularly described on Schedule 2(C) as the "Washington
Property".
"Working Capital Advances" means Advances borrowed by the Borrower for use
by the Borrower or its Subsidiaries for working capital purposes.
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"Working Capital Sublimit" shall mean $1,000,000 of the aggregate
principal amount available to the Borrower for Working Capital Advances.
1.2 Accounting Terms; UCC Terms. As used herein and in any certificate or
other document made or delivered pursuant hereto, accounting terms not
specifically defined herein shall have the respective meanings given to them
under GAAP. All other undefined terms contained in this Agreement shall, unless
the context indicates otherwise, have the meanings provided for by the UCC as in
effect in the State of New York, to the extent the same are used or defined
therein.
1.3 Certain Matters of Construction. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the Exhibits and Schedules hereto, as the same may from time to
time be amended, modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement. Any reference to a "Section",
"Exhibit" or "Schedule" shall refer to the relevant Section of, or Exhibit or
Schedule to, this Agreement, unless specifically indicated to the contrary.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. The term "including" shall not be limiting or
exclusive, unless specifically indicated to the contrary.
SECTION 2. AMOUNT AND TERMS OF REVOLVING LOAN COMMITMENT AND TERM LOAN.
2.1 Revolving Loan Commitment. Subject to the terms and conditions and
relying on the representations and warranties set forth herein, the Bank will
make available Advances to the Borrower from time to time during the Commitment
Period. Each Advance may be in an amount not to exceed the Availability as of
the date of such Advance. The aggregate principal amount at any one time
outstanding shall not exceed the lower of (i) $15,000,000 or (ii) 75% of the
Appraised Value of the Mortgaged Property (the "Commitment") less the sum of (i)
the aggregate initial principal amount of the Term Loan and (ii) the aggregate
face amount of all outstanding Letters of Credit. During the Commitment Period,
the Borrower may use the Commitment for obtaining Loans by borrowing, paying,
prepaying in whole or in part and reborrowing on a revolving basis, all in
accordance with the terms and conditions hereof.
2.2 Revolving Loan Note. Advances made by the Bank to the Borrower
pursuant to Section 2.1 shall be evidenced by that certain Revolving Loan Note
in the form attached hereto as Exhibit B (the "Revolving Loan Note"), payable to
the order of the Bank and representing the obligation of the Borrower to pay the
aggregate unpaid principal amount of all Advances made by the Bank to the
Borrower, with interest thereon as hereinafter described. The Revolving Loan
Note shall (i) be dated the date hereof, and (ii) mature on the Termination
Date. The Borrower
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hereby expressly authorizes the Bank to record on the schedule attached to the
Revolving Loan Note the amount and date of each Advance and drawing under a
Letter of Credit, the date and amount of each payment of principal and the
unpaid principal balance; provided, however, that the failure of the Bank to
make any such notation shall not in any manner affect the obligation of the
Borrower to repay any Loan in accordance with the terms hereof. All such
notations shall be deemed to be correct absent manifest error.
2.3 Procedure for Requesting Advances. The Borrower may borrow during the
Commitment Period on any Business Day by giving the Bank irrevocable notice of a
request for an Advance hereunder at least three (3) Business Days before a
proposed borrowing, (the "Borrowing Notice"). Such Borrowing Notice shall (a)
identify the Project to which such proposed borrowing relates or identify such
proposed borrowing as a Working Capital Advance, and (b) state whether the
Borrower requests the Advance to bear interest at the Adjusted LIBOR Rate, and
if so, for what LIBOR Interest Period. Notwithstanding the foregoing, the Bank
agrees that the initial Advance to be made on the date hereof shall be in the
amount of $5,936,784.93 and shall be used solely for the following purposes: (i)
to repay all interest and principal outstanding under the Original Loan; and
(ii) to repay that certain mortgage currently encumbering the New Orleans
Property. In no event shall any Advance exceed the Availability as of the date
of such Advance. Any Borrowing Notice relating to a specific Project shall
include a certification by the chief executive officer or chief financial
officer of the Borrower that the advanced sum will be used only for Project
Costs incurred in connection with such Project and that the conditions set forth
in Sections 4.2(a) - (f) have been satisfied. Such Borrowing Notice shall set
forth the actual amounts of such costs certified by the Borrower's chief
financial officer and shall be accompanied by certificates from the Construction
Consultant certifying that (i) the Improvement can be completed for the amount
available for construction from the construction budget approved by Bank, and
(ii) the final plans and specifications are satisfactory for the completion of
the Improvements. The Borrowing Notice shall also be accompanied by lien waivers
from the general contractor and all material subcontractors engaged in the
performance of the work being funded by such Advance. The Borrowing Notice and
certifications required pursuant to the Revolver Loan shall be substantially in
the forms attached as Exhibit A. In no event may the amount of Advances with
respect to any Project exceed the Project Availability. A Borrowing Notice shall
be submitted in writing (including, without limitation, via facsimile
transmission) and shall be sufficient if received by 1:00 p.m. New York time on
the date on which such Notice is to be given. If any such Borrowing Notice is
sent by facsimile it shall be confirmed in writing sent by the Borrower to the
Bank within one (1) Business Day thereafter. Unless notification is otherwise
furnished by the Borrower to the Bank (in a manner consistent with the
requirements of this Section), Advances will be made by credits to the
Borrower's demand deposit account maintained with the Bank. Any request by the
Borrower for an Advance shall constitute a representation and warranty by the
Borrower, as more particularly set forth in Section 4.2. If Borrower fails to
request that an Advance under the Revolving Loan be a LIBOR Loan, or if the
Adjusted LIBOR Rate is not available in the Bank's sole discretion, such Advance
shall bear interest at the Adjusted Prime Rate.
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2.4 Interest on the Revolving Loan Note. Until the earlier of (a) the date
upon which it is repaid in full, or (b) the occurrence of the Conversion Date
relating thereto, each Advance made during the Commitment Period shall bear
interest, at: (i) the Adjusted Prime Rate, or (ii) subject to availability and
at the Borrower's request, the Adjusted LIBOR Rate.
2.5 Restrictions with Respect to Working Capital Advances. Each Advance or
portion of an Advance designated by the Borrower as a Working Capital Advance
shall be repaid in full, together with all interest thereon, no later than 90
days after the date of such Advance, subject to renewal.
2.6 Term Loan. On July 31, 1999, all sums advanced under the Revolving
Loan to fund each Project and which are then outstanding (up to an aggregate
amount not to exceed $12,200,000.00) will be converted to a term loan (a "Term
Loan"). The date of conversion of such Advances shall be referred to as the
"Conversion Date."
2.7 Term Note. The Term Loan shall be evidenced by a Term Note dated as of
the applicable Conversion Date (the "Term Note"), payable to the order of the
Bank and representing the obligation of the Borrower to repay the principal
amount of the Term Loan. The Term Loan shall be repaid in 36 equal monthly
installments of principal together with accrued interest, based on a fifteen
(15) year straight-line amortization schedule, payable commencing on the last
business day of the month following the Conversion Date, and on the last
business day of each month thereafter (each an "Installment Payment Date"), with
the balance due on July 31, 2002.
2.8 Interest on the Term Note. (a) Interest on the Term Note shall be
calculated, at the Borrower's option, in one or more of the following manners:
(i) a variable Interest Rate equal to the Adjusted Prime Rate or (ii) a fixed
Interest Rate to be determined as provided in Section 2.8(b).
(b) At any time, commencing 30 days prior to the Conversion Date for
the Term Loan and continuing during the term of the Term Loan, the Borrower may,
by written notice to the Bank, request no later than 10:00 a.m. New York time on
a Business Day (the "Rate Determination Day") that the Bank provide a quotation
for a fixed interest rate to apply to the Term Loan for the remainder of its
term. The Bank shall, by 12:00 p.m. New York time on the Rate Determination Day,
advise the Borrower by telephone notice of the proposed Term Loan fixed rate,
which shall be the Cost of Funds for the remaining term of the Term Loan plus
three and one quarter percent (3.25%) per annum. The Borrower shall accept or
reject the proposed rate by telephone notice to the Bank no later than 3:00 p.m.
New York time on the Rate Determination Day. If the Borrower accepts such rate,
then commencing on the first Business Day following the Rate Determination Day,
the Term Loan shall bear interest at such agreed rate, provided, that in no
event shall such rate take effect during a LIBOR Interest Period. If the
Borrower rejects the quoted rate or fails to accept such rate within such time
period, then, unless the Borrower and the Bank otherwise agree or the Borrower
makes an additional request for a quotation for a fixed interest rate pursuant
to this Section 2.8(b), the Term Loan shall continue to
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bear interest at a variable rate determined in accordance with clause 2.8(a)(i)
above. The Borrower may request a fixed rate quotation with respect to the Term
Loan no more frequently than once every six (6) months; provided, that once a
fixed rate has been accepted, such rate shall apply to the remainder of the term
of the Term Loan.
2.9 Prepayment.
(a) Voluntary. The Borrower may prepay any Loan bearing a variable
rate of interest in whole or in part without premium or penalty; provided,
however, that (i) in the event of any prepayment of a LIBOR Loan, the Borrower
will be required to indemnify the Bank to the extent set forth in Sections 2.11
and 2.12, and (ii) in the event of any prepayment of the Term Loan, the Bank
shall have received not less than five (5) Business Days' irrevocable notice of
the intended prepayment. The Borrower may prepay the Term Loan bearing a fixed
rate of interest; provided, that, such prepayment shall be accompanied by
payment of such amounts as the Bank shall determine in its sole discretion
pursuant to Section 2.12. All prepayments shall be accompanied by payment of
accrued interest on the amount being prepaid through the date of prepayment. Any
amount prepaid on account of a Revolving Loan may be reborrowed in accordance
with and subject to the provisions of Section 2.1. Any partial prepayment of the
Term Loan shall be applied to the last maturing installments in inverse order of
its respective maturities. Except as set forth in the preceding sentence, no
partial prepayment of the Term Loan shall affect the regular installments of
principal and interest due thereunder.
(b) Mandatory. (i) The entire outstanding principal amount of the
Loans, together with any accrued and unpaid interest, shall be due and payable
without further notice or demand upon the consummation of any Offering or Sale.
(ii) No later than 120 days after the end of each fiscal year
of the Borrower, the Borrower shall make a mandatory prepayment, to be applied
against the outstanding principal balance of the Loans, in an amount equal to
twenty-five percent (25.0%) of the amount by which (A) the sum of(i) the
Adjusted Net Income for such year, plus (ii) all non-cash items of the Borrower
and its Subsidiaries on a consolidated basis for such year; less (B) Capital
Expenditures actually paid by the Borrower during such year from any source
other than directly or indirectly by borrowings hereunder, exceeds $3,500,000.
Such payments shall be applied first against the Revolving Loan, next against
the outstanding Term Loan.
2.10 Interest Payments: Default Rate: Manner of Payments.
(a) Interest accrued on each Loan shall be due and payable, without
duplication, at the following times:
(i) with respect to Advances under the Revolving Loan, and
subject to the provisions of Section 2.4, in arrears commencing on the first day
of the first month following such Advance and on the first day of each and every
month thereafter up to and
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including the first to occur of (A) the final Conversion Date, or (B) repayment
in full of all Advances and interest thereon;
(ii) with respect to the Term Loan, in arrears commencing on
the first day of the first month following the Conversion Date of the Term Loan
and on the first day of each and every month thereafter up to and including the
final Maturity Date of the Term Loan; and
(iii) with respect to any portion of any Loan repaid or
prepaid pursuant to this Agreement (other than prepayments pursuant to Section
2.9(b)(iii)), on the date of such repayment or prepayment, as the case may be.
(b) All interest hereunder shall be computed on a 360-day year
calculated on the actual number of days elapsed (365/360) on the outstanding
principal amount of such Loan determined at the close of each day.
(c) If any payment of principal or interest becomes due on a day on
which banks in the City, County and State of New York are required or permitted
by law to remain closed, such payment shall be made on the next succeeding
Business Day and, to the extent permitted by applicable law, interest thereon
shall be payable at the then applicable rate during such extension; provided,
however, that if the result of any such extension would be to extend the date of
the maturity of any LIBOR Loan into another calendar month, the payment shall be
made on the immediately preceding Business Day. No LIBOR Interest Period may
expire after the Conversion Date with respect to the related Advance.
(d) Subject to Section 2.15, all payments (including prepayments) to
be made by the Borrower on account of principal or interest with respect to any
Loan or on account of fees or any other obligations of the Borrower to the Bank
hereunder shall be made to the Bank by automatic deductions from an account of
the Borrower established at the Bank no later than the date of the initial
Advance (and the Borrower hereby authorizes and directs the Bank to charge any
such account of the Borrower for any such payments) or, if directed by the Bank,
by the wiring of immediately available Federal Funds to the Bank, into such
account or accounts as the Bank may designate.
(e) Any payment, whether of principal, interest, fees, expenses or
otherwise, due from the Borrower to the Bank under this Agreement or any other
Loan Document, shall, if not received by the tenth day after the due date
therefor, include a late charge of two percent (2%) of the amount not paid. In
addition, if all or a portion of the principal or interest of any Loan shall not
be received within ten (10) days after the due date therefor (whether at the
stated or any accelerated maturity of such Loan) or if any fee or other amount
due hereunder shall not be paid when due, or upon the occurrence of any other
Event of Default, then all Loans, and all installments of interest, fees,
expenses or other amounts then due or thereafter coming due hereunder, to the
extent permitted by applicable law, shall bear interest (payable on
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demand, and in any event on the last day of each month, and computed daily on
the basis of a 360-day year for actual days elapsed) at the Post Default Rate
until the earlier to occur of (i) the date such amount is paid, and (ii) if the
Post Default Rate has become payable solely as a result of an Event of Default
(a "Stepdown Default") other than a payment default or a default under Section
8(f), the date such Stepdown Default has been cured. In no event, however, shall
interest payable hereunder be in excess of the maximum rate of interest
permitted under applicable law. The obligation to so pay any interest and/or
late charges shall not be construed so as to waive the requirement for payment
on the same date that payment is to be made to the Bank as set forth in this
Agreement, nor shall acceptance of payment of such sums be deemed a waiver of
any Default or Event of Default.
2.11 Additional Provisions regarding LIBOR Loans. Notwithstanding anything
contained herein to the contrary, if the Bank determines, in its reasonable
discretion, that it is unable for any reason to quote or determine a rate based
upon a LIBOR Rate, the Borrower shall not be entitled to elect an Adjusted LIBOR
Rate until such time as the Bank shall quote or determine such rates.
Subject to the preceding paragraph, at any time that the Borrower elects
an Adjusted LIBOR Rate as the interest rate to be paid with respect to any Loan,
that election shall be irrevocable and the Bank's record of such election of the
Adjusted LIBOR Rate and/or of the associated LIBOR Interest Period shall be
conclusive upon the Borrower.
If the Borrower has not timely and effectively elected an Adjusted LIBOR
Rate as the Interest Rate to be paid by it with respect to any Loan, then the
Interest Rate shall be the Adjusted Prime Rate until such an election is made.
Notwithstanding anything contained herein to the contrary, if the Bank
shall have determined (which determination shall be conclusive and binding upon
the Borrower) that:
(y) the LIBOR Rate does not accurately reflect the cost to the Bank
of making or maintaining a LIBOR Loan, and/or
(z) if by reason of circumstances affecting the interbank market,
funds are not available to the Bank to make or maintain loans hereunder
based upon the LIBOR Rate or that adequate and reasonable means do not
exist for ascertaining the LIBOR Rate with respect to a proposed LIBOR
Loan,
then the Bank shall give notice of such inability and/or determination to the
Borrower at least one day prior to the first day of the proposed LIBOR Interest
Period. If such notice is given, until such notice has been withdrawn by the
Bank, no further LIBOR Loans shall be made. The Borrower, in such event, shall,
at the Borrower's option, on the last day of any LIBOR Interest Period either
prepay such LIBOR Loan or convert such LIBOR Loan into a Prime Loan.
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If during the term of any LIBOR Loan there occurs a change in law or
regulation or in the interpretation thereof by any governmental authority
charged with the administration or interpretation thereof, and such change has
made it unlawful for the Bank to make a LIBOR Loan or to maintain any
then-extant LIBOR Loan, then the right of the Borrower to request a LIBOR Loan
shall be suspended and, as to any then-extant LIBOR Loan, the Borrower shall,
upon demand from the Bank, either prepay such LIBOR Loan or convert such LIBOR
Loan to a Prime Loan, as elected by the Borrower and will reimburse the Bank for
any losses sustained or costs incurred as provided in the prepayment indemnity
provisions set forth below, unless the Borrower may lawfully continue to
maintain the Loan (or any portion thereof) then bearing interest at the Adjusted
LIBOR Rate to the end of the current interest period at which time the interest
rate shall convert to the Adjusted Prime Rate.
Immediately upon the termination of the condition which led to the
suspension of the right of the Borrower to elect a LIBOR Rate, the Bank will so
notify the Borrower and the right to such election shall be reinstated.
In the event that any time or from time to time any domestic or foreign
requirement of law, regulation, order or decree or any change therein or in the
interpretation or application thereof or compliance by the Bank with any request
or directive (whether or not having the force of law) from any central bank or
monetary authority or other governmental authority:
(a) does or shall impose, modify or hold applicable or change any
reserve (including, without limitation, basic, supplemental, marginal and
emergency reserves), special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by (including, without limitation, all
eurocurrency funding by and all "Eurocurrency liabilities" as defined in
Regulation D of the Board of Governors of the Federal Reserve System of),
any office of the Bank; or
(b) does or shall impose on the Bank any other condition, or change
therein;
and the Bank determines that the result of any of the foregoing (a) and (b) is
to increase the cost to the Bank of utilizing a LIBOR Interest Period hereunder,
or to reduce the amount of any payment (whether of principal, interest or
otherwise) receivable by the Bank pursuant to a Note or to require the Bank to
make any payment on or calculated by reference to the gross amount of any sum
received by it pursuant to a Note, then the Bank shall promptly give notice to
the Borrower of such event and determination and in any such case the Borrower
shall pay to the Bank, on demand, from time to time as specified by the Bank,
such additional amount or amounts as will compensate and indemnify the Bank for
such additional cost, reduction or payment. A certificate of the Bank as to the
additional amounts payable pursuant to this paragraph delivered to the Borrower,
shall be final, conclusive and binding on the Borrower absent manifest error, if
made reasonably and in good faith. In such event, at the option of the
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Borrower and upon ten (10) Business Days' prior notice given by the Borrower to
the Bank, the obligation of the Bank to make LIBOR Loans hereunder shall
forthwith terminate and LIBOR Loans then outstanding, if any, shall be prepaid
or converted into a Prime Loan subject to subparagraphs (a) and (b) of the
prepayment indemnity provisions set forth below. The protection of this
paragraph shall be available to the Bank regardless of any possible contention
of invalidity or inapplicability of the law, regulation or condition which has
been imposed.
2.12 Indemnities. The Borrower hereby indemnifies and agrees to hold
harmless the Bank and its officers, directors, employees and agents against and
from any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys' fees and expenses)
which may be instituted or asserted against or incurred by such indemnified
Person arising out of, in any way connected with, or as a consequence of any of
the following:
(a) the use of any proceeds of any of the Loans; or
(b) this Agreement, any of the other Loan Documents, the performance
by the parties hereto and thereto of their respective obligations hereunder and
thereunder, and consummation of the transactions contemplated hereby and
thereby; or
(c) default in payment of the principal amount of any Loan or any
part thereof or interest accrued thereon, or any other amount due in connection
with any of the Loan Documents; or
(d) the occurrence of any other Default or Event of Default under
this Agreement; or
(e) any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not such indemnified Person is a party thereto;
or
(f) the failure of the Borrower to borrow a LIBOR Loan after
agreement shall have been reached on the amount, interest rate, and the Interest
Period thereof; or
(g) the receipt or recovery by the Bank, whether by voluntary
prepayment, acceleration or otherwise, of all or any part of a LIBOR Loan or a
Fixed Rate Loan prior to the last day of an Interest Period or Maturity Date, as
the case may be, applicable thereto; or
(h) the conversion, prior to the last day of an applicable Interest
Period, of a LIBOR Loan to a Prime Loan or a Fixed Rate Loan.
Without limiting the effect of the foregoing, the amount to be paid by the
Borrower to the Bank in order to indemnify the Bank for any loss occasioned by
any of the events described in the preceding clauses (f), (g) and (h), and as
liquidated damages therefor (and regardless of whether same are reasonable),
shall be equal to the excess, discounted to its present value as of
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the date so received or recovered by the Bank, of (i) the amount of interest
which otherwise would have accrued on the principal amount so received or
recovered at the rate of interest applicable to the principal amount of the Loan
(prior to default) during the period (the "Indemnity Period") which shall
commence on the date of such receipt or recovery (the "Commencement Date"), and
shall end, as to the whole or each part of the principal amount so received or
recovered, on the date or dates determined by applying such amount to the last
maturing installments thereof in inverse order of their respective maturities
over (ii) the amount of interest which would be earned by the Bank during the
Indemnity Period if it invested the whole or each part of the principal amount
so received or recovered (as the case may be) on the Commencement Date at the
rate per annum determined by the Bank as the rate it would bid in the London
interbank market for a deposit of Eurodollars in an amount approximately equal
to such principal amount (or part thereof) for a period of time comparable to
the Indemnity Period.
A certificate as to any additional amounts payable pursuant to this
Section setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by the Bank or such
other indemnified Person set forth therein if made reasonably and in good faith.
The Borrower shall pay any amounts so certified to it by the Bank or such other
indemnified Person within ten (10) days of receipt of any such certificate. The
provisions of this Section 2.12 shall remain operative and in full force and
effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any or
all of the Obligations, the invalidity or unenforceability of any term of this
Agreement or any of the other Loan Documents, or any investigation made by or on
behalf of the Bank or any other indemnified Person.
2.13 Increased Costs. If the Bank determines that the effect of any
applicable law or government regulation, guideline or order or the
interpretation thereof by any Governmental Authority charged with the
administration thereof (such as, for example, a change in official reserve
requirements which the Bank is required to maintain in respect of loans or
deposits or other funds procured for funding such loans) is to increase the cost
to the Bank of making or continuing any of the Loans hereunder or to reduce the
amount of any payment of principal or interest receivable by the Bank thereon,
then the Borrower will pay to the Bank on demand such additional amounts as the
Bank may determine to be required to compensate the Bank for such additional
costs or reduction. Any additional payment under this Section will be computed
from the effective date at which such additional costs have to be borne by the
Bank. A certificate as to any additional amounts payable pursuant to this
Section setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by the Bank set forth
therein if made reasonably and in good faith. The Borrower shall pay any amounts
so certified to them by the Bank within ten (10) days of receipt of any such
certificate.
2.14 [INTENTIONALLY OMITTED]
2.15 Taxes. (i) Subject to the other provisions of this Section 2.15 and
Sections 9.16 and 9.17, any and all payments by the Borrower under this
Agreement and any other Loan
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Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding (i) taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
imposed on (or measured by) the net income, total receipts, or capital of the
Bank and franchise taxes imposed on the Bank; and (ii) all taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto imposed on the Bank by the United States by means of withholding taxes
if and to the extent that such withholding taxes (x) shall be in effect and
shall be applicable under applicable laws and regulations (including judicial
and administrative interpretations thereof) to the Bank on the Closing Date, or
on the effective date of an assignment in the case of an assignee, or, if such
withholding taxes result therefrom, changes any other office from which the Bank
makes or maintains any other extension of credit under this Agreement, or (y)
result from the failure of the Bank to comply with Section 2.15(e) or (f) (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Bank, (i) the sum payable shall be increased by the amount
necessary so that after making all required deduction (including deductions
applicable to additional sums payable under this Section 2.15), the Bank shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.
(a) Notwithstanding anything to the contrary set forth herein, the
Borrower agrees to pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document ("Other
Taxes").
(b) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to the Bank, the
Borrower will furnish to the Bank, at its address referred to in Section 9.1,
the original or a certified copy of a receipt or other evidence reasonably
satisfactory to the Bank.
(c) If the Bank shall receive a credit or refund from a taxing
authority with respect to, and actually resulting from, an amount of Taxes or
Other Taxes actually paid to or on behalf of the Bank, by the Borrower (a "Tax
Credit"), the Bank shall promptly notify the Borrower of such Tax Credit. If in
the reasonable opinion of the Borrower, any amount has been paid to or on behalf
of the Bank pursuant to subsection (a) or (b) of this Section with respect to
Taxes or Other Taxes which are not correctly or legally asserted, the Bank will
cooperate with the Borrower (such cooperation to be without expense or liability
to the Bank) in seeking to obtain a refund of such amount. If such Tax Credit is
received by the Bank, in the form of cash, the Bank shall as soon as practicable
pay to the Borrower the amount so received with respect to the Tax Credit. If
such Tax Credit is not received by the Bank in the form of cash, the Bank shall
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pay the Borrower an amount equal to the amount of such Tax Credit not later than
the time prescribed by applicable law for filing the return (including
extensions of time) for the Bank's taxable period which includes the period in
which the Bank receives the economic benefit of such Tax Credit. In any event,
the amount of any Tax Credit payable by the Bank to the Borrower pursuant to
this subsection (d) shall not exceed the actual amount of cash refunded to, or
credits received and usable by, the Bank from a taxing authority. In determining
the amount of any Tax Credit, the Bank may use such apportionment and
attribution rules as the Bank customarily employs in allocating taxes among its
various operations and income sources and such determination shall be conclusive
absent manifest error. The Borrower further agrees promptly to return to the
Bank the amount paid to the Borrower with respect to a Tax Credit by the Bank if
such Bank is required to repay, or is determined to be ineligible for, a Tax
Credit for such amount.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreement and obligations of the Borrower contained in
this Section shall survive the payment in full of the obligations hereunder for
a period expiring concurrently with the expiration of the statute of limitations
applicable to claims made by the taxing authorities to collect Taxes or Other
Taxes.
(e) The Bank agrees that it will cooperate with the Borrower to
minimize amounts payable by the Borrower under this Section; provided, however,
that the Bank shall not be obligated by reason of this subsection (g) to
disclose any information regarding its tax affairs or tax computations or to
reorder its tax or other affairs or tax or other planning or to take any action
which, in the sole judgment of the Bank, would result in any tax, cost or
expense to such Bank or would otherwise be disadvantageous to the Bank, or
relocate its office.
(f) Notwithstanding anything in this Agreement to the contrary, tax
matters shall be governed solely by this Section 2.15, Sections 9.16 and 9.17;
other sections, including Sections 2.11, 2.13 and 9.4, shall not apply to any
taxes.
2.16 Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower to fund the Projects of the Borrower or its Subsidiaries and, subject
to the sublimit restrictions in Section 2.5, to meet working capital needs.
2.17 Letters of Credit. At the request of the Borrower and subject
to the Availability, during the Commitment Period, the Bank may issue for the
account of the Borrower one or more letters of credit (each a "Letter of
Credit") to secure lease obligations of the Borrower and its Subsidiaries. The
principal amount of any outstanding Letters of Credit shall reduce the
Availability pursuant to this Agreement, and any drawings under a Letter of
Credit shall be deemed to be an Advance under the Revolving Loan pursuant to
Sections 2.1 and 4.2. In addition to the fees set forth herein, the Borrower
agrees to pay a letter of credit fee to be determined by the Bank and any and
all usual and customary charges imposed by the Bank with respect to any such
Letters of Credit. Borrower further agrees to execute and deliver and to cause
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the Subsidiaries to execute and deliver any customer documentation reasonably
required by the Bank in connection with the issuance of any such Letter of
Credit. Notwithstanding the foregoing, in no event shall the expiration date of
any Letter of Credit be later than the last business day prior to the
Termination Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to make the
financial accommodations herein provided for, the Borrower hereby covenants,
represents and warrants to the Bank that:
3.1 Financial Condition. The Borrower has previously furnished to the Bank
true and complete copies of the combined balance sheets as at December 30, 1996
and December 29, 1997 and the related combined statements of income and owners'
equity for the fifty-two-week period ended December 30, 1996 and December 29,
1997, respectively, of the Borrower and its Subsidiaries, certified, with
respect to the December 30, 1996 financial statements, by Goldstein Golub
Kessler & Company, P.C., and with respect to the December 29, 1997 financial
statements, a draft has been provided by an independent accounting firm
acceptable to the Bank. The Borrower also has furnished to the Bank certain
unaudited financial statements of the Borrower as follows: a consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of June 30,
1998, and consolidated and consolidating statements of operations of the
Borrower and its Subsidiaries for the six month period then ended (collectively,
the "June Financial Statements"). Except as set forth in Schedule 3.1(A), the
June Financial Statements fairly present in all material respects, in accordance
with GAAP, the financial position and results of operations of the Borrower and
its Subsidiaries as of the date and for the fiscal period shown therein on a
basis consistent with prior periods, subject to year-end audit adjustments.
Except as provided in Schedule 3.1(A) and the other Schedules to this Agreement,
none of the Borrower or its Subsidiaries have any material contingent
obligations, contingent liabilities or liabilities for taxes, long-term leases
or unusual forward or long-term commitments, which are not reflected in the
foregoing statements or in the notes thereto. Since the date of the
aforementioned financial statements, there has been no material adverse change
in the business, operations, assets or financial or other condition of the
Borrower and its Subsidiaries, considered as a whole, except as disclosed in
Schedule 3.1(B) attached hereto.
3.2 Due Existence and Authority; Compliance with Law. The Borrower and its
Subsidiaries (other than any Designated Subsidiary) (a) are duly organized,
validly existing and in good standing under the laws of the jurisdiction of
their formation, (b) have the power and authority and the legal right to own and
operate their property, and to conduct the business in which they are currently
engaged, (c) are duly qualified as a foreign entity and in good standing under
the laws of each jurisdiction where their ownership or operation of property or
the conduct of their business require such qualification, and (d) are in
compliance with all Requirements of Law, except to the extent that the failure
to so qualify as a foreign entity as required by clause (c) of this Section or
to comply with all Requirements of Law as required by clause (d) of this
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Section could not, in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property or financial or other
condition of the Borrower or its Subsidiaries (other than any Designated
Subsidiary), considered individually and as a whole, and could not materially
adversely affect the ability of the Borrower or any of its Subsidiaries to
perform their obligations under this Agreement or any of the other Loan
Documents.
3.3 Power and Authority; Authorization; Enforceable Obligations. The
Borrower and its Subsidiaries have the power and authority and the legal right
to make, execute, deliver and perform their obligations under this Agreement and
the other Loan Documents to which they are a party, and to borrow hereunder, and
have taken all necessary action to authorize the borrowings on the terms and
conditions of this Agreement and the other Loan Documents to which they are a
party, and to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents to which they are a party. No consent or
authorization of, filing with, or other act by or in respect of any other Person
(including stockholders and creditors of the Borrower or any of its
Subsidiaries) or any Governmental Authority is required in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the other Loan Documents. This
Agreement and the other Loan Documents will be duly executed and delivered on
behalf of the Borrower and each of its Subsidiaries which is a party thereto,
and this Agreement and the other Loan Documents, when executed and delivered,
will each constitute the legal, valid and binding obligations of the Borrower
and each of its Subsidiaries which is a party thereto, enforceable against the
Borrower and its Subsidiaries in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
3.4 Legal Bar. The execution, delivery and performance of this Agreement
and the other Loan Documents, and the borrowings hereunder and the use of the
proceeds thereof by the Borrower or its Subsidiaries, will not violate any
Requirement of Law or any Contractual Obligation of the Borrower or any of its
Subsidiaries, and will not result in, or require, the creation or imposition of
any Lien on any properties or revenues of the Borrower or any of its
Subsidiaries pursuant to any Requirement of Law or Contractual Obligation,
except those in favor of the Bank provided herein.
3.5 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending by or against the
Borrower or any of its Subsidiaries (other than any Designated Subsidiary) or
against any of their respective properties or revenues (a) with respect to this
Agreement, any of the other Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which, if adversely determined, would
have a material adverse effect on the business, operations, property or
financial or other condition of the Borrower or its Subsidiaries (other than any
Designated Subsidiary), considered individually and as a whole.
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3.6 No Default. Neither the Borrower nor any of its Subsidiaries (other
than any Designated Subsidiary) is in default under or with respect to any
Contractual Obligation in any respect which could reasonably be expected to be
materially adverse to the business, operations, property or financial or other
condition of the Borrower or its Subsidiaries (other than any Designated
Subsidiary), considered individually and as a whole, or which could materially
and adversely affect the ability of the Borrower or its Subsidiaries to perform
their respective obligations under this Agreement or any of the other Loan
Documents. No Default or Event of Default has occurred and is continuing.
3.7 No Burdensome Restrictions. No Contractual Obligation of the Borrower
or any of its Subsidiaries (other than any Designated Subsidiary) and no
Requirement of Law materially adversely affects, or insofar as the Borrower may
reasonably foresee could reasonably be expected to materially adversely affect,
the business, operations, property or financial or other condition of the
Borrower or its Subsidiaries (other than any Designated Subsidiary), considered
individually and as a whole.
3.8 Taxes. The Borrower and its Subsidiaries have filed or caused to be
filed all tax returns which, to the knowledge of the Borrower and its
Subsidiaries, are required to be filed by the Borrower or any of its
Subsidiaries, and have paid all taxes shown to be due and payable by the
Borrower or any of its Subsidiaries on said returns or on any assessments made
against them or any of their property, except for Disputed Taxes.
3.9 Federal Regulations. Neither the Borrower nor any of its Subsidiaries
is engaged nor will they engage, principally or as one of their important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" (as such terms are defined in Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect). No part of the proceeds of any Loans hereunder will
be used for "purchasing" or "carrying" "margin stock" (as so defined) or for any
purpose which violates the provisions of the Regulations of such Board of
Governors.
3.10 Liens on Properties. There are no Liens of any nature whatsoever on
any Real Property, property or asset of the Borrower or any of its Subsidiaries,
except for Liens in favor of the Bank or Permitted Liens. The Borrower is not a
party to any contract, agreement, lease or instrument (other than this Agreement
and the other Loan Documents) the performance of which, either unconditionally
or upon the happening of an event, will result in or require the creation of any
Lien on the property or assets of the Borrower or any of its Subsidiaries or
otherwise result in a violation of any Loan Document, except for Permitted
Liens.
3.11 Security Interest. Upon execution and delivery of the Security
Agreement and filing of the Forms UCC-1 and compliance with the provisions of
the Security Agreement, the Security Agreement will have created in favor of the
Bank a valid and perfected, first priority security interest in that portion of
the Collateral which is of a type in which a security interest is perfected by
filing of a financing statement under the UCC.
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3.12 Ownership, Leasehold Interests and Liens. The Borrower and/or its
Subsidiaries has good, marketable and insurable fee simple title (or good,
marketable and insurable leasehold interest in the case of any leasehold
properties), and good title (or valid leasehold interests in the case of any
leasehold properties) in all of the Real Property, and none of such Real
Properties is subject to any Lien, except for Permitted Liens.
3.13 Information. No report (if prepared by the Borrower, any of its
Affiliates, or, if not prepared by the Borrower or its Affiliates, to the extent
that information contained therein was supplied by the Borrower or any of its
Affiliates), information, exhibit, any financial statement, document, book or
record furnished or to be furnished by the Borrower or any of its Affiliates
(other than projections as set forth below) to the Bank pursuant to the
Commitment Letter, this Agreement or any other Loan Document is inaccurate in
any material respect as of the date it is or will be dated or (except as
otherwise disclosed to the Bank, as the case may be, at such time) as of the
date so furnished, contains any material misstatement of fact, or omits to state
a material fact or any fact necessary to make the statements contained therein
not materially misleading in the light of the circumstances under which they
were made, in each case, considered in light of all of the information furnished
to the Bank at or prior to such time. Any financial projections furnished to the
Bank are, or will have been, based on good faith projections of, and assumptions
believed to be reasonable by, the management of the Borrower as of the date such
statements were prepared.
3.14 Tradenames. The Borrower has no tradenames, fictitious names, assumed
names or "doing business as" names, except as set forth on Schedule 3.13.
3.15 Solvency. Both before and after giving effect to the transactions
contemplated by this Agreement: (i) the Borrower will not have an unreasonably
small amount of capital for the operation of the business in which it is engaged
and is proposed to be engaged, and (ii) the Borrower anticipates that it will be
able to pay its Indebtedness as it or any part thereof becomes due.
3.16 Brokers. No broker or finder has acted on behalf of the Borrower or
its Subsidiaries to obtain, make or close the Commitment Letter, this Agreement
or any of the Loans, and the Borrower has no obligations to any Person in
respect of any finder's or brokerage fees or commissions in connection with any
of the foregoing. The Borrower and its Subsidiaries indemnify and agree to hold
harmless the Bank against and from any and all claims by any Person for any such
fees or commissions.
3.17 Management Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any management, consulting or similar agreement with
any other Person with respect to the business, operations or other assets of the
Borrower or any of its Subsidiaries, except for the management agreements listed
on Schedule 3.16.
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3.18 Consents of Restaurant Owners. The Borrower shall seek, with respect
to those management agreements noted on Schedule 3.16 which require the consent
of the respective restaurant owner, the consent of such restaurant owners to the
assignment to the Bank of the Borrower's and its Subsidiaries' right, title and
interest under such management agreements.
3.19 Leases. Neither the Borrower nor any of its Subsidiaries is a party
to any real property leases, except for the leases listed on Schedule 3.18.
3.20 Environmental Compliance. The Borrower or an affiliate or agent
thereof has conducted or caused to be conducted Phase I environmental site
assessments with respect to the past usage and condition of the Mortgaged
Property and the operations conducted thereon, and is familiar with the present
condition and usage of the Mortgaged Property and the operations conducted
thereon and, based upon such reports and knowledge, makes the following
representations and warranties:
(a) With respect to the Mortgaged Property, none of the Borrower, or
any operator of the Mortgaged Property, or any operations thereon is in
violation, or alleged violation, of any judgment, decree, order, law, license,
rule or regulation pertaining to environmental matters, including, without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to the environment (hereinafter
"Environmental Laws"), which violation involves the Mortgaged Property, and
would have a material adverse effect on the environment or the business, assets
or financial condition of any such Person.
(b) The Borrower has not received any notice from any third party
including, without limitation, any federal, state or local governmental
authority, (i) that it has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
ss.9601(5), any hazardous substances as defined by 42 U.S.C. ss.9601(14), any
pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous Substances") which it has
generated, transported or disposed of have been found at any site at which a
federal, state or local agency or other third party has conducted or has ordered
that such Person conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out of
any third party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances.
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(c) With respect to the Mortgaged Property, except as specifically
set forth in the environmental site assessment reports for the Mortgaged
Property, each of which has been provided to the Bank on or before the date
hereof: (i) no portion of the Mortgaged Property has been used for the handling,
processing, storage or disposal of Hazardous Substances except in accordance
with applicable Environmental Laws, and no underground tank or other underground
storage receptacle for Hazardous Substances is located on any portion of the
Mortgaged Property; (ii) in the course of any activities conducted by the
Borrower or the operators of its properties, no Hazardous Substances have been
generated or are being used on the Mortgaged Property except in the ordinary
course of business and in accordance with applicable Environmental Laws; (iii)
there has been no past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping (a "Release") or threatened Release of Hazardous Substances on, upon,
into or from the Mortgaged Property, or, to the best of the Borrower's
knowledge, on, upon, into or from the other properties of Borrower, which
Release would have a material adverse effect on the value of any of the
Mortgaged Property or adjacent properties or the environment; (iv) to the best
of the Borrower's knowledge, there have been no Releases on, upon, from or into
any real property in the vicinity of any of the Mortgaged Property which,
through soil or groundwater contamination, may have come to be located on, and
which would have a material adverse effect on the value of, the Mortgaged
Property; and (v) to the best of Borrower's knowledge and belief, any Hazardous
Substances that have been generated on any of the Mortgaged Property have been
transported off-site only by carriers having an identification number issued by
the EPA or approved by a state or local environmental regulatory authority
having jurisdiction regarding the transportation of such substance and, to the
best knowledge of the Borrower without independent investigation, treated or
disposed of only by treatment or disposal facilities maintaining valid permits
as required under all applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Borrower's knowledge, operating
in compliance with such permits and applicable Environmental Laws.
(d) Neither the Borrower nor Mortgaged Property is required by any
applicable Environmental Law to perform Hazardous Substances site assessments,
or remove or remediate Hazardous Substances, or give notice to any governmental
agency or to record or deliver to other Persons an environmental disclosure
document or statement by virtue of the transactions set forth herein and
contemplated hereby, or as a condition to the recording of the Mortgages or to
the effectiveness of any other transactions contemplated hereby.
3.21 No Material Adverse Change. Except as set forth on Schedule 3.20
since December 29, 1997, there has occurred no materially adverse change in the
financial condition or business of the Borrower and its Subsidiaries taken as a
whole, as shown on or reflected in the balance sheet of the Borrower and its
Subsidiaries, as of December 29, 1997, or its consolidated statement of
operations or cash flows for the fiscal year then ended, other than changes in
the ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business or financial condition
of the Borrower or its Subsidiaries taken as a whole.
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3.22 No Default under Revolving Loan. There has been no payment default by
the Borrower or any Subsidiary under the Revolving Loan.
3.23 Leases. The Borrower has delivered to the Bank true copies of the
Leases and any amendments thereto relating to the Mortgaged Property.
3.24 Year 2000 Compliance. (a) All of the Internal MIS Systems of the
Borrower and its Subsidiaries will be Year 2000 Compliant on or before June 30,
1999.
(b)(i) To the Borrower's knowledge, all vendors of products or
services to the Borrower, its Subsidiaries and their respective products,
services and operations, are Year 2000 Compliant, except for vendors whose
failure to be Year 2000 Compliant would not have a material adverse effect on
the business, operations, property or financial or other condition of the
Borrower or its Subsidiaries ("Immaterial Vendors"). To the knowledge of
Borrower after a reasonably diligent investigation, each such vendor will
continue to furnish its products or services to the Borrower, without
interruption or material delay, on and after January 1, 2000.
(ii) The Borrower and its Subsidiaries agree to enter into
appropriate agreements with each of their vendors (other than Immaterial
Vendors) certifying that all hardware, software or firmware, and any other
products and services furnished by such vendor, including any and all
enhancements, upgrades, customization, modifications, maintenance and the like
are Year 2000 Compliant. All such vendor agreements shall include appropriate
indemnification by the vendor or its products, services or operations fail to be
Year 2000 Compliant or if the products, services or operations fail to conform
to or meet the terms of the vendor warranties, representations or other
contractual terms.
(d) Borrower and its Subsidiaries agree to furnish the Bank with a
true, correct and complete copy of any internal investigations, memoranda,
budget plans, forecasts or reports concerning the Year 2000 Compliance of the
products, services, operations, systems, supplies and facilities of the
Borrower, its Subsidiaries and their vendors.
(e) For purposes of this Section 3.24, the following terms shall
have the meanings specified below:
"Internal MIS Systems" means any computer software and systems (including
hardware, firmware, operating system software, utilities and applications
software) used in the ordinary course of the business of the Borrower and
its Subsidiaries by or on behalf of the Borrower and its Subsidiaries,
including payroll, accounting, billing/receivables, inventory, asset
tracking, customer service, human resources and e-mail systems of the
Borrower and its Subsidiaries.
"Year 2000 Compliant" means that (1) the products, services or other
item(s) at issue accurately process, provide and/or receive all date/time
data (including calculating,
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comparing, sequencing, processing and outputting) within, from, into and
between centuries (including leap year calculations), and (2) neither the
performance nor the functionality nor the provision by the Borrower and
its Subsidiaries of products, services and other item(s) will be affected
by any dates/times prior to, on, after or spanning January 1, 2000. The
design of the products, services and other item(s) at issue to ensure
compliance with the foregoing warranties and representations includes
proper date/time data century recognition and recognition of 1999 and
2000, calculations that accommodate single century and multi-century
formulae and date/time values before, on, after and spanning January 1,
2000, and date/time data interface values that reflect the century, 1999
and 2000. In particular, but without limitation, (i) no value for current
date/time will cause any error, interruption, or decreased performance in
or for such product(s), service(s) and other item(s), (ii) all
manipulations of date and time related data (including calculating,
comparing, sequencing, processing and outputting) will produce correct
results for all valid dates and times when used independently or in
combination with other products, services, and/or items, (iii) date/time
elements in interfaces and data storage will specify the century to
eliminate date ambiguity without human intervention, including leap year
calculations, (iv) where any date/time element is represented without a
century, the correct century will be unambiguous for all manipulations
involving that element, (v) authorization codes, passwords and zaps (purge
functions) will function normally and in the same manner during, prior to,
on and after January 1, 2000, including the manner in which they function
with respect to expiration dates and CPU serial numbers, and (vi) the
Borrower's supply of the product(s), service(s) and other item(s) will not
be interrupted, delayed, decreased or otherwise affected by the advent of
the year 2000.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Conditions to Initial Advance. The obligation of the Bank to make the
initial Advance to the Borrower hereunder is subject to the satisfaction of the
following conditions precedent:
(a) Note. The Bank shall have received the Revolving Loan Note,
conforming to the requirements hereof and duly executed by the Borrower,
evidencing the Borrower's obligation to pay all Advances.
(b) Subsidiaries' Guaranty. The Bank shall have received the
Subsidiaries' Guaranty, duly executed by each of its Subsidiaries which is a
party thereto.
(c) Security Agreement. The Bank shall have received the Security
Agreement, duly executed by the Borrower and each of its Subsidiaries which is a
party thereto, together with UCC-1 financing statements executed by each such
entity in favor of the Bank and evidence satisfactory to the Bank and its
counsel of filing of such financing statements and perfection of the security
interests relating thereto.
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(d) Indemnity Agreement. The Bank shall have received the Indemnity
Agreement, duly executed, acknowledged and delivered by the Borrower and each of
its Subsidiaries which is a party thereto.
(e) Assignment of Insurance. The Bank shall have received a valid
and enforceable assignment of the life insurance policy described in Section
5.9.
(f) Legal Opinion. The Bank shall have received a favorable opinion
of counsel to the Borrower, in form and substance reasonably acceptable to the
Bank and its counsel, which form of opinion is attached hereto as Exhibit G.
(g) Certificates and Resolutions. The Bank shall have received (i)
copies of the resolutions of the manager of the Borrower and of the members or
other appropriate authority of its Subsidiaries authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents,
certified by the Secretary or an Assistant Secretary of each such entity; and
(ii) a certificate of the Secretary or an Assistant Secretary of the Borrower
and its Subsidiaries certifying the names and true signatures of the officers
and authorized signatories of each such entity authorized to sign any and all
documents to be delivered by each such entity or as required or contemplated
hereunder.
(h) Commitment Letter. The Borrower shall have satisfied all the
terms and conditions of the Commitment Letter, and no default shall have
occurred thereunder, except as waived by the Bank.
(i) Assignments of Management Agreement. The Bank shall have
received confirmation that the assignment, duly executed by Restaurant Group
Management Services, L.L.C., of such Subsidiary's right, title and interest in
and to the Management Agreement, dated April 18, 1996, by and between 37 East
50th Street Corporation and Restaurant Group Management Services, L.L.C., is
still in full force and effect.
(j) Mortgages. The Bank shall have received evidence that the
Mortgages have been recorded, creating a valid first priority Lien on the Las
Vegas Property (the "Las Vegas Mortgage"), the New Orleans Property (the "New
Orleans Mortgage"), and the Washington Property (the "Washington Mortgage")
which Mortgages shall be in the form of Exhibit E (with such changes as are
necessary or appropriate so as to conform to the law and practice of the state
in which each Mortgaged Property is located).
(k) Environmental Reports. The Bank shall have received
environmental site assessment reports for the Mortgage Property prepared by the
Environmental Engineer, which indicate the condition of the Mortgaged Property
and such other properties and any buildings thereon and which set forth no
qualifications except those that are acceptable to the Bank in its sole
discretion, and disclosing that each piece of Mortgage Property and any building
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thereon is free of oil, underground storage, asbestos or asbestos-containing
material, lead paint and other Hazardous Substances (except to the extent
acceptable to the Bank in its sole discretion), and which reports are otherwise
in form and substance satisfactory to the Bank.
(l) Appraisals. The Bank shall have received Appraisals of the
Mortgaged Property in form and substance satisfactory to the Bank prior to the
date hereof.
(m) Building Permit. The Bank shall have received evidence
satisfactory to it, in its sole discretion, that the plans and specifications
for the Projects have been approved by all appropriate governmental entities,
and that Improvements, if constructed in accordance with the approved plans and
specifications, will comply with all applicable laws, including, without
limitation, all zoning laws and building codes, rules and regulations.
(n) Plans. The Bank shall have received the final plans and
specifications for the construction of the Improvements certified by the
Borrower's Construction Consultant and reviewed by an independent engineer
engaged by the Bank, which plans shall comply with all federal, state and local
governmental requirements.
(o) Estoppel Certificates. The Bank shall have received an estoppel
certificate in form and substance satisfactory to the Bank, in its sole
discretion, from the landlord under any lease entered into by the Borrower or
any Subsidiary in respect of the Las Vegas Property and the Washington Property.
(p) Operating Accounts. The Borrower shall have transferred to
accounts at the Bank all of its cash management, cash concentration and
operating accounts, except for such operating accounts as may be required to be
maintained by Borrower in jurisdictions where the Bank does not conduct banking
operations.
(q) Title Insurance. Borrower shall have delivered to the Bank a
title insurance policy or a title binder or a certificate of title of Title
Serv, as agent for a nationally recognized title insurance company, containing
the agreement of the Title Company to issue its policy of title insurance
insuring the lien of the Mortgage, which title insurance policy shall be in an
amount specified by the Banks and in no event less than the principal amount of
the Loan. The title insurance policy shall contain such endorsements and
affirmative insurance as the Banks may require, including, without limitation, a
revolving credit endorsement.
(r) Survey. Borrower shall have delivered to the Bank an ALTA/ACSM
survey for each Real Property showing a state of facts satisfactory to the Bank
in all respects.
(s) Construction Budgets. The Bank shall have received budgets that
shall set forth the aggregate amount of funds to be expended to make the
Improvements on the Projects, and which budgets are in form and substance
satisfactory to the Bank.
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(t) Certificates, Permits, etc. Borrower shall deliver to the Bank
copies of all necessary certificates, authorizations, permits and licenses
required to permit the construction, completion and contemplated use of the
applicable Mortgaged Property, as issued by the appropriate governmental
authorities (and, to the extent assignable, Borrower hereby assigns all such
certificates, authorizations, permits and licenses to the Bank as additional
security for the repayment of the Loans and the obligations of Borrower pursuant
to the Loan Documents).
(u) Assignment of Management Agreement. The Bank shall have received
an assignment, in form and substance acceptable to the Bank, duly executed by
Restaurant Group Management Services, L.L.C., of such Subsidiary's right, title
and interest in and to the Management Agreement, dated April 18, 1996, by and
Between 37 East 50th Street Corporation and Restaurant Group Management
Services, L.L.C.
(v) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Bank and its counsel.
4.2 Conditions to All Extensions of Credit. The obligation of the Bank to
make any Loan to be made by it hereunder or to convert any Advance to the Term
Loan is subject to the satisfaction of the following conditions precedent at the
time of such requested Advance or conversion:
(a) Representations and Warranties. The representations and
warranties made by the Borrower herein, in the other Loan Documents or which are
contained in any certificate, document or financial or other statement furnished
at any time under or in connection herewith, shall be correct on and as of the
borrowing date for such extension of credit as if made on and as of such date,
except to the extent expressly made with respect to another date.
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on the date an extension of credit is to
be made or after giving effect to the extension of credit to be made on such
date.
(c) Lien Waivers, etc. Borrower shall have delivered to Lender (i)
such waivers of lien from contractors, subcontractors and materialmen as may be
requested or required by the Bank, or as may be required by Title Serv, as agent
for a nationally recognized title insurance company, in order to induce Title
Serv, as agent for a nationally recognized title insurance company, to insure
each advance of the Loan against all mechanic's or materialmen's liens for labor
furnished and materials supplied, and (ii) a general contractor's and major
subcontractors' letter in form and substance satisfactory to Bank, providing
that such general contractor and/or major subcontractor will complete work in
connection with such Project in the event Borrower Defaults;
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(d) Title Continuation. Prior to each advance of a Loan, the Title
Company shall have issued a written continuation of title showing no exceptions
to title other than those exceptions previously approved by the Bank in writing;
(e) Evidence of Payment. Prior to each advance of a Loan, Borrower
shall, upon request of the Bank, furnish the Bank with evidence satisfactory to
the Bank showing payment of all bills and charges for which advances of a Loan
have been made pursuant to this Agreement.
(f) Compliance with Laws, Contracts. Borrower shall at all times be
in compliance with all applicable laws, rules, restrictions, orders and
regulations, and shall not be in default pursuant to any agreement in connection
with the Loan or any Project.
Each borrowing and requested borrowing by the Borrower hereunder shall
constitute a representation and warranty by the Borrower as of the date of each
such borrowing and requested borrowing that the conditions in clauses (a)
through (f) of this Section have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower hereby agrees that, so long as any of the Obligations remain
outstanding and unpaid, or the Commitment remains in effect, the Borrower will:
5.1 Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders with respect to its business and
properties (including, without limitation, any fiscal and accounting rules and
regulations) and maintain all licenses, permits, charters and registrations
which are material to the conduct of its business.
5.2 Preservation of Existence. Observe in all material respects all
procedures required to preserve and maintain its legal existence, and all
rights, franchises and privileges in the jurisdiction of its organization, and
qualify and remain qualified to do business and in good standing in each
jurisdiction where the nature of its business requires it to do so, except where
the failure to be so qualified and in good standing would not have a material
adverse effect on the financial condition of the Borrower or its ability to
perform its obligations under this Agreement or any other Loan Document to which
it is a party.
5.3 Financial Information and Compliance Certificates.
(a) Keep their books of account in accordance with good accounting
practices and furnish to the Bank, within 120 days after the last day of each
fiscal year, consolidated balance sheets of the Borrower and its Subsidiaries as
at such last day of the fiscal year and statements of income and retained
earnings and cash flows for such fiscal year each prepared in accordance with
GAAP and certified by a firm of independent certified public accountants
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reasonably satisfactory to the Bank; and, within 45 days after the close of each
of the first three quarters of each fiscal year, consolidated and consolidating
balance sheets, statements of income and retained earnings and cash flows of the
Borrower and its Subsidiaries as of the last day of and for such quarter and for
the period of the fiscal year ended as of the close of the particular quarter,
all such quarterly statements to be in reasonable detail and certified by the
chief financial or accounting officer of the Borrower as having been prepared in
accordance with GAAP (subject to year-end adjustments). The Borrower will also
furnish, within forty-five days after the end of a calendar month, monthly
profit and loss statements of each existing and new restaurant owned or managed
by the Borrower or any of its Subsidiaries, internally prepared and certified by
the chief financial officer of the Borrower. The Borrower will, with reasonable
promptness, furnish such other data as may be reasonably requested by the Bank,
including, without limitation, copies of all material contracts and agreements,
and will at all times and from time to time permit the Bank by or through any of
its officers, agents, employees, attorneys or accountants to inspect and make
extracts from the books and records of the Borrower.
(b) At the same time as it delivers the financial statements called
for by Section 5.3(a), the Borrower shall deliver a certificate of the chief
executive officer and the chief financial or accounting officer of the Borrower
evidencing a computation of compliance with the provisions of Section 6 and
stating that in each case except as disclosed in such certificate, the person
making such certificate has no knowledge of any Default or Event of Default.
Together with their delivery of annual certified financial statements, the
Borrower's certified public accountants shall also deliver a certificate stating
that such accountants have no knowledge of any Default or Event of Default,
which shall be addressed to the Borrower and the Bank.
5.4 Defaults. Promptly notify the Bank of any Default or Event of Default,
setting forth the details of such Default or Event of Default and the actions
which the Borrower is taking or proposes to be taken with respect thereto.
5.5 Insurance. Maintain policies of hazard, general liability insurance,
business interruption insurance and other insurance as the Bank may reasonably
request (including, without limitation, the insurance more particularly
described in the Security Agreement) with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower operates and naming the Bank as
an additional insured and loss payee thereon as its interest may appear. All
such insurance shall be reasonably satisfactory to the Bank and its counsel as
to form, amount and insurer.
5.6 Preservation of Properties. Maintain and preserve all of their
respective properties which are used or which are useful in the conduct of their
respective businesses in good working order and condition, ordinary wear and
tear excepted.
5.7 Taxes. Duly pay and discharge all taxes or other claims which might
become a Lien upon any of their respective properties, except to the extent that
any thereof are being in
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good faith appropriately contested with adequate reserves provided therefor, and
so long as the failure to pay such taxes would not give rise to a Lien which is
not a Permitted Lien.
5.8 Notice of Litigation. Promptly notify the Bank of any litigation,
legal proceeding or dispute affecting the Borrower or any of its Subsidiaries
(other than (i) disputes in the ordinary course of business involving amounts
less than $100,000 or (ii) litigation arising in the ordinary course of business
which the Borrower reasonably believes to be covered by insurance and not
reasonably likely, even if adversely determined, to have a material adverse
effect on the Borrower or any Subsidiary (other than any Designated Subsidiary))
whether or not fully covered by insurance, and regardless of the subject matter
thereof (excluding, however, any actions relating to workers' compensation
claims or negligence claims relating to use of motor vehicles, if fully covered
by insurance, subject to deductibles).
5.9 Alan Stillman. Employ and continue to employ Alan Stillman as a key
officer of the Borrower and maintain in force a $5,000,000 life insurance policy
on the life of Alan Stillman, which life insurance shall be assigned to the Bank
free and clear of any other liens, claims or assignments. Notwithstanding the
foregoing, in the event of the death or disability of Alan Stillman, the
Borrower shall have 60 days in which to obtain the consent of the Bank to
replacement senior management reasonably satisfactory to the Bank.
5.10 Security Agreement and Projects. Cause each future Subsidiary of the
Borrower (other than a Designated Subsidiary) to execute and deliver a
counterpart of the Subsidiaries' Guaranty and the Security Agreement promptly
upon the formation of such Subsidiary and cause each contractor providing
services in connection with a Project to submit a contractor's final affidavit
upon the completion of the Improvements at a specific Project in form and
substance satisfactory to Bank.
5.11 New Restaurants. Each new restaurant established by Borrower or its
Subsidiaries shall have a positive monthly EBITDA for at least one full month no
later than the twelfth month after such new restaurant's opening, such positive
EBITDA to be demonstrated by the new restaurant's monthly profit and loss
statement provided to the Bank in accordance with Section 5.3 above.
SECTION 6. FINANCIAL COVENANTS.
6.1 Covenants. The Borrower hereby agrees that, so long as any of the
Obligations remain outstanding and unpaid, or the Commitment remains in effect
(whichever is later):
(a) Consolidated Fixed Charge Coverage Ratio. The Borrower and its
Subsidiaries on a consolidated basis will maintain a Consolidated Fixed Charge
Coverage Ratio, calculated on a rolling four-quarter basis, of not less than
1.25 to 1.0 from January 1, 1999 through September 30, 1999; and of 1.50 to 1.0
thereafter.
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(b) Consolidated EBITDA. The Consolidated EBITDA of the Borrower and
its Subsidiaries shall be not less than: a loss of ($12,000) for the third
fiscal quarter of 1998; $406,000 for the fourth fiscal quarter of 1998;
$2,063,000 for the first fiscal quarter of 1999; $2,336,000 for the second
fiscal quarter of 1999, $982,000 for the third fiscal quarter of 1999;
$4,303,000 for the fourth fiscal quarter of 1999, $2,991,000 for the first
fiscal quarter of 2000; $3,179,000 for the second fiscal quarter of 2000;
$2,079,000 for the third fiscal quarter of 2000; and $4,952,000 for the fourth
fiscal quarter of 2000.
6.2 Financial Covenants related to Affiliates. Manhattan Ocean Club
Associates, L.L.C., La Cite Associates, L.L.C. and Atlantic & Pacific Grill
Associates, L.L.C., on a combined basis, shall achieve and maintain a combined
EBITDA before management fees paid to the Borrower of at least $2,650,000 as of
December 31, 1997; $2,950,000 as of December 31, 1998; $3,070,000 as of December
31, 1999; provided, that such management fees are eliminated upon consolidation.
SECTION 7. NEGATIVE COVENANTS.
The Borrower hereby agrees that, so long as any of the Obligations remain
outstanding and unpaid, or the Commitment remains in effect, neither the
Borrower nor any Subsidiary will:
7.1 Indebtedness for Borrowed Money. Incur, or permit to exist, any
Indebtedness for borrowed money, except:
(a) Indebtedness incurred pursuant to borrowings hereunder and under
any other loans made by the Bank in its discretion to the Borrower;
(b) Indebtedness which existed on the date of this Agreement and is
set forth on Schedule 7.1(b);
(c) the letters of credit identified on Schedule 7.1(c) or any
replacement thereof, which secure lease obligations of the Borrower or any of
its Subsidiaries; and
(d) subordinated debt; provided, that, (i) immediately prior to and
after assuming such debt, the Borrower is in compliance with all of the
financial covenants set forth in Sections 6.1 and 6.2, and (ii) the Borrower is
not in default under this Agreement or any other Loan Document, and (iii) the
creditor of such debt agrees to subordinate its position pursuant to a
subordination agreement acceptable to the Bank;
provided, however, that in no event may the Borrower incur any Indebtedness
otherwise permitted under clause (c) above if such Indebtedness would cause the
Borrower to violate any other covenant herein and in no event shall the
aggregate amount of Indebtedness permitted under clause (c) above exceed
$10,000,000 (including the debt related to the contemplated Projects, each as
described on Schedule 1).
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7.2 Mergers and Sales of Assets. Enter into any merger or consolidation or
liquidate, wind up or dissolve the Borrower or any Subsidiary or sell, transfer
or lease or otherwise dispose of all or any substantial part of their respective
assets (other than sales of inventory and obsolete equipment in the ordinary
course of business) or acquire by purchase or otherwise the business or assets
of, or stock of, another business entity.
7.3 Loans; Investments. Lend or advance money, credit or property to or
invest in (by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other Person, except (a) investments in United States Government
obligations, certificates of deposit or money market funds of any banking
institution with combined capital and surplus of at least $200,000,000, (b)
capital contributions or loans or advances to Subsidiaries, (c) reasonable loans
to any employee of the Borrower or its Subsidiaries not exceeding $75,000 per
employee and not exceeding in the aggregate $250,000 outstanding at any time,
and (d) reasonable and customary expense advances made to employees of the
Borrower and its Subsidiaries in the ordinary course of their business.
7.4 Liens. Except as specifically contemplated by the Loan Documents,
create, incur, assume or permit to exist any Lien (other than Permitted Liens)
which is prior to or equal in priority to the Liens created by the Loan
Documents on any property or assets (including stock or other securities of any
Person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof.
7.5 Contingent Liabilities. Assume, endorse, be or become liable for or
guarantee any obligation of (a) any Person which is not an Affiliate of the
Borrower and a member of the Borrower's consolidated group for financial
reporting purposes, excluding, however, the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, or (b)
an Affiliate of the Borrower which is a member of the Borrower's consolidated
group for financial reporting purposes, without the prior written consent of the
Bank, which consent will not be unreasonably withheld so long as such proposed
action would not (i) result in a violation by the Borrower of any financial
covenant set forth in this Agreement or any of the other Loan Documents, or (ii)
otherwise result in any Default or Event of Default. Notwithstanding the
foregoing, so long as such guarantee does not cause the Borrower to violate any
financial covenant contained in the Loan Documents, the Borrower or any of its
Subsidiaries may (i) guarantee the lease obligations of any of its wholly-owned
Subsidiaries in connection with the acquisition or development of a Project;
provided, that, any such lease is at a market rate rental and with a third-party
landlord or (ii) guarantee Indebtedness that is otherwise permissible under
Section 7.1(c) or (d).
7.6 Sales of Receivables; Sale - Leasebacks. Sell, discount or otherwise
dispose of notes, accounts receivable or other obligations owing to the
Borrower, with or without recourse, except for the purpose of collection in the
ordinary course of business; or sell any asset pursuant to an arrangement to
thereafter lease such asset from the purchaser thereof.
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7.7 INTENTIONALLY OMITTED.
7.8 Nature of Business. Materially alter the nature of their business.
7.9 Accounting Changes. Make any change in their accounting treatment or
financial reporting practices, except as required or permitted by GAAP.
7.10 Transactions with Affiliates. Except as otherwise specifically set
forth in this Agreement, directly or indirectly purchase, acquire or lease any
property or assets from, or sell, transfer or lease any property or assets to,
or enter into any other transaction with, any Affiliate, except that as long as
no Event of Default shall have occurred and be continuing, the Borrower or any
Subsidiary may engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
it than those which would have been obtained in an arm's-length transaction with
a non-affiliated third party.
7.11 Operating Loss. Suffer or permit any of its Subsidiaries to suffer
any aggregate operating loss for two consecutive fiscal quarters which exceeds
$400,000; provided, however, that (a) for purposes of determining whether the
Borrower and its Subsidiaries have suffered such a loss, any Project Costs
incurred by the Borrower or its Subsidiaries shall be excluded, (b) any non-cash
extraordinary or non-recurring charges (not to exceed $1,000,000 in the
aggregate) shall be excluded, and (c) the results of operations of any
Subsidiary established for purposes of opening a new restaurant shall be
excluded from any calculation related to compliance with this Section 7.11 for
any fiscal quarter which includes at least one full month of the first twelve
calendar months following the commencement of operations of the new restaurant
operated by such Subsidiary.
7.12 Dividends and Distributions. Declare or pay or cause its Subsidiaries
to declare or pay, directly or indirectly, any dividend or distribution to any
shareholder, member or partner, except that (a) with respect to any fiscal year
in which the Borrower is a limited liability company, the Borrower may declare
and pay dividends or distributions to its members in an amount equal to the
income tax liability the Borrower would have had for such year if the Borrower
were an individual subject to federal, State of New York and City of New York
income tax at the highest applicable marginal tax rate in effect in each such
jurisdiction for such year; and (b) direct and indirect wholly-owned and
consolidated Subsidiaries of the Borrower may declare and pay dividends and
distributions to their respective shareholders, partners or members.
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SECTION 8. EVENTS OF DEFAULT.
Upon and after the occurrence of any of the following events (each an
Event of Default):
(a) The Borrower shall fail to pay any interest on or principal of
any of the Notes when due, or shall fail to pay any other amount payable
hereunder or under any other Loan Document; or
(b) Any representation or warranty made or deemed made by the
Borrower herein or in any of the other Loan Documents or which is contained in
any certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any of the other Loan Documents
shall prove to have been false in any material respect on or as of the date made
or deemed made; or
(c) The Borrower shall have failed to repay any Working Capital
Advance within the time period set forth in Section 2.5; or
(d) The Borrower shall breach any other covenant or default in the
observance or performance of any other provision contained in this Agreement or
any other Loan Document; provided, however, that, except for a breach of the
covenants set forth in Sections 7.2, 7.4, 7.8, 7.11 or 7.12 of this Agreement,
if such breach or default is susceptible of cure, such breach or default shall
not constitute an Event of Default unless such default shall continue unremedied
for a period of 30 days after written notice thereof is given to the Borrower by
the Bank; provided, further, that if such default is susceptible of cure, and
the Borrower is diligently proceeding to effectuate such cure, but such cure can
not be completed within such 30 day period, such period may be extended, at the
reasonable discretion of the Bank, for such reasonable period (not to exceed an
aggregate of 120 days) as the Bank may permit so long as the Borrower continues
to diligently pursue such cure; or
(e) At any time after the date hereof, the Bank shall not have a
valid prior perfected first Lien and security interest in the Mortgaged
Properties and the other collateral intended to be covered by the Security
Agreement; or
(f)(i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or
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(ii) there shall be commenced against the Borrower or any of
its Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment and (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or
(iii) there shall be commenced against the Borrower or any of
its Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall have not been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or
(iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) of this
Section 8(f); or
(v) the Borrower or any of its Subsidiaries shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g)(i) The Borrower or any of its Subsidiaries shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Internal Revenue Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Plan, which
Reportable Event or institution of proceedings is, in the reasonable opinion of
the Bank, likely to result in the termination of such Plan for purposes of Title
IV of ERISA, and, in the case of a Reportable Event, such Reportable Event shall
continue unremedied for ten days after notice of such Reportable Event pursuant
to Section 4043(a), (c) or (d) of ERISA is given or such proceedings shall
continue for ten days after commencement thereof, as the case may be, (iv) any
Plan shall terminate for purposes of Title IV of ERISA, and in each case in
clauses (i) - (iv) above, such event or condition could reasonably be expected
to subject the Borrower and any of its Subsidiaries to any tax, penalty or other
liabilities in the aggregate material in relation to the business, operations or
property of the Borrower and its Subsidiaries, considered as a whole; or
(h) The rendition by any court of a final judgment against the
Borrower or any of its Subsidiaries which shall not be satisfactorily stayed,
discharged, vacated, bonded or set aside within 60 days of the making thereof;
or the attachment of any property of the Borrower or any of its Subsidiaries
which has not been released or provided for to the reasonable satisfaction of
the Bank within 60 days after the making thereof; or
(i) The Subsidiaries' Guaranty shall cease to be in full force and
effect as to any Subsidiary which is a party thereto; or
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(j) Alan Stillman and/or his wife shall fail to control, directly
or indirectly, at least 22% of the voting interests or stock of the Borrower; or
(k) The Borrower or any Subsidiary shall breach or default in its
obligations under any Indebtedness with respect to which the damages for such
breach or default might reasonably be expected to exceed $100,000; or
(l) The Borrower or any Subsidiary shall fail to pay any due and
unpaid taxes, except for Disputed Taxes the existence of which does not cause
the Borrower to violate any other covenant in this Agreement;
then, in any such event, any or all of the following actions may be taken: (x)
the Bank may, at its option and without giving any prior notice to the Borrower,
declare the Commitment to be terminated forthwith, whereupon the Commitment and
all obligations of the Bank to make Revolving Loans or convert any Advances into
the Term Loan shall immediately terminate; and (y) the Bank may, at its option
and without giving any prior notice to the Borrower, declare the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Notes to be due and payable and the same, and all interest accrued
thereon, shall forthwith become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby waived, anything
contained herein or in any instrument evidencing the Loans to the contrary
notwithstanding.
SECTION 9. MISCELLANEOUS.
9.1 Notices. All notices, requests and demands to or upon the respective
parties hereto shall be in writing (unless otherwise expressly provided herein)
and shall be deemed to have been duly given or made when delivered by hand, or
by telecopy, receipt acknowledged, or five (5) calendar days after having been
deposited in the mail addressed as follows, or to such address as may be
hereafter notified in writing by the respective parties hereto and any future
holders of any Note:
The Borrower: The New York Restaurant Group, Inc.
1114 First Avenue
New York, New York 10021
Attn: Mr. Mark K. Levine, Executive Vice
President
with a copy to: Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
Attn: Cornelius J. Chapman, Esq.
-42-
<PAGE>
The Bank: Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Attn: Mr. Judah Zweiter, Vice President
with a copy to: Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Walter H. Curchack, Esq.
9.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Bank, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right.
9.3 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement, the Notes and the other Loan Documents.
9.4 Payment of Expenses; Examination.
(a) In addition to the reasonable fees, costs and expenses payable
to the Bank pursuant to Section 2.11 of this Agreement, and pursuant to any of
the other Loan Documents or otherwise, the Borrower agrees to pay or reimburse
the Bank promptly for all its reasonable out-of-pocket costs and expenses
incurred in connection with (i) the preparation of, or any amendment,
modification or waiver of, or consent with respect to, or any payment under or
termination of, any or all of the Loan Documents, including, without limitation,
the reasonable fees and disbursements of attorneys for the Bank, (ii) the
enforcement or preservation of any rights under this Agreement, any Note, any of
the other Loan Documents or any other instrument or agreement entered into in
connection herewith or therewith, including, without limitation, the reasonable
fees and disbursements of attorneys for the Bank, (iii) any claim or action
threatened, made or brought against the Bank arising out of or relating to any
extent to this Agreement, any Note, any of the other Loan Documents or any
instrument or agreement entered into in connection with the transactions
contemplated hereby or thereby, including, without limitation, the reasonable
fees and disbursements of attorneys for the Bank, and (iv) the transactions
contemplated hereby, including, without limitation, search fees, recording and
filing fees and fees and costs of appraisers, engineers, or other experts
retained by the Bank.
(b) The Borrower agrees that (i) at any time but not exceeding once
in a calendar year or (ii) after an Event of Default has occurred, at any time
and from time to time, the
-43-
<PAGE>
Bank may conduct, at the Borrower's expense, (A) an examination of the
Borrower's books and records, and (B) field examinations with respect to any
Project. The obligations set forth in this Section 9.4 shall be in addition to
any other obligations or liabilities of the Borrower to the Bank hereunder or at
common law or otherwise. The provisions of this Section 9.4 shall survive the
payment of the Notes and the termination of this Agreement.
9.5 Waiver of Jury Trial, Setoff and Counterclaim. THE BORROWER AND THE
BANK IN ANY LITIGATION (WHETHER OR NOT ARISING OUT OF OR RELATING TO THIS
AGREEMENT) IN WHICH THEY SHALL BE ADVERSE PARTIES WAIVE THE RIGHT OF TRIAL BY
JURY AND THE BORROWER WAIVES THE RIGHT TO INTERPOSE ANY SETOFF OR COUNTERCLAIM
OF ANY KIND OR DESCRIPTION IN ANY SUCH LITIGATION.
9.6 Waiver of Automatic Stay. THE BORROWER AGREES THAT, IN THE EVENT THAT
THE BORROWER SHALL (i) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT JURISDICTION
OR BE THE SUBJECT OF ANY PETITION UNDER TITLE 11 OF THE U.S. CODE, AS AMENDED
("BANKRUPTCY CODE"), (ii) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER
THE BANKRUPTCY CODE, (iii) FILE OR BE THE SUBJECT OF ANY PETITION SEEKING ANY
REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS, (iv)
HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE,
RECEIVER, CONSERVATOR, OR LIQUIDATOR, OR (v) BE THE SUBJECT OF ANY ORDER,
JUDGMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING A
PETITION FILED AGAINST SUCH PARTY FOR ANY REORGANIZATION, ARRANGEMENT,
COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY
PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY,
INSOLVENCY, OR RELIEF FOR DEBTORS, THE BANK SHALL THEREUPON BE ENTITLED AND THE
BORROWER IRREVOCABLY CONSENTS TO IMMEDIATE AND UNCONDITIONAL RELIEF FROM ANY
AUTOMATIC STAY IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR OTHERWISE, ON
OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES OTHERWISE AVAILABLE TO THE
BANK AS PROVIDED FOR HEREIN, IN ANY NOTE, OR ANY OTHER LOAN DOCUMENTS DELIVERED
IN CONNECTION HEREWITH AND AS OTHERWISE PROVIDED BY LAW, AND THE BORROWER HEREBY
IRREVOCABLY WAIVES ANY RIGHT TO OBJECT TO SUCH RELIEF AND WILL NOT CONTEST ANY
MOTION BY THE BANK SEEKING RELIEF FROM THE AUTOMATIC STAY AND THE BORROWER WILL
COOPERATE WITH THE BANK, IN ANY MANNER REQUESTED BY THE BANK, IN ITS EFFORTS TO
OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION.
-44-
<PAGE>
9.7 Modification and Waiver. No modification or waiver of, or with respect
to, any provision of this Agreement or any document or instrument delivered in
connection therewith shall be effective unless and until it shall be in writing
and signed by the Bank and the Borrower, and then such modification or waiver
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrower in any case shall, of itself,
entitle it to any other or further notice or demand in similar or other
circumstances.
9.8 Severability. In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
9.9 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Bank, all future holders of the Notes and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights under this Agreement without the prior written
consent of the Bank, and any attempt at such assignment without such consent
shall be void, and at the option of the Bank, be deemed a default under this
Agreement. The term "Bank" as used in this Agreement shall be deemed to include
the Bank and its successors, endorsees and assigns, and any Loan connected with
or contemplated by this transaction may be assigned, serviced and/or
participated in (either in whole or in part) by the Bank and/or its successors
and assigns.
9.10 Governing Law; Consent to Jurisdiction. This Agreement, the Notes and
any documents and instruments delivered in connection herewith and therewith and
the rights and duties of the parties hereunder and thereunder shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York, and the Borrower consents to the jurisdiction of the courts of the
State of New York in any action brought to enforce any rights of the Bank under
this Agreement, the Notes and any document and instrument related hereto.
9.11 Entire Agreement. This Agreement and any other agreements, documents
and instruments executed and delivered pursuant to or in connection with the
Obligations contain the entire agreement between the parties relating to the
subject matter hereof and thereof. The Borrower expressly acknowledges that the
Bank has not made and the Borrower is not relying on any oral representations,
agreements or commitments of the Bank or any officer, employee, agent or
representative thereof.
9.12 Interest Adjustment. Notwithstanding anything to the contrary
contained in this Agreement or in the Notes, if at any time the applicable rate
of interest payable on any Note, together with all fees and charges which are
treated as interest under applicable law (collectively, the "Charges"), as
provided for in this Agreement, the Notes or in any other document executed
-45-
<PAGE>
in connection herewith or therewith, or otherwise contracted for, charged,
received, taken or reserved by the Bank, shall exceed the maximum lawful rate
(the "Maximum Rate") which may be contracted for, charged, taken, received or
reserved by the Bank in accordance with applicable law, the rate of interest
payable under the Notes held by the Bank, together with all Charges payable to
the Bank, shall be limited to the Maximum Rate. The Borrower hereby agrees to
give the Bank prior written notice in the event that any interest payment made
to the Bank with respect to any Note will cause the total interest payments
collected in any one year to be illegal under applicable law. In the event that
the interest referred to hereunder or the Note would be illegal in the Bank's
opinion, the Bank reserves the right to reduce the interest payable by the
Borrower or apply any sum in excess of the maximum collectible interest in
reduction of principal.
9.13 Rates. The Borrower hereby acknowledges that neither the Prime Rate
nor the LIBOR Rate is necessarily the lowest rate charged by the Bank for
commercial or other types of loans, it being understood that the Prime Rate and
the LIBOR Rate are only two of the bases for computing interest on loans made by
the Bank, and that by computing interest at the Prime Rate or the LIBOR Rate,
the Bank is not committed to charge, and the Borrower has not in any way
bargained for, interest based on a lower or the lowest rate at which the Bank
may now or in the future make loans to other borrowers.
9.14 Section Titles. The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever, and
are not a part of the agreement among the parties hereto.
9.15 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
9.16 Taxes. With respect to an assignee of the Loan to whom Section
2.15(e) applies or any participant, the Borrower shall not be required to pay
any amount pursuant to Section 2.15 that is greater than the amount which it
would have been required to pay had no interest in this Agreement or any other
Loan Document been transferred (including for these purposes through
participation). The transferor of such interest shall be obligated to indemnify
and hold harmless the Borrower from and against any taxes, penalties, interest
or other costs or losses (including, without limitation, reasonably attorneys'
fees and expenses) incurred or payable by the Borrower as a result of the
failure of the Borrower to comply with its obligations to deduct or withhold any
Taxes from any payments made pursuant to this Agreement or any other Loan
Document, which Taxes would not have been incurred or payable if such transferee
had delivered to the Borrower, and did in fact so deliver, duly completed and
valid forms or other documentation entitling such participant to receive payment
under this Agreement or any other Loan Document without deduction or withholding
of any Taxes.
-46-
<PAGE>
9.17 Tax Treatment. Without limiting the application of any other
provision of this Agreement, if any interest in any Loan Document is transferred
by the Bank to any transferee, the transferor shall use its reasonable best
efforts to cause such transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.15(e).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ Mark K. Levine
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
FLEET BANK, N.A.
By: /s/ Judah Zweiter
--------------------------------------
Name: Judah Zweiter
Title: Vice President
<PAGE>
EXHIBIT A
Borrowing Notice
[SEE ATTACHED]
<PAGE>
FORM OF BORROWING NOTICE
[Date]
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, NY 10036
Attention: Judah Zweiter
Dear Sirs:
The undersigned, The New York Restaurant Group, Inc. (the "Borrower"),
refers to the Loan Agreement, dated as of September 1, 1998 (as it may hereafter
be amended, modified, extended or restated from time to time, the "Loan
Agreement"), between the Borrower and Fleet Bank, N.A. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Loan Agreement. The Borrower hereby gives you notice pursuant to
Section 2.3 of the Loan Agreement that it requests an Advance under the Loan
Agreement, and in that connection sets forth below the terms on which such
Advance is requested to be made:
(A) Identify Project
or state for working capital(1) _________________
(B) If for a Project, total
Project Costs _________________
Amount Requested (if for a Project,
not to exceed 90% of actual
Project Costs) _________________
(C) Interest
(i) Adjusted LIBOR Rate _________________
Applicable LIBOR Interest Period ___________months
(ii) Adjusted Prime Rate _________________
- ----------
(1) If for working capital, subject to Working Capital Sublimit.
<PAGE>
[If the advance under the particular Borrowing Notice is to fund a
particular Project, the following certification by the chief executive officer
or the chief financial officer of the Borrower must be included.]
The sum requested under this Borrowing Notice will be used only for
Improvements in connection with the Project identified herein and that the
conditions set forth in Sections 4.2(a) - (f) have been satisfied.
The undersigned is the Chief Financial Officer or Chief Executive Officer
of The New York Restaurant Group, Inc., and hereby certifies pursuant to Section
2.3 of the Loan Agreement that the total cost identified in (B) above, to my
knowledge, reflects actual Project Costs incurred for the particular Project
identified herein.
Attached hereto and made part of this Borrowing Notice are (A)
certificates from the Construction Consultant certifying that (i) the
Improvement can be completed for the amount available for construction from the
construction budget approved by Bank, and (ii) the final plans and
specifications are satisfactory for the completion of the Improvements; and (B)
lien waivers from the general contractor and all material subcontractors engaged
in the performance of the work being funded by such Advance
Upon acceptance of any or all of the Loans made by the Bank in response to
this request, the Borrower shall be deemed to have represented and warranted
that the conditions to lending specified in Section 4.2 of the Loan Agreement
have been satisfied.
Very truly yours,
THE NEW YORK RESTAURANT GROUP, INC
By:
--------------------------------------
Name:
Title:
<PAGE>
REVOLVING LOAN NOTE
$15,000,000.00
New York, New York
September 1, 1998
THE NEW YORK RESTAURANT GROUP, INC., a Delaware corporation
(the "Borrower"), for value received, hereby promises to pay to the order of
FLEET BANK, N.A. (the "Bank") on July 31, 1999, at the office of the Bank
specified in Section 9.1 of the Loan Agreement, dated as of even date herewith,
between the Borrower and the Bank, as amended from time to time (as so amended,
the "Agreement"; terms defined in the Agreement shall have their defined
meanings when used in this Note), in lawful money of the United States of
America and in immediately available funds, the principal amount of FIFTEEN
MILLION AND 00/100 DOLLARS ($15,000,000.00) or, if less than such principal
amount, the aggregate unpaid principal amount of all Loans made by the Bank to
the Borrower pursuant to Section 2.1 of the Agreement. The Borrower further
promises to pay interest in like money on the unpaid principal balance of this
Note from time to time outstanding at (i) the Adjusted Prime Rate, or (ii)
subject to availability and at the Borrower's request, the Adjusted LIBOR Rate.
Interest shall be computed on the basis of a 360-day year for actual days
elapsed and shall be payable in arrears commencing on the first day of the first
month following any Loan made by the Bank to the Borrower pursuant to Section
2.1 of the Agreement, and on the first day of each and every month thereafter,
as more particularly set forth in, and subject to the terms and conditions of,
the Agreement. All Loans made by the Bank pursuant to Section 2.1 of the
Agreement and all payments of the principal thereon may be endorsed by the
holder of this Note on the schedule annexed hereto, to which the holder may add
additional pages. The aggregate net unpaid amount of Loans set forth in such
schedule shall be presumed to be the principal balance hereof. After the stated
or any accelerated maturity hereof, and after the occurrence of any Event of
Default, this Note shall bear interest at the Post Default Rate, and in the
event that any amount payable hereunder or in connection herewith remains unpaid
for a period of 10 days after its due date, the Borrower shall also be subject
to a late charge of two percent (2%) of the amount not paid when due, all as
more particularly set forth in Section 2.10(e) of the Agreement, and all of such
interest and late charges shall be payable on demand, but in no event in excess
of the maximum rate of interest permitted under applicable law.
This Note is the Revolving Loan Note referred to in the Agreement,
and is entitled to the benefits thereof and may be prepaid, and is required to
be prepaid, in whole or in part (subject to the indemnity provided in the
Agreement), as provided therein.
Upon the occurrence of any one or more of the Events of Default
specified in the Agreement, all amounts then remaining unpaid on this Note shall
be, or may be declared to be, immediately due and payable, in each case as
provided in the Agreement. This Note is secured
<PAGE>
by the Mortgages, the collateral described in the Security Agreement and by
the Subsidiaries' Guaranty.
The Borrower, for itself and its legal representatives, successors
and assigns, and all endorsers, guarantors or any others who may at any time
become liable for payment hereunder, hereby (i) consents to any and all
extensions of time, renewals, waivers, or modifications or substitutions or
releases of security that may be granted or consented to by the Bank or the
holder hereof with regard to the time of payment hereunder, the security held
for payment hereunder, or any other provision hereof, and (ii) waives
presentment, demand, protest and notice of protest, notice of dishonor, notice
of non-payment, notice of maturity, presentment for the purpose of accelerating
maturity, diligence in collection, and the benefit of any exemption of
insolvency laws, and all other notices applicable hereto, and agrees to pay, to
the extent permitted by law, all fees, costs and expenses incurred by or on
behalf of the Bank or the holder hereof in the collection hereof, including
legal costs and reasonable attorneys' fees and expenses.
This Note has been issued pursuant to the terms of the Agreement,
and is subject to all of the terms and conditions thereof.
This Note shall be construed in accordance with and governed by the
laws of the State of New York. The Borrower consents to the jurisdiction of the
courts of the State of New York in any action brought to enforce any rights of
the Bank or any holder under this Note, and the Borrower waives the right of
trial by jury and the right to interpose any setoff or counterclaim of any kind
or description with respect to any such action.
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
THE NEW YORK RESTAURANT
GROUP, INC.
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
SCHEDULE TO REVOLVING LOAN NOTE
DATED SEPTEMBER 1, 1998
BY
THE NEW YORK RESTAURANT GROUP, INC.
TO
FLEET BANK, N.A.
Advances and Payments of Principal and Interest
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Amount of Amount of Principal Amount of Unpaid Principal Notation
Date Advance Paid or Prepaid Interest Paid Balance of Advances Made By
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
==============================================================================================
</TABLE>
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of September, 1998, before me personally came Mark K.
Levine, to me known, who, being by me duly sworn, did depose and say that he is
the Executive Vice President of The New York Restaurant Group, Inc., the
corporation described in, and which executed, the foregoing instrument; and that
he signed his name thereto by order of the directors of said corporation.
-----------------------------
Notary Public
<PAGE>
SECURITY AGREEMENT
FOR VALUE RECEIVED, and to induce FLEET BANK, N.A., a national
banking association having an office at 1185 Avenue of the Americas, New York,
New York 10036 (hereinafter referred to as "Secured Party"), to extend credit
and other financial accommodations to THE NEW YORK RESTAURANT GROUP, INC., a
Delaware corporation having its chief place of business at 1114 First Avenue,
New York, New York 10021 (the "Borrower"), the Borrower, The Manhattan Ocean
Club Associates, L.L.C., a New York limited liability company, La Cite
Associates, L.L.C., a Delaware limited liability company, Atlantic & Pacific
Grill Associates, L.L.C., a New York limited liability company, Mrs. Parks Sub,
LLC, a Delaware limited liability company, New York RGI Sub, LLC, a Delaware
limited liability company, Restaurant Group Management Service, LLC, a New York
limited liability company, S & W Chicago, LLC, a Delaware limited liability
company, S & W of Miami, L.L.C., a Delaware limited liability company, MOC D.C.,
L.L.C., a Delaware limited liability company, S & W Las Vegas, L.L.C., a
Delaware limited liability company, S & W New Orleans, L.L.C., a Delaware
limited liability company, S & W D.C., L.L.C., a Delaware limited liability
company, Manhattan Ocean Holdings, Inc., a Delaware corporation, Cite Holdings,
Inc., a Delaware corporation, Atlantic & Pacific Grill Holdings, Inc., a
Delaware corporation, MPM Holdings, Inc., a Delaware corporation, NYRGI
Holdings, Inc., a Delaware corporation, Restaurant Group Management Holdings,
Inc., a New York corporation, S & W Chicago Holdings, Inc., a Delaware
corporation, MOC D.C. Holdings, Inc., a Delaware corporation, S & W New Orleans
Holdings, Inc., a Delaware corporation, and S & W D.C. Holdings, Inc., a
Delaware corporation (the twenty-two (22) foregoing entities referred to herein
as the "Subsidiaries") (the Borrower and the Subsidiaries collectively referred
to as "Debtor") hereby agree that Secured Party shall have the rights, remedies
and benefits hereinafter set forth.
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Collateral" shall mean all of Debtor's now existing and hereafter
arising interests in and to all of the following, whether now existing or owned
or hereafter created or acquired, wherever located, including substitutions,
accessions, additions and replacements thereto and thereof:
(a) all accounts, contract rights, chattel paper, documents,
instruments, notes, acceptances, drafts and general intangibles
(including, but not limited to, all of Debtor's now existing and hereafter
arising choses in action and tax and duty refunds, all now owned and
hereafter acquired franchises, licenses, permits, patents, patent
applications, trademarks, tradenames and copyrights, and all rights
thereunder and registrations thereof); Debtor's
<PAGE>
interest in the goods represented thereby and all returned, reclaimed and
repossessed goods with respect thereto; all of Debtor's rights as an
unpaid vendor (including stoppage in transit,
replevin, reclamation and resale), all additional amounts due to Debtor from any
account debtor irrespective of whether such additional amounts have been
specifically assigned to Secured Party; all guaranties, letters of credit and
other agreements or property securing or relating to any of the items referred
to above; all monies, deposits (general or special), securities, instruments,
credits and other property of Debtor now or hereafter actually or constructively
held or received by, or in transit in any manner to or from, Secured Party or
any entity which at any time participates in Secured Party's financing of
Debtor, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, or placed in any safe deposit box leased by Secured Party or such
other entity to Debtor; and all rights and remedies of Debtor under or in
connection with all of the foregoing;
(b) all inventory, including raw materials, wine inventory and all
other goods, all right, title and interest of Debtor therein and thereto;
(c) all machinery, equipment, furniture, furnishings, fixtures, and
all attachments, components, accessories and parts therefor or installed
thereon or affixed thereto;
(d) all of Debtor's leasehold interests in equipment, premises or
facilities leased from third parties;
(e) all of Debtor's books, records, ledger sheets, ledgers, files,
orders, invoices and shipping receipts (including, without limitation,
computer programs, tapes and related electronic data processing software)
relating to all of the foregoing;
(f) all of the Borrower's interest in the stock identified on
Schedule B hereto or membership interests in the Subsidiaries that are
limited liability companies;
(g) all works of art owned by the Debtor; and
(h) any and all products and proceeds of the foregoing in any form,
whether from the voluntary or involuntary disposition thereof, including,
without limitation, accounts, contract rights, general intangibles,
chattel paper, documents, instruments, inventory, equipment, fixtures, all
insurance proceeds and all claims by Debtor against third parties for
damage to or loss or destruction of any or all of the foregoing;
provided, however, that Collateral shall not include (i) those leases identified
on Schedule 3.18 of the Loan Agreement, and (ii) liquor and other licenses and
permits which are not transferable without the consent of the applicable
regulatory authority. Notwithstanding the foregoing, "Collateral" shall not
include any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would constitute a violation of a valid and enforceable restriction in
favor of a third party on such grant, unless and until any required consents
shall have been obtained. Debtor agrees to use commercially reasonable efforts
to obtain any such required consent with respect to any material items of such
Collateral.
-2-
<PAGE>
"Event of Default" shall have the meaning assigned to such term in
the Loan Agreement.
"Financing Agreements" shall mean this Agreement, the Loan
Agreement, the Note, the Term Note and all other "Loan Documents" (as said term
is defined in the Loan Agreement), and all present and future related
agreements, documents and instruments, as now existing and as hereafter amended,
modified or supplemented.
"Guarantor" shall mean any person or entity who or which at any time
guarantees to Secured Party the payment or performance of all or any portion of
the Obligations.
"Loan Agreement" shall mean that certain Loan Agreement, dated as of
September 1, 1998, between the Borrower and Secured Party.
"Note" shall mean that certain Revolving Loan Note of even date
herewith in the principal face amount of $15,000,000.00 executed by the Borrower
in favor of Secured Party.
"Obligations" shall mean all present and future indebtedness,
obligations, covenants, duties and liabilities of any kind or nature of Debtor
to Secured Party, now or hereafter existing, arising directly between Debtor and
Secured Party or acquired outright, conditionally or as collateral security from
another by Secured Party, absolute or contingent, joint and/or several, secured
or unsecured, due or not due, contractual or tortuous, liquidated or
unliquidated, arising by operation of law or otherwise, direct or indirect,
whether or not evidenced by any note, agreement or other instrument, including,
but without limiting the generality of the foregoing, indebtedness, obligations,
covenants, duties and liabilities of Debtor to Secured Party pursuant to the
Financing Agreements and, to the extent not otherwise included, all
"Obligations" described and defined in the Loan Agreement.
"Term Note" shall have the meaning assigned to such term in the Loan
Agreement.
All other terms defined in the preamble or the recitals hereto shall
have the respective meanings ascribed to them therein. Unless the context
otherwise indicates, all terms used without definition in this Agreement shall
have the meanings ascribed to them in the Uniform Commercial Code of the State
of New York as presently in effect, to the extent the same are used or defined
therein.
-3-
<PAGE>
ARTICLE 2
SECURITY
2.1 Grant of Security Interest. As security for the payment and
performance of the Obligations, Debtor hereby grants to Secured Party a
continuing security interest in and a general lien upon the Collateral.
ARTICLE 3
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF DEBTOR
Debtor hereby represents and warrants to, and covenants and agrees
with, Secured Party that:
3.1 Performance of Obligations. The Borrower and its Subsidiaries
will pay and perform all of the Obligations according to their terms.
3.2 Locations of Offices and Collateral. The Schedule A annexed
hereto accurately and completely sets forth the mailing addresses of the chief
executive office of the Borrower, the principal and other places of business of
the Borrower, the office where the Debtor keeps their books and records
concerning the Collateral (including accounts and contract rights) and the
locations where any of the Collateral is or may hereafter be located, and the
Debtor will not change any of the same, nor open or make use of any new place of
business or location of Collateral or books and records, without thirty (30)
days' prior written notice to Secured Party.
3.3 Further Assurances; Financing Statements. Upon request of
Secured Party, at any time and from time to time, Debtor will, at its own cost
and expense, execute and deliver to Secured Party one or more financing
statements pursuant to the Uniform Commercial Code, or amendments or
continuations thereof, and any other documents required by Secured Party to
further evidence, effect or perfect the security interest granted herein or to
otherwise effectuate the purposes of this Agreement, and, to the extent
permitted by applicable law, Debtor hereby authorizes Secured Party to execute
and file at any time or times one or more financing statements pursuant to the
Uniform Commercial Code with respect to any or all of the Collateral, signed
only by Secured Party. Debtor hereby agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement shall be sufficient
as a financing statement.
3.4 Title to Collateral. The Collateral is, and shall at all times
be, owned by Debtor free and clear of any security interests, liens or
encumbrances, except for such security interests, liens or encumbrances which
are Permitted Liens (as said term is defined in the Loan Agreement).
3.5 Disposition of Collateral. Except for sales of inventory or
equipment in the ordinary course of Debtor's business, Debtor will not sell,
exchange or otherwise dispose of any of
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<PAGE>
the Collateral, or any rights thereto, without having obtained Secured Party's
prior written consent in each instance.
3.6 Discharge of Liens. Debtor shall immediately pay and cause the
discharge of any liens, taxes or assessments which may be levied upon the
Collateral, except for the Permitted Liens.
3.7 Insurance. Debtor, at its own cost and expense, will insure the
Collateral at all times against all hazards specified by Secured Party,
including, but not limited to, fire, theft and risks covered by extended
coverage insurance, and such policies shall be payable to Secured Party as its
interest may appear. Said policies of insurance shall be satisfactory to Secured
Party as to form, amount and insurer. At Secured Party's request, Debtor shall
furnish certificates, policies or endorsements to Secured Party as proof of such
insurance, and if it fails to do so Secured Party is authorized, but not
required, to obtain such insurance at Debtor's expense. All policies shall
provide for at least thirty (30) days' prior written notice of cancellation to
Secured Party. Upon and after the occurrence of an Event of Default, Secured
Party may act as attorney-in-fact for Debtor in making, adjusting and settling
any claims under any such insurance policies. Debtor hereby assigns to Secured
Party all of its right, title and interest in and to any insurance policies
insuring the Collateral, including all rights to receive the proceeds of
insurance, and directs all insurers to pay all such proceeds directly to Secured
Party and authorizes Secured Party to endorse Debtor's name on any instrument
for such payment. Notwithstanding the foregoing, so long as no Default or Event
of Default exists under the Loan Agreement, upon the Borrower's written request
Secured Party shall hold such proceeds, without interest (except that insurance
proceeds in excess of $10,000 for any occurrence shall be held by Secured Party
at the prevailing rate of interest as determined by Secured Party in its sole
discretion), and make such proceeds available to the Borrower to replace or
repair the Collateral in question, upon such terms and conditions as Secured
Party may reasonably require.
3.8 Condition of Collateral. Debtor will keep the Collateral in good
condition and repair, reasonable wear and tear excepted, and will furnish all
required parts and servicing (including any contract service necessary to
maintain the benefit of any warranty of the manufacturer). Debtor will promptly
notify Secured Party of any destruction of or any substantial damage to any of
the Collateral.
3.9 Actions by Secured Party. Secured Party may, in its sole
discretion and at any time, for the account and expense of Debtor, pay any
amount or do any act required of Debtor hereunder or reasonably requested by
Secured Party to preserve, protect, maintain or enforce the Obligations, the
Collateral or the security interest granted herein, and which Debtor fails to do
or pay after notice from Secured Party, including, without limitation, payment
of any judgment against Debtor, any insurance premium, any warehouse charge and
any lien, claim or encumbrance upon or with respect to the Collateral, and any
such payment shall be added to the Obligations and shall be payable upon demand.
3.10 Adverse Changes. Debtor shall promptly notify Secured Party in
writing of any material adverse change in Debtor's financial condition or any
event which materially adversely
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<PAGE>
affects the value of the Collateral or the rights or remedies of Secured Party
in relation to any Debtor or any Collateral.
3.11 Inspection of Collateral. Debtor will at all times during
normal business hours allow Secured Party or its agents to examine and inspect
the Collateral as well as Debtor's books and records pertaining thereto, and to
make extracts and copies thereof.
3.12 Reports. Debtor will report, in form satisfactory to Secured
Party, such information as Secured Party may request from time to time regarding
the Collateral.
3.13 Changes in Structure. Debtor shall not become a party to any
consolidation, merger, liquidation or dissolution, except as permitted by the
Loan Agreement.
3.14 Name Changes. Debtor will notify Secured Party of any intended
change in Debtor's name, and will notify Secured Party when such change becomes
effective.
3.15 Former or Fictitious Names. Schedule A annexed hereto
accurately and completely sets forth all corporate or fictitious names, and
tradenames used by Debtor or by which Debtor has been known during the preceding
five (5) years, and Debtor will give Secured Party prior written notice of
Debtor's use of any fictitious name or tradename not listed on the annexed
Schedule A.
3.16 Required Consents. No consent or approval of any governmental
body or regulatory authority or of any other person, corporation or entity is or
will be necessary or required for the execution, delivery and performance of
this Agreement, or for the grant of a security interest in the Collateral to
Secured Party, or the exercise by Secured Party of any rights with respect to
the Collateral, except for such consents as have heretofore been obtained and
delivered to Secured Party.
3.17 No Litigation. There are no pending or threatened actions or
proceedings before any court, judicial body, administrative agency or arbitrator
which, if adversely determined, could reasonably be expected to materially
adversely affect (a) the financial condition or operations of Debtor, (b) the
Collateral, or (c) the ability of Debtor to perform hereunder.
3.18 Delivery and Marking of Certain Collateral. Debtor will, upon
the reasonable request of the Secured Party (a) deliver and pledge to Secured
Party, duly endorsed and/or accompanied by such instruments of assignment and
transfer in such form and substance as Secured Party may request, any and all
instruments, documents, securities and chattel paper which are included in the
Collateral, (b) cause the issuance of a document in the name of Secured Party in
respect of any goods in the possession of a bailee (other than a bailee who has
issued a negotiable document therefor), and (c) keep and stamp or otherwise mark
any and all documents and chattel paper, and its individual books and records
relating to inventory, accounts, chattel paper, securities and contract rights,
in such manner as Secured Party may reasonably require.
3.19 No Filing Required. No action of, or filing with, any
governmental or public body or authority (other than the filing and recording of
Uniform Commercial Code financing
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<PAGE>
statements and other instruments typically required to perfect security
interests in the types of property constituting Collateral) is required in
connection with the execution, delivery and performance of this Agreement, the
other Financing Agreements or any of the instruments or documents to be
delivered pursuant hereto or thereto.
3.20 Licenses and Approvals. Debtor has obtained all necessary
licenses and approvals and is in compliance in all material respects with all
applicable state and federal laws and regulations relating to the conduct of its
business as presently conducted or contemplated.
3.21 Preservation of Corporate Existence, Etc. Debtor will at all
times preserve and keep in full force and effect its existence, licenses,
permits, rights and franchises, except as permitted by the Loan Agreement.
ARTICLE 4
RIGHTS AND REMEDIES UPON DEFAULT
Upon and after the occurrence of an Event of Default, Secured Party
shall have all of the following rights and remedies, in addition to those
available to it under other sections of this Agreement, under the other
Financing Agreements, by applicable law or otherwise:
4.1 Acceleration of Obligations. All or any portion of the
Obligations shall, at the option of Secured Party and without notice, demand or
legal process, become immediately due and payable.
4.2 Rights Under Uniform Commercial Code. Secured Party shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code of the State of New York and of any state in which Collateral is located
from time to time.
4.3 Possession of Collateral. Secured Party shall have the right:
(a) to enter upon the premises of Debtor or any other place or places where the
Collateral is located and kept through self-help and without judicial process
without first obtaining a final judgment or giving Debtor notice and opportunity
for a hearing on the validity of Secured Party's claim and without any
obligation to pay rent; (b) to prepare, assemble or process the Collateral for
sale, lease, or other disposition; (c) to remove the Collateral to the premises
of Secured Party or any agent of Secured Party, for such time as Secured Party
may desire, in order to collect or dispose of the Collateral; and (d) to require
Debtor to assemble the Collateral and make it available to Secured Party at a
place to be designated by Secured Party.
4.4 Action Pending Disposition. Until Secured Party is able to
effect a sale or other disposition of the Collateral, Secured Party shall have
the right to use or take such action with respect to the Collateral, or any part
thereof, as it deems appropriate for the purpose of preserving the Collateral or
its value or for any other purpose deemed appropriate by Secured Party. Secured
Party shall have no obligation to Debtor to maintain or preserve the rights of
Debtor as against third
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<PAGE>
parties with respect to the Collateral while the Collateral is in the possession
of Secured Party. Secured Party may, if it so elects, seek the appointment of a
receiver or keeper to take possession of the Collateral and to enforce any of
Secured Party's remedies with respect to such appointment without prior notice
or hearing.
4.5 Disposition of Collateral. Secured Party shall have the right to
sell or otherwise dispose of all or any of the Collateral, at public or private
sale or sales, in lots or in bulk, for cash or on credit, all as Secured Party,
in its sole discretion, may deem advisable. Secured Party will give Debtor
notice of the time and place of any public sale of the Collateral, or of the
time after which any private sale or any other intended disposition thereof is
to be made, by sending notice, as provided in Section 6.2 below, at least five
(5) days before the time of the sale or disposition, which provisions for notice
Debtor and Secured Party agree are reasonable; provided, however, that no such
notice need be given by Secured Party with respect to Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Such sales may be adjourned and continued from time
to time with or without notice. Secured Party shall have the right to conduct
such sales on Debtor's premises or elsewhere and shall have the right to use
Debtor's premises without charge for such sales for such time or times as
Secured Party deems necessary or advisable. To enable Secured Party to effect
any such sale, assignment and/or transfer, Debtor hereby makes, constitutes and
appoints Secured Party as its true and lawful attorney, in its name, place and
stead, and for its account and risk, to make, execute and deliver any and all
assignments or other instruments which Secured Party may deem necessary or
proper to effectuate the authority hereby conferred by signing Debtor's name
only or by signing the same as its attorney-in-fact, as may be deemed by Secured
Party to be necessary or proper in connection with any sale, assignment or
transfer of all or any part of the Collateral. The foregoing power of attorney
is coupled with an interest and shall be a continuing one and irrevocable so
long as any portion of the Obligations remains unpaid in whole or in part.
Secured Party may purchase all or any part of the Collateral at
public sale or, if permitted by law, private sale, and in lieu of actual payment
of such purchase price, may set off the amount of such price against the
Obligations. Except as otherwise provided by law, the proceeds realized from the
sale of any of the Collateral may be applied by Secured Party first to the
reasonable costs, expenses and attorneys' fees and expenses incurred by Secured
Party for collection and for acquisition, completion, protection, removal,
storage, sale and delivery of the Collateral, and then to any of the Obligations
in such order and manner as Secured Party, in its sole discretion, deems
advisable. If any deficiency shall arise, Debtor shall remain liable to Secured
Party therefor.
4.6 Waiver of Bond. In connection with the foregoing remedies,
Debtor hereby waives the posting of any bond which might otherwise be required.
4.7 Remedies Cumulative. All rights and remedies of Secured Party
arising under this Agreement, the other Financing Agreements, or any other
agreement with Debtor or by operation of law shall be cumulative and
non-exclusive, to the fullest extent permitted by law.
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<PAGE>
4.8. Special Louisiana Provisions. The following provisions of this
section 4.8 govern Secured Party's rights and remedies upon an Event of Default
to the extent Louisiana law is applicable and are in addition to all other
rights and remedies of Secured Party under this Agreement.
Upon the occurrence of an Event of Default, Secured Party shall have
all the rights and remedies of a secured party under Chapter 9 of the Louisiana
Commercial Laws, Title 10 of the Louisiana Revised Statutes of 1950, as the same
may be amended.
Debtor hereby acknowledges the indebtedness owed under the
Obligations and, for the purposes of Louisiana executory process procedures,
confesses judgment in favor of Secured Party for the full amount of the
Obligations, consenting that judgment be rendered and signed whether during the
court's term or during vacation, in favor of Secured Party for the full amount
of the Obligations in principal, interest, and attorneys' fees, together with
all charges and expenses whatsoever, as mentioned in this Agreement or in any
document, instrument, agreement, or other writing evidencing the Obligations.
Upon the occurrence of an Event of Default, Debtor declares that it
shall be lawful for, and it does hereby authorize, Secured Party to cause all or
any part of the Collateral to be seized and sold, under executory process or
under writ of fieri facias issued in execution of an ordinary judgment obtained
on the Obligations, without appraisement to the highest bidder, for cash or on
such terms as are acceptable to Secured Party. Debtor waives all and every
appraisement of the Collateral and waives and renounces the benefit of
appraisement and the benefit of all laws relative to the appraisement of the
Collateral seized and sold under executory or other legal process. Debtor agrees
to waive, and does hereby specifically waive:
(i) the benefit of appraisement provided for in Articles 2332, 2336,
2723, and 2724, Louisiana Code of Civil Procedure, and all other laws conferring
such benefits;
(ii) the demand and three (3) days delay accorded by Articles 2639
and 2721, Louisiana Code of Civil Procedure;
(iii) the notice of seizure required by Articles 2293 and 2721,
Louisiana Code of Civil Procedure;
(iv) the three (3) days delay provided by Articles 2331 and 2722,
Louisiana Code of Civil Procedure;
(v) the benefit of the other provisions of Articles 2331,2722, and
2723, Louisiana Code of Civil Procedure;
(vi) the benefit of the provisions of any other articles of the
Louisiana Code of Civil Procedure not specifically mentioned above; and
(vii) all rights of division and discussion with respect to all
Obligations.
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<PAGE>
Pursuant to the authority contained in La. R.S. 9:5136 through
9:5140.1 (La. Act. No. 315 of 1976), Debtor and Secured Party do hereby
expressly designate, at this time, Secured Party or its designee to be keeper or
receiver for the benefit of Secured Party or any assignee of Secured Party, at
its option, to take effect immediately upon any seizure of the Collateral under
writ of executory process or under writ of sequestration or fieri facias as an
incident to an action brought by Secured Party. The fees of the keeper or
receiver shall be secured by the security interest in the Collateral granted in
this Agreement.
ARTICLE 5
SECURED PARTY'S EXPENSES AND ATTORNEYS' FEES
5.1 Debtor's Liability for Secured Party's Expenses. Debtor will be
liable to Secured Party for any and all sums, costs and expenses which Secured
Party may pay or incur pursuant to the provisions of this Agreement or in
defending, protecting or enforcing the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with the
provisions hereof, including without limitation all search, filing and recording
fees, appraisal fees, taxes, levies and reasonable attorneys' and accountants'
fees and expenses, all fees and expenses for the service and filing of papers,
fees of marshals, sheriffs, custodians, auctioneers and others, travel expenses,
court costs and collection charges, all expenditures in connection with the
repossession, holding, preparation for sale and sale of the Collateral, and all
such liabilities shall be part of the Obligations and shall be payable upon
demand.
ARTICLE 6
MISCELLANEOUS
6.1 Waivers. Any failure or delay by Secured Party to require strict
performance by Debtor of any of the provisions, warranties, terms or conditions
contained herein or in any of the other Financing Agreements shall not affect
Secured Party's right to demand strict compliance therewith and performance
thereof, and any waiver of any default shall not waive or affect any other
default, whether prior or subsequent thereto, and whether of the same or of a
different type. None of the warranties, conditions, provisions and terms
contained herein or in any other agreement, document or instrument shall be
deemed to have been waived by any act or knowledge of Secured Party, its agents,
officers, stockholders or employees, but only by an instrument in writing,
signed by an appropriate officer of Secured Party and directed to Debtor,
specifying such waiver.
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<PAGE>
6.2 Notices.
(a) Any notice, demand, consent, approval, disapproval or
statement (collectively, "Notices") required or permitted to be given by the
terms and provisions of this Agreement, or by any law or governmental
regulation, shall be in writing and, unless otherwise required by such law or
regulation, shall be personally delivered or sent by United States mail, postage
prepaid, as registered or certified mail or by nationally recognized overnight
courier service. Any Notice to Debtor shall be addressed to such party at its
address hereinabove set forth, Attention: Mr. Mark K. Levine, with a copy to
Hutchins, Wheeler & Dittmar, Attention: Cornelius J. Chapman, Esq. Any Notice to
Secured Party shall be addressed to such party at its address hereinabove set
forth, Attention: Mr. Judah Zweiter, with a copy to Robinson Silverman Pearce
Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York, New York 10104,
Attention: Walter H. Curchack, Esq. By giving the other party at least ten (10)
days' prior written notice, any party may, by Notice given as above provided,
designate a different address or addresses for Notices.
(b) Any Notice shall be deemed given as of the date of
delivery, with receipt acknowledged or as indicated by affidavit, in the case of
personal delivery; in the case of mailing, any Notice shall be deemed given on
the fifth business day after mailing; in the case of delivery by nationally
recognized overnight courier service, any Notice shall be deemed given on the
next business day after dispatch.
6.3 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in a manner so as to be effective and valid under
applicable law. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such provision and the remaining provisions of
this Agreement shall remain unaffected and in full force and effect.
6.4 Successors and Assigns. This Agreement shall be binding upon and
for the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
6.5 Governing Law; Consent to Jurisdiction; Venue Waiver; Waiver of
Jury Trial. The validity, interpretation and effect of this Agreement shall be
governed by the laws of the State of New York. Debtor hereby consents to the
nonexclusive jurisdiction of all courts in said State and hereby waives all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Agreement.
6.6 Articles and Section Titles. The titles of articles and sections
contained in this Agreement are merely for convenience and shall be without
substantive meaning or content.
6.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original but all of which
shall constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
September 1, 1998.
THE NEW YORK RESTAURANT GROUP, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
THE MANHATTAN OCEAN CLUB
ASSOCIATES, L.L.C., a New York limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
LA CITE ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
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<PAGE>
ATLANTIC & PACIFIC GRILL
ASSOCIATES, L.L.C., a New York
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MRS. PARKS SUB, LLC, a Delaware limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NEW YORK RGI SUB, INC., a Delaware limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
RESTAURANT GROUP MANAGEMENT
SERVICE, LLC, a New York,
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W Chicago, L.L.C., a Delaware limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W OF MIAMI, L.L.C., a Delaware limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
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<PAGE>
MOC D.C., L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W LAS VEGAS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W NEW ORLEANS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
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<PAGE>
S & W D.C., LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MANHATTAN OCEAN HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
CITE HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
ATLANTIC & PACIFIC GRILL HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
MPM HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NYRGI HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
RESTAURANT GROUP MANAGEMENT
HOLDINGS, INC., a New York corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W CHICAGO HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MOC D.C. HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
S & W NEW ORLEANS HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W D.C. HOLDINGS, INC., a Delaware
corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
FLEET BANK, N.A., a national banking
association
By:
--------------------------------------
Name: Judah Zweiter
Title: Vice President
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day ___ of September, 1998, before me personally came Mark K.
Levine, to me known who, being by me duly sworn, did depose and say that he is
employed by The New York Restaurant Group, Inc. at 1114 First Avenue, New York,
NY 10021; that he is an Executive Vice President of The New York Restaurant
Group, Inc., the Manager of The Manhattan Ocean Club Associates, L.L.C., La Cite
Associates, L.L.C., Atlantic & Pacific Grill Associates, L.L.C., Mrs. Parks Sub,
LLC, New York RGI Sub, LLC, Restaurant Group Management Service, LLC, S & W
Chicago, L.L.C., S & W of Miami, L.L.C., MOC D.C., L.L.C., S & W Las Vegas,
L.L.C., S & W New Orleans, L.L.C. and S & W D.C., L.L.C.; and he is the
Executive Vice President of Manhattan Ocean Holdings, Inc., Cite Holdings, Inc.,
Atlantic & Pacific Grill Holdings, Inc., MPM Holdings, Inc., NYRGI Holdings,
Inc., Restaurant Group Management Holdings, Inc., S & W Chicago Holdings, Inc.,
MOC D.C. Holdings, Inc., S & W New Orleans, Inc. and S & W D.C., Inc., the
entities described in, and which executed, the foregoing instrument; and that he
signed his name thereto by order of the members of said limited liability
companies.
---------------------------------
Notary Public
<PAGE>
SCHEDULE A TO SECURITY AGREEMENT
Address of the Borrower's Chief Executive 1114 First Avenue
Office: New York, NY 10021
Address of the Borrower's Principal Place of 1114 First Avenue
Business: New York, NY 10021
Other Places of Business:
Office Where Books and Records 1114 First Avenue
re: Collateral Are Kept: New York, NY 10021
Locations of Collateral:
(Except for Wine Inventory)
Locations of Wine Inventory:
Former Names, Fictitious
Names, Tradenames and
Tradestyles:
<PAGE>
SCHEDULE B TO THE SECURITY AGREEMENT
Issuer Certificate No. No. Of Shares % of Issued Shares
- ------ --------------- ------------- ------------------
Cite Holdings, Inc.
Atlantic & Pacific
Grill Holdings, Inc.
Manhattan Ocean
Holdings, Inc.
MPM Holdings, Inc.
NYRGI Holdings, Inc.
Restaurant Group Management
Holdings, Inc.
S&W Chicago Holdings, Inc.
S&W D.C. Holdings, Inc.
MOC D.C. Holdings, Inc.
S&W New Orleans
Holdings, Inc.
<PAGE>
GUARANTY
GUARANTY (this "Guaranty"), dated as of September 1, 1998, by The
Manhattan Ocean Club Associates, L.L.C., a New York limited liability company,
La Cite Associates, L.L.C., a Delaware limited liability company, Atlantic &
Pacific Grill Associates, L.L.C., a New York limited liability company, Mrs.
Parks Sub, LLC, a Delaware limited liability company, New York RGI Sub, LLC, a
Delaware limited liability company, Restaurant Group Management Service, LLC, a
New York limited liability company, S & W Chicago, LLC, a Delaware limited
liability company, S & W of Miami, L.L.C., a Delaware limited liability company,
MOC D.C., L.L.C., a Delaware limited liability company, S & W Las Vegas, L.L.C.,
a Delaware limited liability company, S & W New Orleans, L.L.C., a Delaware
limited liability company, S & W D.C., L.L.C., a Delaware limited liability
company, Manhattan Ocean Holdings, Inc., a Delaware corporation, Cite Holdings,
Inc., a Delaware corporation, and Atlantic & Pacific Grill Holdings, Inc., a
Delaware corporation, MPM Holdings, Inc., a Delaware corporation, NYRGI
Holdings, Inc., a Delaware corporation, Restaurant Group Management Holdings,
Inc., a New York corporation, S & W Chicago Holdings, Inc., a Delaware
corporation, MOC D.C. Holdings, Inc., a Delaware corporation, S & W New Orleans
Holdings, Inc., a Delaware corporation, and S & W D.C. Holdings, Inc., a
Delaware corporation (each of the twenty-two (22) foregoing entities is referred
to herein as a "Guarantor and collectively as the "Guarantors") in favor of
FLEET BANK, N.A., a national banking association organized and existing under
and by virtue of the laws of the United States of America, having an office at
1185 Avenue of the Americas, New York, New York 10036 (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank has agreed to make available to The New York
Restaurant Group, Inc., a Delaware corporation (the "Borrower"), a senior
secured revolving credit and term loan facility in the principal amount of up to
$15,000,000 (the "Facility");
WHEREAS, in connection with making available such Facility to the
Borrower, the Bank and the Borrower have entered into a Loan Agreement of even
date herewith (the "Loan Agreement");
WHEREAS, the terms of the Loan Agreement include certain affirmative
and negative covenants applicable to the Guarantors;
WHEREAS, each Guarantor is an affiliated entity of the Borrower and
will derive substantial benefit as a result of the accommodations to be granted
by the Bank pursuant to the Loan Documents (as hereinafter defined);
<PAGE>
WHEREAS, the Bank requires, as a condition to the execution by it of
the Loan Documents, that the Guarantors execute and deliver this Guaranty; and
WHEREAS, each Guarantor desires to execute and deliver to the Bank
this Guaranty, to induce the Bank to execute and deliver the Loan Documents and
to make available the Facility.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, the Guarantors hereby agree with the Bank as follows:
SECTION 1. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" of a Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person.
"Bank" has the meaning specified in the preamble.
"Borrower" has the meaning specified in the recitals.
"Cite Holdings" has the meaning specified in the recitals.
"Collateral" has the meaning specified in the Security Agreement.
"Grill Holdings" has the meaning specified in the recitals.
"Guarantor" and "Guarantors" have the meanings specified in the
preamble.
"Letter of Credit" has the meaning specified in the Loan Agreement.
"Loan Documents" has the meaning specified in the Loan Agreement.
"MO Holdings" has the meaning specified in the recitals.
"Mortgage" has the meaning specified in the Loan Agreement.
"Obligations" has the meaning specified in Section 2 hereof.
"Notes" has the meaning specified in the Loan Agreement.
"Person" has the meaning specified in the Loan Agreement.
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"Post Default Rate" has the meaning specified in the Loan Agreement.
"Security Agreement" has the meaning specified in the Loan
Agreement.
SECTION 2. Guaranty.
The Guarantors hereby jointly and severally irrevocably, absolutely
and unconditionally guarantee the prompt payment by the Borrower, as and when
due and payable (whether by scheduled maturity, acceleration, demand or
otherwise), of the following:
a. all principal amounts of the Notes;
b. all interest, fees, late charges and penalties, if any,
reasonable attorneys' fees, costs and disbursements, and other charges payable
under the terms of the Loan Documents; and
c. if issued in accordance with the Loan Agreement, all
principal amounts drawn under each Letter of Credit.
Without limiting the generality of subparagraph (b) above, such
obligations shall include the payment of any and all interest due under the Loan
Documents (including interest calculated at any applicable default or
post-maturity rate) including, without limitation, (i) any and all interest due
after the occurrence of a default and the acceleration by the Bank of its rights
and remedies under the Loan Agreement; and (ii) any and all interest due on the
principal portion of any deficiency between the obligations under the Loan
Agreement and the amount realized in foreclosure of any Collateral.
The foregoing obligations described in this Section 2 are referred to herein as
the "Obligations."
SECTION 3. Obligations of Guarantors Unconditional.
(a) The Guarantors hereby jointly and severally guarantee that
the Obligations will be paid strictly in accordance with the terms of the Loan
Documents regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Bank with
respect thereto. The obligations of the Guarantors hereunder shall be absolute
and unconditional irrespective of: (i) the validity, regularity or
enforceability of the Loan Documents or any other instrument or document
executed or delivered in connection therewith; (ii) any alteration, amendment,
modification, release, termination or cancellation of any Loan Document, or any
change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the obligations of the Borrower contained in any of
the Loan Documents; (iii) any waiver of, or consent to any departure from, any
of the provisions of any Loan Document; (iv) any exchange, addition,
subordination or release of, or non-perfection of any lien on or security
interest
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in, any collateral under the Loan Documents; (v) any alteration, modification,
amendment, release, termination or cancellation of or waiver of or consent to
any departure from, any other indemnity or guaranty given in connection with the
Loan Documents; (vi) any negligence by the Bank in the administration or
enforcement of the Obligations or any delay in enforcing the Obligations or in
realizing on any collateral for the Obligations or any extension of the term of
the Notes and any Letter of Credit, if issued; (vii) the insolvency or
bankruptcy of the Borrower or any of the signatories of this Guaranty; (viii)
any failure by the Bank to advise any Guarantor of adverse changes in the
financial condition of the Borrower, any Project (as defined in the Loan
Agreement) or any matters relating to any Letter of Credit, if issued; (ix) any
sale, transfer, grant, conveyance or assignment of the Borrower's interest in
any Project or any part thereof; or (x) any other circumstance which might
otherwise constitute a defense (legal, equitable or otherwise) available to, or
a discharge of, the Borrower with respect to any or all of the Obligations of
the Guarantors in respect hereof. The Guarantors agree that any exculpatory
language contained in any of the Loan Documents shall in no event apply to this
Guaranty, and will not prevent the Bank from proceeding against the Guarantors
to enforce this Guaranty, except with respect to any exculpation from, defense
to or discharge of any of the Obligations based solely on the actual gross
negligence or willful misconduct of the Bank.
(b) This Guaranty (i) is a guaranty of payment and not of
collection, (ii) is a continuing guaranty and shall remain in full force and
effect until the satisfaction in full of all of the Obligations and the payment
in full of all amounts, if any, which become payable pursuant to Section 4
hereof, and (iii) notwithstanding clause (ii) above, shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
of any of the Obligations (to the extent payable in money) is rescinded or must
otherwise be returned by the Bank to the Borrower or any Guarantor or to any
guarantor, trustee, receiver or other representative of any of them, upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
SECTION 4. Indemnity.
Without limiting the generality of Section 2 hereof, the Guarantors
shall, jointly and severally, indemnify, defend (with counsel reasonably
acceptable to the Bank) and save harmless the Bank from and against all damages,
losses, liabilities, obligations, penalties, claims, demands, defenses,
judgments, suits, proceedings, penalties, expenditures, costs, disbursements and
expenses (including, without limitation, court costs and attorneys' and experts'
fees and expenses) of any kind or nature whatsoever which may, at any time or
from time to time, be imposed upon, incurred by or asserted or awarded against
the Bank by reason of, or arising from or out of, the Bank's enforcement (or
attempted enforcement) of this Guaranty or any of the other Loan Documents.
SECTION 5. Waiver.
Each Guarantor hereby waives (i) promptness and diligence; (ii)
notice of acceptance and notice of the incurrence of any obligation by the
Borrower; (iii) notice of any actions taken by
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the Bank, the Borrower or any interested party under any Loan Document or any
other agreement or instrument relating thereto; (iv) all other notices, demands
and protests, and all other formalities of every kind in connection with the
enforcement of the Obligations or of the obligations of such Guarantor
hereunder, the omission of or delay in which, but for the provisions of this
Section 5, might constitute grounds for relieving such Guarantor of its
obligations hereunder; (v) the right to a trial by jury of any dispute arising
under, or relating to, this Guaranty or the Loan Documents; (vi) any right or
claim of right to cause a marshalling of the Borrower's assets or to cause the
Bank to proceed against any security for the obligations under the Loan
Documents before proceeding against such Guarantor; and (vii) any requirement
that the Bank protect, secure, perfect or insure any security interest or lien
in or on any property subject thereto or exhaust any right or take any action
against the Borrower or any other Person or any collateral as a precondition to
the Bank's right to enforce this Guaranty in accordance with its terms. Without
limiting the generality of the foregoing, each Guarantor hereby waives any
defense which may arise by reason of (A) the incapacity, lack of authority,
death or disability of, or revocation hereof by, any Person, (B) the failure of
the Bank to file or enforce any claim against the estate (in probate, bankruptcy
or any other proceedings) of any Person, or (C) any defense based upon an
election of remedies by the Bank.
SECTION 6. Subrogation; Subordination.
(a) No Guarantor shall exercise any rights which it may
acquire by way of subrogation hereunder, by any payment made by it hereunder or
otherwise, until such date on which all of the Obligations and other obligations
then due and payable, arising under this Guaranty including, without limitation,
the obligations arising under Section 4 hereof, shall have been satisfied in
full. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations and all such other
obligations then due and payable shall not have been paid in full, such amount
shall be held in trust for the benefit of the Bank, shall be segregated from the
other funds of such Guarantor and shall forthwith be paid over to the Bank to be
applied in whole or in part by the Bank against the Obligations and all such
other obligations then due and payable, whether matured or unmatured. If (i) the
Guarantors shall make payment to the Bank of all or any portion of the
Obligations and/or such other obligations then due and payable and (ii) all of
the Obligations and all such other obligations then due and payable shall be
paid in full, the Bank shall, at the request of the Guarantors, execute and
deliver to the Guarantors (without recourse, representation or warranty)
appropriate documents necessary to evidence the transfer by subrogation to any
Guarantor of an interest in the Obligations resulting from such payment by such
Guarantor, such subrogation to be fully subject and subordinate, however, to the
collection by the Bank of all amounts due to the Bank by the Borrower under the
Loan Documents and any other guaranties or indemnities executed in connection
with the Notes and any Letter of Credit, if issued.
(b) If, upon or after the occurrence of an Event of Default,
any Guarantor shall advance or become obligated to pay any sums toward the
construction, completion or equipment of or on any Project, or in the event that
for any reason whatsoever the Borrower or any subsequent owner or user of all or
any portion of any Project is now, or shall hereafter become, indebted to any
Guarantor, or in the event any Guarantor shall become entitled to cash flow from
all
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<PAGE>
or any portion of any Project, such Guarantor agrees that the amount of such
sums and of such indebtedness, together with all interest thereon, shall at all
times be fully subordinate as to lien (if any), time and right of payment,
rights against the collateral therefor (if any) and in all the respects, to all
sums, including principal, interest and all fees and other amounts, at any time
owing to the Bank under the Loan Agreement or any of the other Loan Documents
and that such Guarantor shall not be entitled to enforce or receive payment
thereof until all such sums then owing or contingently owed to the Bank have
been paid in full. If, upon or after the occurrence of an Event of Default, any
amounts shall be paid to any Guarantor on account of any claim set forth at any
time when all of the Obligations under the Loan Documents shall not have been
satisfied in full, such amount shall be held in trust by such Guarantor, and
shall forthwith be paid over to the Bank, to be held or applied, in whole or in
part, by the Bank against the Obligations, whether matured or unmatured. Nothing
herein contained is intended or shall be construed to give to the Guarantors any
right of subrogation in or under the Loan Agreement or any of the Loan Documents
or any right to participate in any way therein or in the right, title or
interest of the Bank in or to all or any portion of any Project, any
improvements on all or any portion of any Project, notwithstanding any payments
made by the Guarantors to or toward the construction, completion or equipment of
any Project or any payment relating thereto or with respect to the Notes, any
Letter of Credit, if issued, or any payments made by the Guarantors under this
Guaranty, all such rights of subrogation and participation being hereby
expressly waived and released by the Guarantors until all Obligations under the
Loan Documents have been satisfied in full.
(c) Notwithstanding any other provision in this Agreement, if any
Guarantor is or at any time becomes an "insider" of the Borrower as such term is
defined in ss.101 of the Federal Bankruptcy Code, such Guarantor hereby
irrevocably waives any and all rights to which it may be entitled by operation
of law or otherwise, upon making any payment hereunder, to be subrogated to the
rights of the Bank against the Borrower with respect to such payment, or
otherwise to be reimbursed, indemnified or exonerated by the Borrower in respect
thereof.
SECTION 7. Events of Default; Remedies.
a. Each of the following events shall constitute an Event of Default
under this Guaranty:
(i) If any "Event of Default" as defined in the Loan Agreement shall
occur;
(ii) If any representation or warranty by any Guarantor herein or in
any writing furnished in connection with or pursuant to this Guaranty shall be
false in any material respect with respect to such Guarantor on the date as of
which made; or
(iii) If any Guarantor defaults in the performance or observance of
any agreement, covenant, term or condition contained in this Guaranty or in the
performance or observance of any agreement, covenant, term or condition
contained in the Loan Agreement or in any other Loan Document to which it is a
party.
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<PAGE>
b. Upon the occurrence of an Event of Default, the Bank, at its
option, may declare all sums guaranteed hereunder to be and become forthwith due
and payable by the Guarantors, jointly and severally, under the terms of and
with the effect provided in this Guaranty, regardless of whether (i) an Event of
Default by or with respect to the Borrower shall have occurred under the Loan
Agreement or (ii) the Bank shall have exercised any of its rights or remedies
under any of the Loan Documents.
SECTION 8. Representations and Warranties.
The Guarantors represent and warrant, jointly and severally, to the
Bank as follows:
(a) Ocean Club is a duly organized and validly existing limited
liability company under the laws of the State of New York. La Cite is a duly
organized and validly existing limited liability company under the laws of the
State of Delaware. Atlantic & Pacific is a duly organized and validly existing
limited liability company under the laws of the State of New York. MO Holdings
is a duly organized and validly existing corporation under the laws of the State
of Delaware. Cite is a duly organized and validly existing corporation under the
laws of the State of Delaware. Grill is a duly organized and validly existing
corporation under the laws of the State of Delaware. Each Guarantor has full
power and authority (i) to own its properties and to carry on its business as
now conducted and as contemplated to be conducted in connection with the
execution, delivery and performance of its obligations under this Guaranty, and
(ii) to execute, deliver, perform and secure its obligations under this
Guaranty. [S&W Las Vegas, New Orleans and D.C.]
(b) The execution, delivery and performance of this Guaranty, and
the performance of its obligations hereunder, (i) have been duly authorized by
all necessary action on the part of each Guarantor, (ii) do not and will not
conflict with, or result in a violation of, any provision of law or any order,
writ, rule or regulation of any court or governmental or regulatory agency,
authority or instrumentality binding upon or applicable to such Guarantor and
(iii) do not and will not conflict with, result in a violation of, or constitute
a default under, any order, resolution, agreement or instrument to which such
Guarantor is a party or by which such Guarantor or any of its property is bound.
(c) This Guaranty, when executed by the parties hereto, will be a
valid and binding obligation of each Guarantor, enforceable in accordance with
its terms, except to the extent, if any, that the enforceability thereof may be
limited by (i) any applicable bankruptcy, insolvency or other similar law or
enactment affecting the enforcement of creditors' rights generally and (ii) the
fact that specific performance and other equitable remedies are granted only in
the discretion of a court.
(d) No consent, approval, permit, authorization or order of, or
registration or filing with, any court or governmental agency, authority or
other instrumentality not already obtained, given or made is required on the
part of any Guarantor for the execution, delivery and performance by such
Guarantor of this Guaranty.
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<PAGE>
(e) There is no action, suit, proceeding, inquiry or investigation,
at law or in equity, before or by any court, arbitrator, governmental or other
board, body or official, pending or, to the best knowledge of any Guarantor,
threatened against or affecting such Guarantor, questioning the validity of any
proceeding taken or to be taken by such Guarantor in connection with the
execution, delivery and performance by such Guarantor of this Guaranty, or
seeking to prohibit, restrain or enjoin the execution, delivery or performance
by such Guarantor of any of the foregoing, nor, to the best knowledge of such
Guarantor, is there any basis therefor, wherein an unfavorable decision, ruling
or finding would adversely affect the validity or enforceability of, or the
authority or ability of such Guarantor to perform its obligations, under this
Guaranty.
The Guarantors hereby jointly and severally affirm each representation and
warranty made by the Borrower to the Bank with respect to the Guarantors in the
Loan Agreement.
SECTION 9. Application of Payments by Borrower.
For the purposes of this Guaranty, all amounts paid by the Borrower
in respect of the Loan Documents, whether such amounts are paid as required to
be paid under the Loan Documents, voluntary prepayments, or on acceleration or
as the proceeds of a foreclosure under the terms of the Security Agreement or
any Mortgage, shall be applied to the Obligations in such manner as the Bank may
determine.
SECTION 10. Right of Setoff.
Each Guarantor hereby (a) pledges and grants to the Bank a security
interest in and to any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Bank or any Affiliate thereof to or for the credit or account of such
Guarantor (collectively, "Deposits"), and (b) irrevocably authorizes and directs
the Bank or any Affiliate thereof, at any time and from time to time upon the
occurrence of a default hereunder by such Guarantor, without notice to such
Guarantor (any such notice being expressly waived by such Guarantor) and to the
fullest extent permitted by law, to setoff and apply any such Deposits against
any and all Obligations of such Guarantor now or hereafter existing under the
Loan Documents, or to hold such Deposits for future application against
obligations thereafter arising under any of the Loan Documents, irrespective of
whether or not the Bank shall have made any demand under the Loan Documents and
although such obligations maybe contingent or unmatured. From and after the date
of the occurrence of any Event of Default under any of the Loan Documents, the
Bank shall have dominion and control over such Deposits and shall have the sole
ability to make withdrawals with respect to such Deposits. The Bank agrees to
promptly notify such Guarantor after any such application made by the Bank;
provided, however, that the failure to give such notice shall not affect the
validity of such application. The rights of the Bank under this Section 10 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Bank may have hereunder or under applicable law.
SECTION 11. Notices, Etc.
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<PAGE>
All notices or other communications required or permitted hereunder
shall be in writing and shall be personally delivered, transmitted by
telecopier, delivered by overnight courier, or mailed by registered or certified
mail, postage prepaid, with return receipt requested and addressed as follows:
If to any Guarantor:
The New York Restaurant Group, Inc.
1114 First Avenue
New York, NY 10021
Attn: Mark K. Levine
Executive Vice President
Copies of any notice to any Guarantor
shall be delivered to:
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Attn: Cornelius J. Chapman, Esq.
if to the Bank:
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Attn: Judah Zweiter
Vice President
with a copy to:
Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Walter H. Curchack, Esq.
Any party may change the person or address to whom or which notices are given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed. Any notice or other communication given hereunder shall be deemed to
have been given or delivered: if personally delivered, upon delivery, if
transmitted by telecopier, upon transmission thereof as indicated on the
transmission receipts, if sent by overnight courier, on the first (1st) business
day of the Bank after being sent, and if sent by mail, on the third (3rd)
business day of the Bank after mailing. Each party shall be entitled to rely
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on all communications which purport to be given on behalf of any other party
hereto and purport to be signed by an authorized signatory of such party or the
above-indicated attorneys.
SECTION 12. Payments Free and Clear of Taxes, Etc.
All payments by the Guarantors under this Guaranty shall be made
without setoff, counterclaim or other defense. All such payments shall be made
free and clear of and without deduction for any present or future stamp or other
taxes, levies, imposts, deductions, charges, fees, withholdings, liabilities,
restrictions or conditions of any nature whatsoever now or hereafter imposed,
levied, collected, assessed or withheld by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (whether pursuant to United
States federal, state or local law or foreign law), and all interest, penalties
or similar liabilities, but excluding any and all taxes on the Bank's overall
net income (all such non-excluded taxes, levies, imposts, deductions, charges,
fees, withholdings, liabilities, restrictions and conditions hereinafter
referred to as "Taxes"). In the event that any withholding or deduction from any
payment to be made by the Guarantors hereunder is required in respect of any
Taxes pursuant to any applicable law, rule, or regulation, then the Guarantors
will, jointly and severally:
(a) pay to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to such
authority; and
(c) pay to the Bank such additional amount as is necessary to
ensure that the net amount actually received by the Bank after such withholding
or deduction (including withholdings or deductions on amounts payable under this
subsection (c) of this Section) will equal the full amount the Bank would have
received had no such withholding or deduction been required. If the Guarantors
fail to perform their obligations under subsections (a) and (b) above, the
Guarantors shall, jointly and severally, indemnify, defend (with counsel
reasonably acceptable to the Bank) and save harmless the Bank from and against
any incremental taxes, interest or penalties that may become payable as a result
to any such failure.
SECTION 13. Waiver of Automatic Bankruptcy Stay.
Each Guarantor hereby waives any provisions applicable in connection
with any voluntary or involuntary insolvency, bankruptcy, reorganization,
fraudulent conveyance or similar proceeding involving the Borrower (or otherwise
affecting any Project) under any state or federal law regarding creditors'
rights or debtors' obligations imposing against the Bank, or otherwise providing
for, an automatic stay under Section 362 (a) of the Bankruptcy Code or any other
prohibition against the Bank's commencing, maintaining, completing any
proceedings in connection with or the exercise or enforcement of any of the
Bank's rights under the Loan Documents or any applicable law. In furtherance
thereof, each Guarantor agrees (i) that, in the event of the imposition of any
such stay or other prohibition, the Bank may seek to lift any such stay or other
prohibition or
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seek exemption therefrom, (ii) not to contest any motion made by the Bank for
the lifting thereof or for exemption therefrom and (iii) to cooperate with the
Bank, in any manner requested by the Bank, in its efforts to obtain relief from
any such stay or other prohibition.
SECTION 14. Miscellaneous.
(a) The Guarantors shall make any payment required to be made
hereunder in lawful money of the United States of America and in immediately
available funds to the Bank at its address specified in Section 11 hereof.
(b) In the event that any amount payable hereunder by the
Guarantors to the Bank is not paid when due, the Guarantors shall pay interest
on such amount at an annual rate equal to the Post Default Rate, calculated on
the basis of a 360-day year, until such time as such amount, together with any
accrued interest thereon, shall have been paid in full to the Bank.
(c) No provision of this Guaranty may be waived, changed,
amended, modified or discharged without an agreement in writing and signed by
the Guarantors and the Bank, and no waiver of, or consent to any departure by
any Guarantor from, any provision of this Guaranty shall be effective unless it
is in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given and, notwithstanding anything contained to the contrary herein, all such
waivers and modifications may be given or withheld in the sole judgment of the
Bank. The Guarantors hereby irrevocably waive any right to claim that any
provision of this Guaranty, including the provisions set forth in this
subsection, have been waived orally or by the acts or omissions of the Bank.
(d) The Bank may take or release other security for the
payment of the Obligations, may release any party primarily or secondarily
liable therefor and may apply any other security held by it to the reduction or
satisfaction of the Obligations without prejudice to any of its rights under
this Guaranty.
(e) No failure on the part of the Bank to exercise, and no
delay in exercising, any right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Bank provided herein and in the Loan
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Bank under any Loan
Document against any party thereto are not conditional or contingent on any
attempt by the Bank to exercise any of its rights under any other Loan Document
against such party or against any other person or entity or collateral.
(f) Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction or prohibited or unenforceable as to any
person or entity shall, as to such jurisdiction or person or entity, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction or as to any other
person or entity.
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(g) This Guaranty shall (i) be binding upon each Guarantor and
its successors and assigns, and (ii) inure, together with all rights and
remedies of the Bank hereunder, to the benefit of the Bank and its successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, the Bank may assign or otherwise transfer all or
any portion of its rights and obligations under any Loan Document, to the extent
provided in and subject to the terms of the Loan Agreement, to any other Person,
and such other Person shall thereupon become vested with all of the rights and
obligations in respect thereof granted to the Bank herein or otherwise. None of
the rights or obligations of the Guarantors hereunder may be assigned or
otherwise transferred without the prior written consent of the Bank.
(h) Without limiting the generality of clause (g) above, the
Guarantors hereby acknowledge that the Bank may sell, grant or assign
participation interest(s) in the Notes, any Letter of Credit, if issued, and the
Loan Agreement and in the Bank's rights and obligations in respect of the Loan
Documents, including, without limitation, this Guaranty, to one or more lending
institutions satisfactory to the Bank, on terms satisfactory to the Bank. In the
event the Bank shall sell, grant or assign participation interest(s) in the
Notes, any Letter of Credit, if issued, and in the Bank's rights and obligations
in respect of the Loan Documents, (i) the Bank may, in its sole discretion,
disclose financial and other information to prospective participant(s) with
respect to the Guarantors, (ii) the Guarantors shall cooperate with the Bank in
connection with any such participation and shall execute any and all documents
which may be required or desirable, in the Bank's or such participants'
judgment, to effectuate any such participation(s), and (iii) each representation
and agreement made by the Guarantors in this Guaranty or in the other Loan
Documents shall run to, and each reference to the Bank shall be deemed to refer
to, the Bank and all of its participant(s).
(i) Each Guarantor hereby irrevocably and unconditionally (i)
submits for itself and its property in any legal action or proceeding relating
to this Guaranty or any other Loan Document to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the exclusive
general jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and appellate
courts thereof, (ii) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court, including, without
limitation, any objection that such action or proceeding was brought in an
inconvenient court and agrees not be plead or claim the same, (iii) agrees not
to commence any legal action or proceeding relating to this Guaranty in any
jurisdiction other than those set forth in clause (i) above, (iv) agrees to
service of any and all process in any such action or proceeding to the address
set forth in Section 11 hereof, (v) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction and (vi) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(j) Each Guarantor hereby acknowledges that this Guaranty is
an instrument for the payment of money only and hereby agrees that in any action
brought by the Bank in order to enforce the terms of this Guaranty, the Bank may
serve with the summons a notice of
-12-
<PAGE>
motion for summary judgment in lieu of a complaint in accordance with the
provisions of Section 3213 of the New York Civil Practice Law and Rules.
(k) The title of this document and the captions used herein
are inserted only as a matter of convenience and for reference and shall in no
way define, limit or describe the scope or the intent of this Guaranty or any of
the provisions hereof.
(l) The obligations of the signatories to this Guaranty shall
be joint and several.
(m) This Guaranty shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York applicable to
contracts made and to be performed in the State of New York.
-13-
<PAGE>
IN WITNESS WHEREOF, the Guarantors have duly executed this Guaranty
as of the date first written above.
THE MANHATTAN OCEAN CLUB
ASSOCIATES, L.L.C., a New York limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
LA CITE ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
ATLANTIC & PACIFIC GRILL
ASSOCIATES, L.L.C., a New York
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
MRS. PARKS SUB, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NEW YORK RGI SUB, INC., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
RESTAURANT GROUP MANAGEMENT
SERVICE, LLC, a New York,
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
S & W Chicago, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W OF MIAMI, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MOC D.C., L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
S & W LAS VEGAS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W NEW ORLEANS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W D.C., LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
MANHATTAN OCEAN HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
CITE HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
ATLANTIC & PACIFIC GRILL HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MPM HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NYRGI HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
RESTAURANT GROUP MANAGEMENT
HOLDINGS, INC., a New York corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W CHICAGO HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MOC D.C. HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W NEW ORLEANS HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W D.C. HOLDINGS, INC., a Delaware
corporation
By:
----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
FLEET BANK, N.A., a national banking
association
By:
----------------------------------------
Name: Judah Zweiter
Title: Vice President
<PAGE>
EXHIBIT E
Form of Mortgage
[SEE ATTACHED]
<PAGE>
ACT OF MORTGAGE * UNITED STATES OF AMERICA
AND SECURITY AGREEMENT *
* STATE OF NEW YORK
BY *
* COUNTY OF NEW YORK
S&W NEW ORLEANS, L.L.C. *
*
IN FAVOR OF *
*
FLEET BANK, N.A. *
*
BE IT KNOWN, that on this ____ day of September, 1998, before me,
the undersigned Notary Public, duly commissioned and qualified for the State of
Louisiana, and in the presence of the witnesses hereinafter named and
undersigned, personally came and appeared:
S&W NEW ORLEANS, L.L.C., a Delaware limited liability company (the
"Mortgagor"), domiciled at Wilmington, Delaware, organized pursuant
to Certificate of Formation dated February 4, 1997, filed in the
office of the Secretary of State, State of Delaware, on February 4,
1997, and Limited Liability Company Agreement dated February 12,
1997, for which a Certificate of Authority was issued by the
Secretary of State, State of Louisiana, on March 12, 1997; appearing
herein through its members, duly authorized pursuant to written
authorization annexed hereto; and whose tax identification number is
13-3932811, and mailing address is 1114 First Avenue, New York, New
York, 10021;
WITNESSETH:
WHEREAS, FLEET BANK, N.A., a national banking association organized
under the laws of the United States having an address at 1185 Avenue of the
Americas, New York, New York 10036 (the "Mortgagee") are parties to a Loan
Agreement dated as of September __, 1998 (as modified, supplemented and in
effect from time to time, the "Loan Agreement") providing for revolving credit
and term loans to be made to the Company in an aggregate principal or face
amount of up to $15,000,000 to be evidenced by, and repayable with, interest
thereon in accordance with various promissory notes (collectively, the "Notes")
to be executed and delivered by the Company to the Mortgagee; and
WHEREAS, Mortgagor has executed and delivered to the Mortgagee its
Subsidiary Guarantee, dated as of the date hereof (the "Subsidiary Guarantee"),
pursuant to which Mortgagor, together with the other Subsidiaries (as defined in
the Loan Agreement) of the Company agreed to jointly and severally guarantee
(the "Guarantee Obligations") the prompt payment in full of the obligations of
the Company to the Mortgagee under the Loan Agreement; and
<PAGE>
WHEREAS, it is a condition to the obligation of the Mortgagee to
extend credit to the Company pursuant to the Loan Agreement that the Mortgagor
execute and deliver this Deed of Trust.
NOW, THEREFORE, to secure the following (collectively, the
"Obligations"): (i) the payment of all obligations evidenced by the Notes and
any and all reborrowings, future advances and readvances under the Loan
Agreement (each of which reborrowings, future advances and readvances shall
enjoy the same priority as the initial advances evidenced by the Notes); (ii)
the obligations of the Mortgagor to the Mortgagee constituting Guarantee
Obligations; (iii) the performance and payment of the covenants and agreements
hereinafter contained; and (iv) the payment of all other obligations of the
Mortgagor to the Mortgagee under the Subsidiary, the Mortgagor does hereby
specially, affect and hypothecate unto the Mortgagee, the lands and premises
described in Schedule A;
TOGETHER with the appurtenances and all the estate and rights of
Mortgagor in and to said premises, together with all of the servitudes, rights,
ways, privileges, and appurtenances now or hereafter thereunto belonging or in
any way appertaining; and the buildings and other improvements thereon; and all
fixtures now or hereafter used or intended to be used in connection with said
premises, which fixtures are now or hereafter owned by the Mortgagor; and all
the right, title and interest of Mortgagor in and to all streets, alleys, roads,
waterways and public places adjoining the said premises and all easements,
servitudes and rights of way, now or hereafter used or existing in connection
therewith; and all the proceeds of the insurance required to be maintained
hereunder and all awards made for any taking by eminent domain or in any
condemnation proceeding including any awards for changes of the grades of
streets, or for consequential damages on account thereof, which awards are
hereby assigned to the Mortgagee with power to collect, receive and apply the
same to the Obligations, whether or not then due and payable, but such
application shall not affect the obligation to continue making payments in
accordance with the terms of the Loan Agreement and the Notes or any other
obligation evidencing the Obligations. All of said premises, property, rights
and interests, however denominated, are herein called the "Premises."
THE PREMISES TO REMAIN SO SPECIALLY MORTGAGED, AFFECTED AND
HYPOTHECATED UNTO AND) IN FAVOR OF THE MORTGAGEE AND) ANY FUTURE HOLDER OR
HOLDERS OF THE OBLIGATIONS SECURED HEREBY UNTIL THE FULL AND FINAL PAYMENT
THEREOF, MORTGAGOR BEING HEREBY OBLIGATED NOT TO SELL, ALIENATE, DETERIORATE OR
OTHERWISE ENCUMBER THE PREMISES TO THE PREJUDICE OF THIS ACT, AND NOT TO PERMIT
OR SUFFER THE SAME TO BE SO SOLD, ALIENATED, DETERIORATED OR ENCUMBERED.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE MAXIMUM AMOUNT
OF THE OBLIGATIONS THAT MAY BE OUTSTANDING AT ANY TIME AND FROM TIME TO TIME
THAT THIS MORTGAGE SECURES, INCLUDING WITHOUT LIMITATION AS A MORTGAGE, AS A
SECURITY AGREEMENT AND AS AN ASSIGNMENT OF LEASES AND RENTS, INCLUDING ALL
PRINCIPAL, INTEREST AND ANY EXPENSES INCURRED BY MORTGAGEE AND ALL OTHER AMOUNTS
INCLUDED WITHIN THE OBLIGATIONS, IS FIFTEEN MILLION DOLLARS ($15,000,000). IT IS
AGREED THAT THIS MORTGAGE SHALL BE ENTITLED TO THE CONTINUING PREFERENCE AND
PRIORITY
-2-
<PAGE>
PROVIDED BY LOUISIANA CIVIL CODE ARTICLE 3298 AND ALL OBLIGATIONS ARISING AFTER
THE DATE HEREOF SHALL BE EQUALLY SECURED BY THIS MORTGAGE AND SHALL HAVE THE
SAME PRIORITY AS TO ALL OBLIGATIONS EXISTING AS OF THE DATE HEREOF AND SHALL BE
SUBJECT TO ALL OF THE TERMS AND PROVISIONS OF THIS MORTGAGE.
AND MORTGAGOR covenants and agrees with and represents to the
Mortgagee as follows:
1. Mortgagor will pay the Obligations in accordance with the terms
thereof, and Mortgagor will pay all taxes or payments in lieu of taxes,
assessments or water rates (collectively herein called "Taxes"), and in default
thereof, the Mortgagee may pay the same. The making of such payments by the
Mortgagee shall not be deemed a waiver of any of its rights under this Mortgage,
the Notes, the Loan Agreement, or any other agreements, instruments and
documents executed pursuant hereto or thereto. Mortgagor will, upon demand,
exhibit to the Mortgagee, receipts for the payment of any Taxes.
2. (a) Mortgagor will keep the Premises insured for the benefit of,
and by insurers reasonably acceptable to, the Mortgagee against such hazards and
in such form and amount as the Mortgagee may reasonably require with responsible
and reputable insurance companies covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties and naming
Mortgagee as loss payee and additional insured as its interest may appear.
Mortgagor will assign and deliver the certificates as to such insurance to the
Mortgagee. Acceptance of any certificate of insurance shall not constitute
approval by the Mortgagee of the insurer, coverage, form, amount or sufficiency
of the insurance. Mortgagor will give immediate notice to the Mortgagee of any
damage by fire or other casualty to the Premises.
(b) The proceeds of any insurance on the Premises received by
Mortgagee shall be applied, at Mortgagee's election, to the prepayment of the
Obligations, without premium or penalty; provided, that so long as (i) no
Default (as hereafter defined) has occurred and is continuing and (ii) the cost
to restore the improvements to the Premises in the reasonable judgment of the
Mortgagee does not exceed Three Hundred and Fifty Thousand ($350,000) Dollars,
the Mortgagee shall make the insurance proceeds available to reimburse Mortgagor
for cost and expenses incurred by Mortgagor to restore the improvements to the
Premises.
(c) If the Mortgagee shall apply any insurance proceeds to the
restoration, repair or replacement of the improvements, then the Mortgagor shall
restore, repair or replace the same promptly and with all reasonable speed so
that the improvements when restored, repaired or replaced shall be at least
equal in quality and value to the improvements immediately prior to the damage
or destruction, in a good and workmanlike manner, free and clear of all
mortgages, liens, charges and encumbrances. The insurance proceeds shall be
disbursed by the Mortgagee from time to time as the work progresses, such
disbursements to be made upon request by the Mortgagor and upon compliance by
the Mortgagor with such conditions as the Mortgagee shall reasonably require to
effect the result referred to in the preceding sentence.
-3-
<PAGE>
3. Mortgagor within five days upon request in person or within ten
days upon request by mail will furnish a written statement duly acknowledged of
the amount due on this Mortgage and whether any offsets or defenses exist
against the Obligations.
4. All notices, demands, consents, statements, requests, approvals
and other communications hereunder (collectively, "notices") shall be in
writing. All notices shall be deemed properly given when delivered, or, if
mailed registered or certified mail, return receipt requested, five calendar
days thereafter, addressed to the parties hereto at their respective addresses
set forth above. Any party may by notice to the other designate a new address to
which all notices shall thereafter be delivered or mailed.
5. (a) No building or fixture of the Premises will be removed,
demolished or altered without written consent of the Mortgagee. The foregoing
shall not be applicable to minor, interior non-structural alterations or to
fixtures constituting machinery and equipment used specifically for the
Mortgagor's distribution business. The Mortgagee shall have the right to enter
and inspect the Premises at any reasonable time and from time to time, upon
prior written notice (except in an emergency) and during normal business hours.
6. Mortgagor warrants the title of Mortgagor to the Premises subject
to the matters set forth in the title insurance policy insuring the Mortgagee's
interest therein and warrants that this Mortgage is and will be maintained as a
valid perfected first lien upon the Premises.
7. Mortgagee may take such action as the Mortgagee deems appropriate
to protect the Premises or the status or priority of the lien of this Mortgage
thereon including, but not limited to, entry upon the Premises to protect them
from deterioration or damage or to cause the Premises to be put in compliance
with any governmental, insurance rating or contract requirements; payments of
amounts due on liens having priority over this Mortgage; payment of any tax or
charge for purposes of assuring the priority or enforceability of this Mortgage;
obtaining insurance on the Premises or commencement or defense of any legal
action or proceeding to assert or protect the validity or priority of the lien
of this Mortgage. Mortgagor shall reimburse the Mortgagee for all expenses in
taking any such action, on demand, with interest at the rate equal to the
default rate applicable to the loans evidenced by the Notes, but in no event
more than the highest rate permitted under the applicable usury law, and the
amount thereof shall be secured by this Mortgage.
8. (a) The Mortgagor hereby assigns, transfers and sets over to the
Mortgagee all of its right, title and interest in, to and under all present and
future leases, occupancy agreements and rents arising out of the Premises as
further security for the payment of this Mortgage and the Mortgagee shall have
the right to enter upon the Premises for the purpose of collecting the same and
to let and operate the Premises or any part thereof and to apply the rents,
issues and profits, either in whole or in part, as the Mortgagee elects, to the
payment of all charges and expenses of the Premises or in reduction of any part
of the Obligations. This assignment and grant shall continue in effect until the
Obligations secured by this Mortgage are paid in full. The Mortgagee hereby
waives the right to enter upon the Premises for the purpose of collecting said
rents, issues and profits, and the Mortgagor
-4-
<PAGE>
shall have a license to collect and receive said rents, issues and profits until
a Default occurs hereunder, but such license of the Mortgagor may be revoked by
the Mortgagee upon a Default. Upon the occurrence of a Default hereunder, the
Mortgagor will pay monthly in advance to the Mortgagee, or to any receiver
appointed to collect said rents, issues and profits, the fair and reasonable
rental value for the use and occupation of the Premises, or of such part thereof
as may be in the possession of the Mortgagor, and upon default in such payments
will vacate and surrender the possession of the Premises to the Mortgagee or
such receiver.
(b) The Mortgagor shall not, without the consent of the
Mortgagee, lease the Premises or any part thereof, modify or cancel any new
lease ("New Lease") of the Premises or any part thereof, accept prepayments of
installments of the rent under any existing or New Lease for a period of more
than one (1) month in advance or further assign the whole or any part of the
rents under any existing lease or New Lease.
9. Defaults. If any Event of Default (herein a "Default") under the
Loan Agreement shall occur and be continuing then, as more particularly provided
in the Loan Agreement, the principal of and accrued interest on the Notes and
all other Obligations under the Loan Agreement may be declared, or may become,
due and payable, without presentment, demand, protest or other formalities of
any kind, all of which have been waived pursuant to the Loan Agreement.
10. If Mortgagee institutes foreclosure proceedings, Mortgagee at
its option may have a keeper appointed by the court to take possession of the
Property to manage, operate and conserve the value and to collect its rents,
issues and profits. The right to take possession of the Property, to manage,
operate and conserve the Property and to collect the rents, issues and profits,
shall be in addition to all other rights or remedies of Mortgagee. After paying
costs of collection and any other expenses incurred, the proceeds shall be
applied to the payment of the Obligations in any order as Mortgagee shall elect.
Mortgagee shall not be liable to account to Mortgagor for any of these actions
other than to account for any rents actually received by Mortgagee. Mortgagee
shall have the option, at its discretion, of appointing itself or its agent as
keeper of the Property pursuant to the provisions of La. R.S. 9:5131 et seq. and
9:5136 et seq. If the Mortgagee avails himself of this right, the keeper named
shall be Mortgagee, or an agent appointed by him. The method by which the agent,
if any, is to be selected is as follows:
(a) The agent chosen by Mortgagee shall be a person, an
individual, a partnership, a corporation or an unincorporated association;
(b) The agent shall be one who, according to the discretion of
Mortgagee, is properly knowledgeable and equipped to keep the Property and
manage it;
(c) The reasons for appointing the agent named, pursuant to
the criteria set forth above, shall also be set forth in the petition to the
court requesting the agent be appointed as keeper; and
-5-
<PAGE>
(d) No notice of the choosing of the agent need be given to
Mortgagor, and Mortgagor expressly waives any right to receive such
notification.
The keeper appointed pursuant to these provisions shall have all the
powers, duties and compensation provided for in La. R.S. 9:5133 and R.S. 9:5138,
and shall not be required to provide any bond otherwise than as required by law
in such proceedings, pursuant to La. R.S. 9:5134 and R.S. 9:5139. Such keeper
shall be entitled to reimbursement for all reasonable out-of-pocket expenses and
for a reasonable fee for its services equal to four (4%) percent of the revenues
received. This clause shall be expressly governed by the provisions of La. R.S.
9:5131 et seq. and 9:5136 et seq.
11. If any action or proceeding be commenced to foreclose this
Mortgage or to collect the Obligations, or in which it becomes necessary to
defend or uphold the lien of this Mortgage, Mortgagor agrees to pay to the
Mortgagee its reasonable attorney's fees in connection with such action or
proceeding, which fees may be collected in such action or proceeding and shall,
to the extent permitted by law, be a lien on the Premises prior to any interest
in, or claim upon the Premises arising subsequent to the lien hereof.
12. Upon the occurrence of a Default, the Mortgagee may, in addition
to any rights or remedies available to it hereunder or elsewhere, take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against the Mortgagor and in and to the Premises, including, but not
limited to, the following actions, each of which may be pursued, to the extent
permitted by applicable law, concurrently or otherwise, at such time and in such
order as the Mortgagee may determine, in its sole discretion, without impairing
or otherwise affecting the other rights and remedies of the Mortgagee: (A) enter
into or upon the Premises, either personally or by its agents, nominees or
attorneys, and dispossess the Mortgagor and its agents and servants therefrom,
and thereupon the Mortgagee may (i) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the
Premises and conduct the business thereat; (ii) complete any construction on the
Premises in such manner and form as the Mortgagee deems advisable; (iii) make
alterations, additions, renewals, replacements and improvements to or on the
Premises; (iv) exercise all rights and powers of the Mortgagor with respect to
the Premises, whether in the name of the Mortgagor or otherwise, including,
without limitation, the right to make, cancel, enforce or modify leases, obtain
and evict tenants, and demand, sue for, collect and receive all earnings,
revenues, rents, issues, profits and other income of the Premises and every part
thereof; and (v) apply the receipts from the Premises to the payment of the
Obligations after deducting therefrom all expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations and all
amounts necessary to pay the taxes, payments in lieu of taxes, assessments,
insurance and other charges in connection with the Premises as well as just and
reasonable compensation for the services of the Mortgagee, its counsel, agents
and employees; or (B) with or without entry, institute proceedings for the
foreclosure of this Mortgage for the portion of the Obligations then due and
payable, subject to the continuing lien of this Mortgage for the balance of the
Obligations then due and payable, and subject to the continuing lien of this
Mortgage for the balance of the Obligations not then due; or (C) institute
proceedings to foreclose the lien of this Mortgage against all or, from time to
time, against any part of the Premises and to have the same sold under the
judgment or decree of a court of competent jurisdiction; or (D) sell, assign or
transfer the Premises or any part thereof and all estate, claim, demand, right,
title and interest of the Mortgagor therein and right of redemption thereof,
pursuant to
-6-
<PAGE>
power of sale or otherwise, at such time and place, upon such terms and after
such notice thereof as may be required or permitted by law for such price and
form of consideration as the Mortgagee may determine or as may be required by
law; or (E) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein; or (F)
apply for the appointment of a trustee, receiver, liquidator or conservator of
the Premises, without regard for the adequacy of the security for the
Obligations and without regard for the solvency of any person, firm or other
entity liable for the payment of the Obligations; or (G) pursue such other
remedies as the Mortgagee may have under applicable law.
13. Upon the occurrence of a Default and at the option of the
Mortgagee the Premises may be seized and sold under executory process issued by
any court of competent jurisdiction, with or without appraisement, to the
highest bidder, for cash or Mortgagee may, at its option, proceed to enforce
this Mortgage in any other manner provided by law.
14. For the purpose of Louisiana executory process procedures, the
Mortgagor expressly confesses judgment in favor of the Mortgagee and any future
holder(s) of the Obligations in the full amount of the Obligations. The
Mortgagor hereby expressly waives the benefit of appraisement, as provided in
Articles 2332, 2336, 2723, and 2724 of the Louisiana Code of Civil Procedure,
and all other laws conferring the same; time being of the essence, the Mortgagor
further expressly waives demand, putting in default, citation and all notices
and delays, including the three-day notice provided by Article 2639 of the
Louisiana Code of Civil Procedure. The Mortgagor further expressly consents to
the use of executory process to enforce the Obligations and this Mortgage.
15. The Mortgagee may, pursuant to the terms and conditions of the
Loan Agreement, and without affecting the lien hereof or the Mortgagor's
obligations hereunder, renew, extend, accelerate or otherwise change the terms
of payment of the Obligations, grant waivers of the provisions thereof or other
indulgences, release any person liable, or collateral held as security, for
payment of the Obligations, and upon any default in payment of any of the
Obligations, pursue, take or refrain from pursuing any remedy for the collection
of the Obligations, including the enforcement of the lien of this Mortgage. No
act or failure to act by the Mortgagee, including acceptance of any partial
payment on the Obligations, shall constitute or be construed as a waiver of the
Mortgagee's right to pursue each and every right and remedy hereunder. This
Mortgage may be modified or discharged only by a written agreement executed by
the party against whom such modification or discharge is sought to be enforced.
16. In case of a sale in foreclosure, the Premises and the rights
and interests of the Mortgagor may be sold in one or more parcels and in one or
more transactions. The Mortgagor hereby waives for itself and all who may claim
through or under it, and to the full extent the Mortgagor may do so under
applicable law, any and all rights of redemption from sale under any order or
decree of foreclosure of this Mortgage or granted under any statute now existing
or hereafter enacted.
17. Should Mortgagor, without the consent in writing of Mortgagee,
voluntarily, involuntarily or otherwise, lease, sell, transfer, or convey any
interest in the Premises or any part thereof, or if by operation of law the
Premises be sold, transferred or pledged, then the Mortgagee may, at its option,
declare all sums secured hereby immediately due and payable. Consent to one such
-7-
<PAGE>
transaction shall not be deemed to be a waiver of the right to require such
consent to future or successive transactions. A transfer or disposition of the
Premises or any part thereof or interest therein shall include, without
limitation, execution of any lease for space in the Premises for purposes other
than occupancy by the lessee named therein, any lease of space in the Premises
containing an option to purchase, a right of first refusal or offer or similar
right, or any direct or indirect sale, assignment, conveyance, transfer
(including a transfer as a result of or in lieu of a condemnation) or other
alienation of all or any part of the Premises or any interest therein, and
including any assignment, pledge, grant of security interest in, conditional
sale, or the execution of a title retention agreement with regard to the
Premises. Any transfer or other disposition (whether by operation of law or
otherwise) of (i) the Majority Member interest in the Grantor, other than as
expressly permitted under the Loan Agreement, or (ii) more than 49% of the
outstanding voting stock of the Mortgagor shall also constitute a transfer of
the Premises, whether made directly or through an intermediary and whether made
in a single transaction or in a series of transactions.
18. All remedies provided in this Mortgage are distinct and
cumulative to any other right or remedy under this Mortgage, the Notes, the Loan
Agreement, any guaranty of the Obligations secured hereby or any other
agreement, if any, between the Mortgagor and the Mortgagee executed
simultaneously or in connection herewith, or afforded by law or equity, and may
be exercised concurrently, independently or successively. Wherever in this
Mortgage the prior consent of the Mortgagee is required, the consent of the
Mortgagee given as to one such transaction shall not be deemed to be a waiver of
the right to require such consent to future or successive transactions. Any such
consents shall be in writing.
19. Any forbearance by the Mortgagee in exercising any right or
remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver
of or preclude the exercise of any such right or remedy. The procurement of
insurance or the payment of taxes or other liens or charges by the Mortgagee
shall not be a waiver of the Mortgagee's right to accelerate the maturity of the
Obligations secured hereby.
20. The covenants, agreements and options herein contained shall
bind and inure to the benefit of the successors and assigns of the parties
hereto.
21. The Mortgagee is hereby granted the right, at its option, to
cure all defaults claimed by it to have occurred hereunder and all sums
reasonably expended by the Mortgagee in furtherance of its rights hereunder
shall be secured hereby and shall bear interest at the default rate applicable
to the loan evidenced by the Notes. Such sums and interest shall be payable by
Mortgagor on demand by Mortgagee or, if not earlier demanded, at the date set
forth for final payment of all sums secured hereby.
22. The execution of this Mortgage has been duly authorized by the
Mortgagor.
23. If Mortgagor shall receive any notice of (i) the happening of
any event involving the use, spill, discharge or clean-up of any hazardous or
toxic substance or waste or any oil or pesticide on or about any property of
Mortgagor or caused by the Mortgagor (a "Hazardous Discharge") or (ii) any
complaint, order, citation or notice with regard to air emissions, water
discharges, noise emissions
-8-
<PAGE>
or any other environmental, health or safety matter affecting Mortgagor, or the
Premises or its operations (an "Environmental Complaint") from any governmental
or regulatory entity, including without limitation the Department of
Environmental Protection of the State in which the Premises is located ("DEP"),
the United States Environmental Protection Agency ("EPA"), the United States
Army Corps of Engineers (the "Corps"), or the United States Coast Guard (the
"Coast Guard"), then Mortgagor shall give written notice of the same to
Mortgagee within ten (10) days of receipt thereof and shall promptly comply with
its obligations under law with regard to such Hazardous Discharge or
Environmental Complaint at the sole cost and expense of the Mortgagor.
24. Without limitation of Mortgagee's rights under this Mortgage, to
the extent permitted by applicable law, Mortgagee shall have the right, but not
the obligation, to exercise any of its rights to cure as provided in this
Mortgage or to enter onto the Premises or to take such other actions as it deems
necessary or advisable, to cleanup, remove, resolve or minimize the impact of,
or otherwise deal with, any such Hazardous Discharge or Environmental Complaint
upon its receipt of any notice from any governmental or regulatory entity,
including without limitation the DEP, the EPA, the Corps or the Coast Guard,
asserting the happening of a Hazardous Discharge or Environmental Complaint
which, if true, could result in any order, suit or other action against
Mortgagor and/or any part of the Premises by any governmental or regulatory
entity or otherwise which, in the sole opinion of Mortgagee, could jeopardize
its collateral security under this Mortgage. All reasonable costs and expenses
incurred and paid by Mortgagee in the exercise of any such rights shall be
secured by this Mortgage and all other collateral granted to Mortgagee and shall
be payable by Mortgagor upon demand.
25. In addition to those Events of Default specified in the Loan
Agreement, the occurrence of any of the following events shall constitute a
Default under this Mortgage and the Loan Agreement, entitling Mortgagee to all
rights and remedies provided therefor:
(a) If Mortgagor shall fail to comply with provisions of
Paragraph 22 hereof, and, in each such case, such failure is not cured by
Mortgagor within 30 days after receipt by Mortgagor of notice of such failure
from Mortgagee; or
(b) If the DEP, EPA or any other state or federal agency
imposes a lien upon any or all of the Premises by reason of the occurrence of a
Hazardous Discharge or Environmental Complaint or otherwise, and such lien is
not discharged or bonded over within 90 days after the earlier of (i) the date
upon which Mortgagor has actual notice of such lien and (ii) the date Mortgagor
receives notice of such lien from Mortgagee; or
(c) If the DEP, EPA or any other state or federal agency
asserts a claim against Mortgagor, the Premises or Mortgagee for damages or
cleanup costs related to a Hazardous Discharge or Environmental Complaint;
provided, however, such claim shall not constitute a default if, within thirty
(30) business days of Mortgagor's receipt of notice of same:
(1) The Mortgagor can prove to Mortgagee's satisfaction
that Mortgagor has commenced and is diligently pursuing either: (A) a cure or
correction of the event which constitutes the basis for the claim, and Mortgagor
is continuing diligently to pursue such cure
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<PAGE>
or correction to completion, or (B) proceedings for injunction, a restraining
order or other appropriate emergency relief to prevent such agency or agencies
from asserting such claim, which relief is granted within sixty (60) days of the
assertion of the claim and the injunction, order or emergency relief is not
thereafter dissolved or reversed on appeal; and
(2) In either of the foregoing events, Mortgagor has
posted a bond, letter of credit or other security, at the sole cost and expense
of the Mortgagor, satisfactory in form, substance and amount to both Mortgagee
and the agency or entity asserting the claim to secure the proper and complete
cure or correction of the event which constitutes the basis for the claim.
26. (a) Mortgagor shall comply (should same become appropriate),
with the provisions of the federal Occupational Safety and Health Act and all
environmental, health and safety laws governing Mortgagor, Mortgagor's business,
and/or the Premises, and all rules and regulations thereunder and all similar
state and local laws, rules and regulations. To the best of Mortgagor's
knowledge, there are not now any outstanding citations, notices or orders of
violation or noncompliance issued to Mortgagor or relating to Mortgagor's
business assets, property or leaseholds under any such laws, rules or
regulations, nor any conditions which, if known by the proper authorities, could
result in any of the foregoing.
(b) Mortgagor has, and will continue to have, all necessary
federal, state and local licenses, certificates and permits relating to
Mortgagor and Mortgagor's facilities, business, Premises and leaseholds and, to
the best of Mortgagor's knowledge, the foregoing are in compliance with all
applicable federal, state and local laws, rules and regulations relating to air
emissions, water discharges, noise emissions, solid or liquid storage and
disposal, hazardous or toxic waste or substances and other environmental, health
and safety matters.
(c) Upon written request, Mortgagor shall provide to Mortgagee
the following information pertaining to all operations conducted in or on the
Premises:
(1) Copies of any and all permits obtained from any
local, state or federal agency.
(2) Material safety data sheets for any and all
chemicals in use at, manufactured at, imported to or stored at the Premises.
(3) Copies of any and all materials filed with Federal
Occupational Safety and Health Agency under the OSHA Hazard Communication
Standard and all materials filed with the Department of Health, Department of
Environmental Protection or any other federal, state or local agency or entity.
(d) Maps, diagrams and site plans showing the, location of all
storage areas and storage tanks for hazardous substances and wastes and the
location of processes using any of them, including details as to the amounts
stored or used, if any.
(e) Any other information which Mortgagee may reasonably
require.
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<PAGE>
27. The parties hereto acknowledge that this Mortgage is being
delivered to the Mortgagee as a condition of the Loan Agreement and the making
of the loans provided for therein.
28. The Mortgagor hereby grants to the Mortgagee a security interest
in all property, whether intangible or intangible, including without limitation
all fixtures, accounts, equipment, inventory and general intangibles now or
hereafter located on, included in, arising out of or related to the Premises, to
which a security interest can attach under the Uniform Commercial Code, as in
effect from time to time, in the state in which the Premises are located (the
"U.C.C.") in order to secure the Obligations. The Mortgagee shall have, in
addition to all other rights and remedies provided herein, in any other document
executed in connection with the transactions contemplated hereby, in law, at
equity or otherwise, all rights and remedies of a secured party under the U.C.C.
This Mortgage shall constitute a security agreement as such term is used in the
U.C.C., and information concerning the security interest created hereby may be
obtained by application to the Mortgagee (secured party) at the address
specified in the introduction hereto. The mailing address of the Mortgagor is
also set forth in the introduction hereto. The Mortgagor irrevocably authorizes
the Mortgagee, without the signature of the Mortgagor, to execute and file any
financing or continuation statement which the Mortgagee deems necessary or
advisable to perfect or continue the perfection of the security interest granted
hereby, or to preserve and maintain the priority of the lien hereof, and the
Mortgagor, upon demand, shall pay, or shall reimburse the Mortgagee for paying,
any and all costs and expenses from time to time incurred in connection with the
preparation, execution and filing of any such statements, and all payments made
by the Mortgagee shall be a lien on the Premises and shall be deemed secured by
this Mortgage. The filing of such statements shall under no circumstance be
construed as impairing either the Mortgagee's remedies or the priority of the
mortgage lien granted hereby, and the Mortgagor agrees that all items of
personal property included within the Premises are, and at all times, for all
purposes and in all proceedings (both legal and equitable) shall be, at the
election of the Mortgagee, regarded as part of the real estate covered by this
Mortgage.
28. THE PROVISIONS OF THIS MORTGAGE WHICH RELATE TO THE REALIZATION
UPON THE SECURITY COVERED BY THIS MORTGAGE SHALL BE GOVERNED BY THE STATE IN
WHICH THE PREMISES IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE VALIDITY AND ENFORCEABILITY OF THIS MORTGAGE, AND THE OBLIGATIONS
ARISING HEREUNDER. IF ANY PROVISION OF THIS MORTGAGE SHALL BE PROHIBITED BY OR
INVALID UNDER THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, SUCH
PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY,
WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS
OF THIS MORTGAGE.
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<PAGE>
THUS DONE AND PASSED, on the day, month and year first written
above, in the presence of the undersigned Notary and the undersigned competent
witnesses, who hereunto sign their names with Mortgagor after reading of the
whole.
MORTGAGOR:
WITNESSES:
S & W NEW ORLEANS, L.L.C., a Delaware
limited liability company
- ------------------------------- BY: THE NEW YORK RESTAURANT
GROUP, INC., a Delaware corporation,
Majority Member
- -------------------------------
By:
-------------------------------------
Name:
Title:
BY: S&W NEW ORLEANS HOLDINGS,
INC., a Delaware corporation, Member
By:
-------------------------------------
Name:
Title:
-------------------------------
NOTARY PUBLIC
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<PAGE>
SCHEDULE A
DESCRIPTION OF PREMISES
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<PAGE>
INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS
INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS (this "Agreement")
made as of the 1st day of September, 1998 by THE NEW YORK RESTAURANT GROUP,
INC., a Delaware corporation having its chief place of business at 1114 First
Avenue, New York, New York 10021 (the "Borrower"), the Borrower, The Manhattan
Ocean Club Associates, L.L.C., a New York limited liability company, La Cite
Associates, L.L.C., a Delaware limited liability company, Atlantic & Pacific
Grill Associates, L.L.C., a New York limited liability company, Mrs. Parks Sub,
LLC, a Delaware limited liability company, New York RGI Sub, LLC, a Delaware
limited liability company, Restaurant Group Management Service, LLC, a New York
limited liability company, S & W Chicago, LLC, a Delaware limited liability
company, S & W of Miami, L.L.C., a Delaware limited liability company, MOC D.C.,
L.L.C., a Delaware limited liability company, S & W Las Vegas, L.L.C., a
Delaware limited liability company, S & W New Orleans, L.L.C., a Delaware
limited liability company, S & W D.C., L.L.C., a Delaware limited liability
company, Manhattan Ocean Holdings, Inc., a Delaware corporation, Cite Holdings,
Inc., a Delaware corporation, Atlantic & Pacific Grill Holdings, Inc., a
Delaware corporation, MPM Holdings, Inc., a Delaware corporation, NYRGI
Holdings, Inc., a Delaware corporation, Restaurant Group Management Holdings,
Inc., a New York corporation, S & W Chicago Holdings, Inc., a Delaware
corporation, MOC D.C. Holdings, Inc., a Delaware corporation, S & W New Orleans
Holdings, Inc., a Delaware corporation, and S & W D.C. Holdings, Inc., a
Delaware corporation (the twenty-two (22) foregoing entities referred to herein
as the "Subsidiaries") (the Borrower and the Subsidiaries collectively referred
to as "Indemnitor") in favor of FLEET BANK, N.A., a national banking association
("Indemnitee") and other Indemnified Parties (defined below).
RECITALS:
A. Indemnitee has agreed to make a senior secured revolving credit
and term loan facility (the "Loan") to Borrower in the aggregate principal
amount of $15,000,000 pursuant to a Loan Agreement dated as of the date hereof
between Indemnitor and Indemnitee (as same may be amended, supplemented,
restated or otherwise modified from time to time, the "Loan Agreement"). Unless
otherwise defined herein, all capitalized terms shall have the meanings given
them in the Loan Agreement.
B. The Loan is evidenced by a Note issued by the Indemnitor in favor
of the Indemnitee, dated the date hereof in the amount of the Loan, and secured
by, among other things, the Mortgages between Lender and certain Subsidiaries,
as described on Schedule A hereto (as the same may be amended, restated,
supplemented, extended, renewed, split, modified, assigned or replaced from time
to time), respectively encumbering such Subsidiary's interest, as a fee owner in
the land and improvements commonly known as 3767 Las Vegas Boulevard South, Las
Vegas, Nevada and 1009-1015 Poydras Street, New Orleans, Louisiana
(collectively, the "Property").
<PAGE>
C. Indemnitee is unwilling to make the Loan unless Indemnitor agrees
to provide the indemnification, representations, warranties, and covenants and
other matters described in this Agreement for the benefit of Indemnitee.
D. Indemnitor enters into this Agreement to induce Indemnitee to
make the Loan.
AGREEMENT:
NOW THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby
represents, warrants, covenants and agrees for the benefit of Indemnified
Parties as follows:
1. Environmental Representations and Warranties. To the best of
Indemnitor's knowledge, based upon the Environmental Reports (as hereinafter
defined) and after due inquiry, (a) there are no Hazardous Substances (defined
below) or underground storage tanks in, on, or under the Property, except those
that are both (i) in compliance with all Environmental Laws (defined below) and
with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in
writing pursuant to the written reports described on Schedule B hereto resulting
from the environmental assessments of the Property delivered to Indemnitee (the
"Environmental Reports"); (b) there are no past, present or threatened Releases
(defined below) of Hazardous Substances in, on, under or from the Property
except as described in the Environmental Reports; (c) there is no threat of any
Release of Hazardous Substances migrating to the Property except as described in
the Environmental Reports; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property, except as described in the Environmental Reports; (e) Indemnitor
does not know of, and has not received, any written or oral notice or other
communication from any person or entity (including, but not limited to, a
governmental entity) relating to Hazardous Substances or Remediation (defined
below) thereof, of liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with any of the foregoing; and (f) Indemnitor has truthfully and
fully provided to Indemnitee, in writing, any and all information relating to
conditions in, on, under or from the Property that is known to Indemnitor and
that is contained in files and records of Indemnitor, including, but not limited
to, any reports relating to Hazardous Substances in, on, under or from the
Property and/or to the environmental condition of the Property.
2. Environmental Covenants. Indemnitor covenants and agrees that:
(a) all uses and operations on or of the Property, whether by Indemnitor or any
other Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances
in, on, under or from the Property; (c) there shall be no Hazardous Substances
in, on, or under the Property, except those that are both (i) in compliance with
all Environmental Laws and permits issued pursuant thereto, and (ii) fully
disclosed to Indemnitee in writing or are required for cleaning and/or the
customary day-to-day operation of the Property; (d) Indemnitor shall keep the
Property free and clear of all Liens imposed pursuant to any Environmental Law,
whether due to any act or omission of Indemnitor or any other Person
(collectively, the "Environmental Liens"); (e) Indemnitor shall, at its sole
cost and expense,
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<PAGE>
perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
reasonable written request of Indemnitee (including, but not limited to,
sampling, testing and analysis of soil, water, air, building materials, and
other materials and substances whether solid, liquid or gas), and share with
Indemnitee the reports and other results thereof, and Indemnitee and other
Indemnified Parties shall be entitled to rely on such reports and other results
thereof; (f) Indemnitor shall, at its sole cost and expense, comply with all
reasonable written requests of Indemnitee to (i) effectuate Remediation of any
condition (including, but not limited to, a Release of a Hazardous Substance)
in, on, under or from the Property; (ii) comply with any Environmental Law;
(iii) comply with any directive from any Governmental Authority; and (iv) take
any other reasonable action necessary or appropriate for protection of human
health or the environment; (g) Indemnitor shall not do or allow any tenant or
other user of the Property to do any act that materially increases the dangers
to human health or the environment, poses an unreasonable risk of harm to any
person or entity, impairs or may impair the value of the Property, is contrary
to any requirement of any insurer, constitutes a public or private nuisance,
constitutes waste, or violates any covenant, condition, agreement or easement
applicable to the Property in connection with any environmental matter
applicable to the Property; and (h) Indemnitor upon obtaining knowledge thereof
shall immediately notify Indemnitee in writing of (A) any presence or Releases
or threatened Releases of Hazardous Substances in, on, under, from or migrating
towards the Property; (B) any non-compliance with any Environmental Laws related
in any way to the Property; (C) any actual or potential Environmental Lien; (D)
any required or proposed Remediation of environmental conditions relating to the
Property; and (E) any written or oral notice or other communication of which
Indemnitor becomes aware from any source whatsoever (including, but not limited
to, a governmental entity) relating in any way to Hazardous Substances or
Remediation thereof, possible liability of any Person pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Agreement.
3. Indemnified Parties' Rights/Cooperation and Access. Indemnified
Parties and any other Person designated by Indemnified Parties (including, but
not limited to, any receiver, any representative of a governmental entity and
any environmental consultant), shall have the right but not the obligation to
enter upon the Property at all reasonable times to assess any and all aspects of
the environmental condition of the Property and its use, including, but not
limited to, conducting any environmental assessment or audit (the scope of which
shall be determined in Indemnitee's sole and absolute discretion) and taking
samples of soil, groundwater or other water, air or building materials, and
conducting other invasive testing, it being understood and agreed that
Indemnitor shall use good faith efforts to cooperate with and provide access to
Indemnified Parties and any such Person designated by Indemnified Parties.
4. Indemnification. Indemnitor covenants and agrees at its sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses (defined below), except for Losses
arising from the willful misconduct or gross negligence of any of the
Indemnified Parties, imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following (a) any presence of any Hazardous
Substances in, on, above, or under the Property; (b) any past, present or
threatened Release of Hazardous Substances in, on, above,
-3-
<PAGE>
under or from the Property; (c) any activity by any Indemnitor, any Person
affiliated with any Indemnitor, and any tenant or other user of the Property in
connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from the Property of any Hazardous
Substances at any time located in, under, on or above the Property; (d) any
activity by Indemnitor or any Affiliate or Subsidiary of Indemnitor, and any
tenant or other user of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Property, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including, but not limited to any removal,
remedial or corrective action; (e) any past, or present non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Property or operations thereon,
including, but not limited to, any failure by Indemnitor, any Affiliate or
Subsidiary of Indemnitor, and any tenant or other user of the Property to comply
with any order of any Governmental Authority in connection with any
Environmental Laws; (f) the imposition, recording or filing of any Environmental
Lien encumbering the Property; (g) any administrative processes or proceedings
or judicial proceedings in any way connected with any matter addressed in this
Agreement; (h) any acts of Indemnitor, any Affiliate or Subsidiary of
Indemnitor, and any other user of the Property in arranging for disposal or
treatment, or arranging with a transporter for transport for disposal or
treatment, of Hazardous Substances owned or possessed by Indemnitor or such
other user at any facility or incineration vessel owned or operated by another
Person containing such or similar Hazardous Substances; (i) any acts of
Indemnitor, any Affiliate or Subsidiary of Indemnitor, and any other user of the
Property in accepting any Hazardous Substances for transport to disposal or
treatment facilities, incineration vessels or sites selected by Indemnitor or
such other user from which there is a Release, or a threatened Release of any
Hazardous Substance which causes the incurrence of costs for Remediation; (j)
any personal injury, wrongful death, or property damage arising under any
statutory or common law or tort law theory, including, but not limited to,
damages assessed for private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (k) any material
misrepresentation or material inaccuracy in any representation or warranty or
material breach or failure to perform any covenants or other obligations
pursuant to this Agreement or the Mortgages except the indemnity provided in
this Section 4 shall not inure to the benefit of any third-party purchaser of
any of the Property. Notwithstanding the foregoing provisions of this Section 4,
if Indemnitee or any of its affiliates take possession of all or any part of the
Property (the "Possession") the indemnity provided in this Section 4 shall not
apply to the extent that any Losses incurred by any of the Indemnified Parties
that is the result of a Release or placement upon the Property of Hazardous
Substances (x) caused by the affirmative act or gross negligence of Indemnitee
or such affiliate or (y) occurring after the date of Possession.
5. Duty to Defend and Attorneys and Other Fees and Expenses. Upon
written request by any Indemnified Party, Indemnitor shall defend same (if
requested by any Indemnified Party, in the name of the Indemnified Party) by
attorneys and other professionals approved by the Indemnified Parties.
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<PAGE>
6. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
The term "Hazardous Substances" includes, but is not limited
to, any and all substances (whether solid, liquid or gas) defined, listed, or
otherwise classified as pollutants, hazardous wastes, hazardous substances,
hazardous materials, extremely hazardous wastes, or words of similar meaning or
regulatory effect under any present or future Environmental Laws or that may
have a negative impact on human health or the environment, including but not
limited to petroleum and petroleum products, asbestos and asbestos-containing
materials, polychlorinated biphenyls, lead, radon, radioactive materials,
flammables and explosives.
The term "Environmental Law" means any present and future
federal, state and local laws, statutes, ordinances, rules, regulations and the
like, as well as common law, relating to protection of human health or the
environment, relating to Hazardous Substances, relating to liability for or
costs of Remediation or prevention of Releases of Hazardous Substances or
relating to liability for or costs of other actual or threatened danger to human
health or the environment. The term "Environmental Law" includes, but is not
limited to, the following statutes, as amended, any successor thereto, and any
regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act; the Resource Conservation and Recovery Act (including, but
not limited to, Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. The term "Environmental
Law" also includes, but is not limited to, any present and future federal, state
and local laws, statutes, ordinances, rules, regulations and the like, as well
as common law: conditioning transfer of the Property upon a negative declaration
or other approval of a governmental authority of the environmental condition of
the Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other Person, whether or not in connection with transfer of title
to or interest in the Property; imposing conditions or requirements in
connection with permits or other authorization for lawful activity; relating to
nuisance, trespass or other causes of action related to the Property; and
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of the Property.
The term "Release" with respect to any Hazardous Substance
includes, but is not limited to, any release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Substances.
The term "Remediation" includes, but is not limited to, any
response, remedial, removal, or corrective action; any activity to clean up,
detoxify, decontaminate, contain
-5-
<PAGE>
or otherwise remediate any Hazardous Substance; any actions to prevent, cure or
mitigate any Release of any Hazardous Substance; any action to comply with any
Environmental Laws or with any permits issued pursuant thereto; any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous
Substances.
The term "Legal Action" means any claim, suit or proceeding,
whether administrative or judicial in nature.
The term "Indemnified Parties" includes Indemnitee, any Person
who is or will have been involved in the origination of the Loan, any Person who
is or will have been involved in the servicing of the Loan, any Person in whose
name the Lien created by the Mortgages is or will have been recorded, Persons
who may hold or acquire or will have held a full or partial interest in the
Loan, as well as custodians, trustees and other fiduciaries who hold or have
held a full or partial interest in the Loan for the benefit of third parties) as
well as the respective directors, officers, shareholders, partners, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including, but not limited to, any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan
or the Property, whether during the term of the Loan or as a part of or
following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Indemnitee's assets and banking business).
The term "Losses" includes any losses, damages, costs, fees,
expenses, claims, suits, judgments, awards, liabilities (including, but not
limited to, strict liabilities), obligations, debts, diminutions in value,
fines, penalties, charges, costs of Remediation (whether or not performed
voluntarily), amounts paid in settlement, litigation costs, reasonable
attorneys' fees and expenses, engineers' and environmental consultants' fees and
expenses, and investigation costs and expenses (including, but not limited to,
costs and expenses for sampling, testing and analysis of soil, water, air,
building materials, and other materials and substances whether solid, liquid or
gas), of whatever kind or nature, and whether or not incurred in connection with
any judicial or administrative proceedings, actions, claims, suits, judgments or
awards.
7. Unimpaired Liability. The liability of Indemnitor under this
Agreement shall in no way be limited or impaired by, and Indemnitor hereby
consents to and agrees to be bound by, any amendment or modification of the
provisions of the Term Note, the Mortgages or any other Loan Document to or with
Indemnitee by Indemnitor or any Person who succeeds Indemnitor or any Person as
owner of the Property. In addition, subject to Section 4 hereof, the liability
of Indemnitor under this Agreement shall in no way be limited or impaired by (i)
any extensions of time for performance required by the Term Note, the Mortgages
or any of other Loan Document, (ii) except as provided herein, any sale or
transfer of all or part of the Property, (iii) except as provided herein, any
exculpatory provision in the Term Note, the Mortgages, or any of other Loan
Document limiting Indemnitee's recourse to the Property or to any other security
for the Term Note, or limiting Indemnitee's rights to a deficiency judgment
against Indemnitor, (iv) the accuracy or inaccuracy of the representations and
warranties made by Indemnitor under the Term Note, the Mortgages or any
-6-
<PAGE>
other Loan Document or herein, (v) the release of Indemnitor or any other Person
from performance or observance of any of the agreements, covenants, terms or
condition contained in any of the Loan Documents by operation of law,
Indemnitee's voluntary act, or otherwise, (vi) the release or substitution in
whole or in part of any security for the Term Note, or (vii) Indemnitee's
failure to record the Mortgages or file any UCC financing statements (or
Indemnitee's improper recording or filing of any thereof) or to otherwise
perfect, protect, secure or insure any Lien given as security for the Term Note;
and, in any such case, whether with or without notice to Indemnitor and with or
without consideration.
8. Enforcement. Indemnified Parties may enforce the obligations of
Indemnitor without first resorting to or exhausting any security or collateral
or without first having recourse to the Term Note, the Mortgages, or any other
Loan Document or any of the Property, through foreclosure proceedings or
otherwise; provided, however, that nothing herein shall inhibit or prevent
Indemnitee from suing on the Term Note, foreclosing, or exercising any power of
sale under the Mortgages, or exercising any other rights and remedies
thereunder. This Agreement is not collateral or security for the debt of
Indemnitor pursuant to the Loan, unless Indemnitee expressly elects in writing
to make this Agreement additional collateral or security for such debt, which
Indemnitee is entitled to do in its sole and absolute discretion.
Notwithstanding any provision of any of the Mortgages, the obligations pursuant
to this Agreement are exceptions to any non-recourse or exculpation provision of
any of the Mortgages, Indemnitor is fully and personally liable for such
obligations, and its liability is not limited to the original or amortized
principal balance of the Loan or the value of the Property.
9. Survival. The obligations and liabilities of Indemnitor under
this Indemnity shall fully survive indefinitely notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any
power of sale, or delivery of a deed in lieu of foreclosure of the Mortgages.
This Agreement shall not inure to the benefit of any third-party purchaser of
the Property other than an affiliate of Lender.
10. Interest. Any amounts payable to any Indemnified Parties under
this Agreement shall become immediately due and payable on demand and, if not
paid within thirty (30) days of such demand therefor, shall bear interest at a
per annum rate equal to the lesser of (a) the Past Default Rate (as defined in
the Loan Agreement) or (b) the maximum interest rate which Indemnitor may by law
pay or Indemnified Parties may charge and collect, from the date payment was
due.
11. Waivers. (a) Indemnitor hereby waives (i) any right or claim of
right to cause a marshalling of Indemnitor's assets or to cause Indemnitee or
other Indemnified Parties to proceed against any of the security for the Loan
before proceeding under this Agreement against Indemnitor; (ii) and relinquishes
all rights and remedies accorded by applicable law to indemnitors or guarantors,
except any rights of subrogation which Indemnitor may have, provided that the
indemnity provided for hereunder shall neither be contingent upon the existence
of any such rights of subrogation nor subject to any claims or defenses
whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights including, without limitation, any claim
that such subrogation rights were abrogated by any acts of Indemnitee or other
Indemnified Parties; (iii) the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim,
-7-
<PAGE>
in any action or proceeding brought against or by Indemnitee or other
Indemnified Parties; (iv) notice of acceptance hereof and of any action taken or
omitted in reliance hereon; (v) presentment for payment, demand of payment,
protest or notice of nonpayment or failure to perform or observe, or other
proof, or notice or demand; and (vi) all homestead exemption rights against the
obligations hereunder and the benefits of any statutes of limitations or repose.
Notwithstanding anything to the contrary contained herein, Indemnitor hereby
agrees to postpone the exercise of any rights of subrogation with respect to any
collateral securing the Loan until the Loan shall have been paid in full.
(b) INDEMNITOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN AGREEMENT, THE TERM NOTE, THE MORTGAGES, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION
THEREWITH.
12. Subrogation. Indemnified Parties shall be and hereby are
subrogated to all of Indemnitor's rights now or hereafter in such claims.
13. Indemnitor's Representations and Warranties. Indemnitor hereby
affirms each representation and warranty made by Indemnitor to Indemnitee in
respect of this Agreement in the Loan Agreement as if such representation or
warranty were stated in its entirety in this Agreement.
14. No Waiver. No delay by any Indemnified Party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of any
such privilege, power or right.
15. Notice of Legal Actions. Each party hereto shall, within five
(5) business days of receipt thereof, give written notice to the other party
hereto of (i) any notice, advice or other communication from any Governmental
Authority or other source with respect to Hazardous Substances on, from or
affecting the Property, and (ii) any Legal Action brought against such party or
related to the Property, with respect to which Indemnitor may have liability
under this Agreement. Such notice shall comply with the provisions of Section 16
hereof
16. Notices. All notices or other written communications hereunder
shall be given in accordance with Section 9.1 of the Loan Agreement to the
address set forth therein.
17. Submission to Jurisdiction. With respect to any claim or action
arising hereunder, Indemnitor (a) irrevocably submits to the nonexclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York, New York and
appellate courts from any thereof, and (b) irrevocably waives any objection
which it may have at any time to the laying on venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any such
court, irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
-8-
<PAGE>
18. No Third-Party Beneficiary. The terms of this Agreement are for
the sole and exclusive protection and use of Indemnified Parties. No party shall
be a third party beneficiary hereunder, and no provision hereof shall operate or
inure to the use and benefit of any such third party. It is agreed that those
persons and entities included in the definition of Indemnified Parties are not
such excluded third party beneficiaries.
19. Duplicate Originals: Counterparts. This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Agreement. The failure of
any party hereto to execute this Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
20. No Oral Change. This Agreement, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Indemnitor or any
Indemnified Party, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
21. Headings, etc. The headings and captions of various paragraphs
of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
22. Number and Gender/Successors and Assigns. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or persons referred to may
require. Without limiting the effect of specific references in any provision of
this Agreement, the term "Indemnitor" shall be deemed to refer to each and every
Person comprising an Indemnitor from time to time, as the sense of a particular
provision may require, and to include the heirs, executors, administrators,
legal representatives, successors and assigns of Indemnitor, all of whom shall
be bound by the provisions of this Agreement, provided that no obligation of any
Indemnitor may be assigned except with the written consent of Indemnitee. Each
reference herein to Indemnitee shall be deemed to include its successors and
assigns. This Agreement shall inure to the benefit of Indemnified Parties and
their respective successors and assigns forever.
23. Rights Cumulative. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies which Indemnitee has
under the Loan Agreement, Mortgages or other Loan Documents or would otherwise
have at law or in equity.
24. Inapplicable Provisions. If any term, condition or covenant of
this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.
-9-
<PAGE>
25. Governing Law. This Agreement shall be deemed to be governed,
construed, applied and enforced in accordance with the laws of the State of New
York without regard to principles of conflicts of law.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by Indemnitor
and is effective as of the day and year first above written.
THE NEW YORK RESTAURANT GROUP, INC.,
a Delaware corporation
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
THE MANHATTAN OCEAN CLUB
ASSOCIATES, L.L.C., a New York limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
LA CITE ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
ATLANTIC & PACIFIC GRILL
ASSOCIATES, L.L.C., a New York
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
<PAGE>
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MRS. PARKS SUB, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NEW YORK RGI SUB, INC., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
RESTAURANT GROUP MANAGEMENT
SERVICE, LLC, a New York,
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
S & W Chicago, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W OF MIAMI, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MOC D.C., L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W LAS VEGAS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
<PAGE>
By:
--------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W NEW ORLEANS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
--------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W D.C., LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
--------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MANHATTAN OCEAN HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
CITE HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
<PAGE>
Name: Mark K. Levine
Title: Executive Vice President
ATLANTIC & PACIFIC GRILL HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MPM HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NYRGI HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
RESTAURANT GROUP MANAGEMENT
HOLDINGS, INC., a New York corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W CHICAGO HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
<PAGE>
Name: Mark K. Levine
Title: Executive Vice President
MOC D.C. HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W NEW ORLEANS HOLDINGS, INC.,
a Delaware corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W D.C. HOLDINGS, INC., a Delaware
corporation
By:
--------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
FLEET BANK, N.A., a national banking
association
By:
--------------------------------------
Name: Judah Zweiter
Title: Vice President
<PAGE>
SCHEDULE A
Act of Mortgage and Security Agreement by S & W New Orleans, L.L.C. in favor of
Fleet Bank, N.A., dated September 1, 1998.
Deed of Trust, Assignment of Leases and Rents and Security Agreement by S & W of
Las Vegas, L.L.C. for the benefit of Fleet Bank, N.A., dated September 1, 1998.
<PAGE>
[LETTERHEAD OF HUTCHINS, WHEELER & DITTMAR]
September 1, 1998
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Re: The New York Restaurant Group. Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.1(f) of the
Loan Agreement between your bank and The New York Restaurant Group, Inc., a
Delaware corporation ("Borrower") dated as of September 1, 1998 (the "Loan
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Loan Agreement.
We have acted as counsel to Borrower and its subsidiaries listed on
Schedule I hereto (the "Subsidiaries") in connection with the preparation,
execution and delivery of the Loan Agreement and the transactions contemplated
therein. In connection with such representation, we have examined originals, or
copies identified to our satisfaction as being true copies, of the following:
(1) The Loan Agreement;
(2) The Notes;
(3) The Security Agreement;
(4) The Indemnity Agreement;
(5) The Subsidiaries' Guarantees;
(6) Agreement Regarding Fees;
(7) Mortgages of S & W of Las Vegas, L.L.C. and S & W New Orleans,
L.L.C.:
(8) Collateral Assignment of Management Agreement;
<PAGE>
(9) Agreement Regarding Post-Closing Items;
(10) Financing statements prepared for filing with the filings offices
listed in Schedule II hereto (the "Filing Offices"); and
(11) Certificates of the Secretary of State of the states listed on
Schedule I hereto as to the legal existence of each Loan Party.
The agreements, documents and instruments referred to in clauses (1)
through (9) above are referred to in this opinion as the "Loan Documents," the
financing statements referred to in clause (10) are referred to in this opinion
as the "Financing Statements," and the Borrower and the Subsidiaries that is a
signatory to any Loan Document are referred to in this letter collectively as
the "Loan Parties."
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such agreements and instruments, corporate
records, certificates of public officials and of officers of the Loan Parties,
and such other documents and records and such matters of law as we have deemed
necessary as a basis for the opinions set forth below. As to questions of fact
material to such opinions, we have relied, without independent verification,
upon certificates of public officials and of officers of the Loan Parties,
copies of which have been delivered to you, and the factual accuracy and
completeness of all the representations and warranties made by the parties to
the Loan Documents and the other documents executed by Borrower in connection
with the transactions contemplated by the Loan Documents. The opinions expressed
herein as to the valid existence of each Loan Party are as of the date of the
certificates referred to in clause (11) above and are based solely on such
certificates.
As used in this opinion and unless otherwise specified herein, the phrases
"to our knowledge," "known to us" and the like refer to the actual present
knowledge of lawyers currently in this firm who have performed substantive legal
services on behalf of Borrower in connection with the transactions referred to
herein, without any independent investigation or file or docket review.
For purposes of this opinion, we have assumed, with your permission and
without independent verification, (a) the genuineness of all signatures, (b) the
legal capacity of all [ILLEGIBLE] persons who have signed documents examined by
us, (c) the authenticity of all documents [ILLEGIBLE] submitted to us as
originals and the conformity to original documents of all documents [ILLEGIBLE]
to us as certified or photostatic copies, (d) that the parties to the Loan
Documents other [ILLEGIBLE] Loan Parties have each duly authorized, executed and
delivered such Loan Documents [ILLEGIBLE] other relevant documents and
instruments, and (e) that each of the parties to the Loan Documents other than
the Loan Parties has all requisite power and authority to enter into and perform
its respective obligations in connection with the transactions described in the
Loan Documents [ILLEGIBLE] which it is a party.
-2-
<PAGE>
We call your attention to the fact that we have not previously represented
certain of the Loan Parties, and we have not represented any of the Loan Parties
prior to 1996. In addition, our representation of the Loan Parties has been
limited to certain specified matters, and we understand that the Loan Parties
use other counsel.
We express no opinion as to the laws of any jurisdiction other than the
federal laws of the United States of America and the General Corporation Law of
the State of Delaware. We call to your attention that the Loan Documents provide
that they are to be governed by and construed in accordance with the laws of the
State of New York, as to which we have no knowledge, have made no independent
investigation and express no opinion. Accordingly, our opinion is based on the
assumption, with your consent, that the laws of New York relating to the
enforceability of the Loan Documents are substantially similar to the laws of
The Commonwealth of Massachusetts. With respect to our opinions set forth in
paragraphs 7 and 8 below as they relate to the creation or perfection of
security interests in any Collateral located in jurisdictions other than
Massachusetts, our opinion is based solely upon our review of a compilation of
the Uniform Commercial Code ("UCC") as in effect in such jurisdictions as set
forth in the Uniform Commercial Code Reporting Service, Clark Boardman Callaghan
(as supplemented 1998) and not upon any special expertise in or independent
review of the laws of such jurisdictions.
Based upon the foregoing and in reliance thereon and subject to the
assumptions, limitations, qualifications and exceptions set forth below, we are
of the opinion that:
1. Each Loan Party is validly existing under the laws of its jurisdiction
of formation. Each Loan Party has all requisite power and authority to own and
operate its properties and to carry on its business as to our knowledge it is
presently conducted, and to enter into and perform its obligations under each
Loan Document to which it is a party.
2. The execution and delivery by each Loan Party and the performance by
each Loan Party of its obligations under each Loan Document to which it is a
party have been duly authorized by all requisite action by each Loan Party. Each
Loan Document to which each Loan Party is a party has been duly executed and
delivered by such Loan Party and each such Loan Document constitutes the valid
and binding obligation of such Loan Party, enforceable against such Loan Party
in accordance with its terms.
3. The execution and delivery by each Loan Party and the performance by
each Loan Party of its obligations under each Loan Document to which it is a
party and the consummation of the transactions pursuant thereto do not violate
the organizational documents of such Loan Party or violate any of the terms of
(a) any existing statute, rule or regulation binding on any Loan Party, (b) to
our knowledge, any order of any court or governmental agency specifically naming
any Loan Party, or (c) to our knowledge, constitute a default (or an event which
with notice or lapse of time or both would constitute a default) under, or give
to others any right of termination, amendment, acceleration or cancellation of
any agreement, indenture or instrument to which any Loan Party is a party.
-3-
<PAGE>
4. No governmental consents, approvals, authorizations, registrations,
declarations or filings (other than such of the foregoing as (a) are
specifically referred to or disclosed in the Loan Documents, (b) which have been
obtained or completed prior to the closing of the transactions contemplated by
the Loan Documents or (c) are filings required to perfect security interests)
are required by any Loan Party in connection with the execution, delivery and
performance by any Loan Party of the Loan Documents.
5. The issuance of the Notes on the date hereof and the application of the
proceeds thereof by Borrower, as provided in the Loan Agreement, do not violate
Regulation G (12 CFR Part 207), Regulation T (12 CFR Part 220), Regulation U (12
CFR Part 221) or Regulation X (12 CFR Part 224) of the Board of Governors of the
Federal Reserve System.
6. No Loan Party is (a) an "investment company" or a company "controlled"
by an "investment company," as such terms are defined in the Investment Company
Act of 1940, as amended, (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or an "affiliate" of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Act of 1935, or (c) subject to any statute or regulation that
limits its ability in any material respect to incur indebtedness for money
borrowed as contemplated by the Loan Documents.
7. The Security Agreement creates in favor of the Bank a valid security
interest in the Collateral described therein. Assuming the delivery to and
possession by the Bank of the shares owned by the Borrower in Atlantic & Pacific
Grill Holdings, Inc., Manhattan Ocean Holdings, Inc., Cite Holdings, Inc. S&W
New Orleans Holdings, Inc., MOC D.C. Holdings, Inc., S&W D.C. Holdings, Inc.,
Restaurant Group Management Holdings, Inc., NYRGI Holdings, Inc. and MPM
Holdings, Inc. duly endorsed or accompanied by an assignment separate from the
certificates evidencing the same duly executed by the Borrower, such security
interest will be perfected under the UCC.
8. Upon the due filing of the Financing Statements duly executed by
Borrower in the Filing Offices, a security interest will be perfected in that
portion of the Collateral in which a security interest may be perfected by the
filing of financing statements under the UCC.
9. There are to our knowledge no actions, suits, or proceedings pending or
overtly threatened against any Loan Party seeking to enjoin or prevent the
transactions contemplated by the Loan Agreement.
The opinions contained herein are subject to the following conditions and
qualifications:
(A) We express no opinion as to the application of any fraudulent
conveyance, fraudulent transfer, fraudulent obligation or similar laws.
(B) We express no opinion as to any provision of the Loan Agreement to the
extent it
-4-
<PAGE>
provides that the Lender may set off and apply any deposits at any time held, or
any other indebtedness at any time owing, by such Lender or participant to or
for the account of any Loan Party.
(C) Our opinions in paragraph 2 above, with respect to the validity,
binding effect and enforceability of the agreements or provisions thereof
referred to in such paragraphs, are subject to the following: (i) bankruptcy,
insolvency, reorganization, moratorium, receivership and other laws now or
hereafter in effect relating to or affecting the enforcement of creditors'
rights, (ii) the effect of general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive
relief, whether considered in a proceeding in equity or at law, and to the
discretion of the court before which any such proceeding may be brought and
(iii) public policy considerations or court decisions which may limit the rights
of any party to obtain certain remedies and to indemnification, including
indemnification for tortious or criminal acts or violations of law.
(D) Our opinion in paragraph 3 above as to compliance with certain
statutes, rules and regulations is limited to those that, in our experience, are
normally applicable to transactions of the type contemplated by the Loan
Documents.
(E) Our opinions set forth in paragraphs 7 and 8 above are limited to
Articles 8 and 9 of the UCC; accordingly, those opinion paragraphs do not
address (i) laws other than Articles 8 and 9 of the UCC, (ii) collateral of a
type not subject to Articles 8 or 9 of the UCC, and (iii) under ss.9-103 of the
UCC, what law governs perfection of the security interests granted in the
Collateral covered by this opinion letter.
The opinions set forth in this letter are limited to the specific issues
addressed herein and to statutes, regulations, rules, decisions, decrees and
facts existing on the date hereof. In rendering such opinions, we disclaim any
obligation to advise any party to whom this opinion is addressed of any change
in any of these sources of law or of any subsequent legal or factual
developments which might affect any matters addressed or opinions set forth
herein.
The opinions set forth herein are rendered solely to Bank, are solely for
the use of [ILLEGIBLE] Bank in connection with the transactions contemplated by
the Loan Agreement, and may relied upon by the Bank for any other purpose. This
letter is not to be quoted in whole or [ILLEGIBLE] or otherwise referred to in
any financial statements or other public releases, nor is it to be filed
-5-
<PAGE>
with any governmental agency or other person or entity, without the prior
written consent of this firm. This letter may not be delivered to or relied upon
by any other person or entity for any purpose without the prior written consent
of this firm.
Very truly yours,
/s/ Hutchins, Wheeler & Dittmar
A Professional Corporation
Hutchins, Wheeler & Dittmar
A Professional Corporation
-6-
<PAGE>
Schedule I
Subsidiaries
Atlantic & Pacific Grill Holdings, Inc.
Cite Holdings, Inc.
S&W of Las Vegas, L.L.C.
S&W D.C., L.L.C.
S&W New Orleans, L.L.C.
La Cite Associates, LLC
New York RGI Sub, LLC
Mrs. Parks Sub, LLC
Manhattan Ocean Holdings, Inc.
Atlantic & Pacific Grill Holdings, Inc.
Cite Holdings, Inc.
NYRGI Holdings, Inc.
MPM Holdings, Inc.
S&W of Miami, L.L.C.
S&W Chicago, L.L.C.
MOC D.C., L.L.C.
S&W Chicago Holdings Inc.
S&W New Orleans Holdings, Inc.
S&W D.C. Holdings, Inc.
MOC D.C. Holdings, Inc.
-7-
<PAGE>
Schedule II
Filing Offices
Subsidiary Filing Offices
- ---------- --------------
Atlantic & Pacific Grill Holdings, Inc. Secretary of State, New York
City Register, Manhattan
Atlantic & Pacific Associates, LLC Secretary of State, New York
City Register, Manhattan
Cite Holdings. Inc. Secretary of State, New York
City Register, Manhattan
La Cite Associates, LLC Secretary of State, New York
City Register, Manhattan
S&W of Las Vegas, L.L.C. Secretary of State, Nevada
Recorder of Deeds, Clark County
S&W D.C., L.L.C. Recorder of Deeds, District of Columbia
S&W D.C., Holdings, Inc. Recorder of Deeds, District of Columbia
MOC D.C., L.L.C. Recorder of Deeds, District of Columbia
MOC D.C. Holdings, Inc. Recorder of Deeds, District of Columbia
S&W New Orleans, L.L.C. Parish of Orleans, Louisiana
S&W New Orleans Holdings, Inc. Parish of Orleans, Louisiana
S&W Chicago, L.L.C. Secretary of State Illinois
Cook County Recorder of Deeds
S&W Chicago Holdings, Inc. Secretary of State Illinois
Cook County Recorder of Deeds
Mrs. Parks Sub, LLC Secretary of State Illinois
Cook County Recorder of Deeds
MPM Holdings, Inc. Secretary of State Illinois
Cook County Recorder of Deeds
<PAGE>
New York RGI Sub, LLC Secretary of State, New York
City Register, Manhattan
NYRGI Holdings, Inc. Secretary of State, New York
City Register, Manhattan
Manhattan Ocean Holdings, Inc. Secretary of State, New York
City Register, Manhattan
The Manhattan Ocean Club Associates, LLC Secretary of State, New York
City Register, Manhattan
Restaurant Group Management Service, LLC Secretary of State, New York
City Register, Manhattan
Restaurant Group Management Holdings, Inc. Secretary of State, New York
City Register, Manhattan
S&W of Miami, L.L.C. Secretary of State, Florida
Dade County Recorder
<PAGE>
SCHEDULES
TO
LOAN AGREEMENT
BETWEEN
THE NEW YORK RESTAURANT GROUP, INC.
AND
FLEET BANK, N.A.
Unless otherwise defined in these Schedules, all capitalized terms used
herein shall have the meanings ascribed to them in the Loan Agreement, dated as
of September 1, 1998 (the "Loan Agreement"), between The New York Restaurant
Group, Inc. (the "Borrower") and Fleet Bank, N.A. (the "Bank").
Matters reflected in the Schedules are not necessarily limited to matters
required to be reflected in the Schedules. Such additional matters are set forth
solely for informational purposes.
Scheduled references are for convenience only and matters disclosed on one
Schedule are deemed disclosed for the purposes of all of the Schedules.
The Schedules supersede and replace any other disclosure schedules or
documents previously provided to the Bank in connection with the Loan Agreement.
Any such earlier disclosure schedule or document has no force or effect.
<PAGE>
Schedule 1
Permitted Liens
1. S&W of Miami, L.L.C. ("S&W Miami"), a Subsidiary of the Borrower, funded
the joint chapter 11 plan of reorganization (the "Plan") of South Pointe
Hospitality, Inc. ("South Point") and 1 Washington Avenue Corporation ("1
Washington") (collectively, the "Debtors"). Upon consummation of the Plan,
S&W Miami acquired 100% of the newly issued shares of common stock of each
of the Debtors, as reorganized, and the existing equity interests in the
Debtors were cancelled. As consideration for S&W Miami's acquisition of
the new common stock, S&W Miami provided funding for distributions under
the Plan in the form of cash and the assumption, by the reorganized
Debtors, of certain existing liabilities. Following consummation of the
Plan, the Debtors are obligated under the agreements described below,
which obligations are secured by substantially all of the assets of the
Debtors.
a. The Ocean Bank Loan Agreement
Pursuant to a Leasehold First Mortgage and Security Agreement, dated as of
April 12, 1994, by and between the Debtors and Ocean Bank (the
"Mortgage"), the Debtors gave Ocean Bank a mortgage in a lease and a
ground lease and purchase option, and on fixtures, subleases, rents and
personal property. The Mortgage secured a claim held by Ocean Bank in the
amount of $1.2 million claim. Under the Plan, and in full settlement of
the Ocean Bank claim, the reorganized Debtors assumed such obligations to
Ocean Bank (with certain modifications), and S&W Miami and the Borrower
guaranteed such obligations.
b. SBA
Pursuant to a Loan Agreement, dated April 12, 1994, by and between the
Debtors and the United States Small Business Administration (the "SBA"),
the SBA loaned South Pointe $1,000,000. Such loan is secured by a second
lien on a portion of the collateral for the Ocean Bank Mortgage. The SBA
asserted a $970,000 claim against the Debtors. The reorganized Debtors
assumed the SBA loan, and S&W Miami and the Borrower guaranteed such loan.
2. S&W New Orleans, L.L.C.: Mortgage in favor of First Bank & Trust on
property located at 1009-1015 Poydras Street, New Orleans, Louisiana.
<PAGE>
Schedule 2
Subsidiaries of the Borrower
The Manhattan Ocean Club Associates, LLC
Manhattan Ocean Holdings, Inc.
La Cite Associates, L.L.C.
Cite Holdings, Inc.
Atlantic & Pacific Grill Associates, L.L.C.
Atlantic & Pacific Holdings, Inc.
Mrs. Parks Sub, LLC
MPM Holdings, Inc.
New York RGI Sub, LLC
NYRGI Holdings, Inc.
Restaurant Group Management Service, LLC
Restaurant Group Management Holdings, Inc.
S&W Chicago, L.L.C.
S&W Chicago Holdings, Inc.
S&W of Miami, L.L.C.
S&W of Las Vegas, L.L.C.
S&W D.C., L.L.C.
S&W D.C. Holdings, Inc.
MOC D.C., L.L.C.
MOC D.C. Holdings, Inc.
S&W New Orleans, L.L.C.
S&W New Orleans Holdings Inc.
<PAGE>
Schedule 2(A)
Description of Las Vegas Property
The South 120 feet of the West Half of the Northwest Quarter of the
Southwest Quarter and the North 10 feet of the West One-Half of the Southwest
Quarter of Section 21, Township 21 South, Range 61 East, M.D.B & M.
Excepting therefrom all State and County roads and highways.
Assessor's Parcel no. 162-21-301-014.
<PAGE>
Schedule 2(B)
Description of New Orleans Property
A certain piece or portion of ground, together with all the buildings and
improvements thereon, and all rights, ways, privileges, servitudes,
appurtenances and advantages thereunto belonging or in anywise appertaining,
situated in the First District of the City of New Orleans, State of Louisiana,
in the square bounded by Poydras, Rampart, Dryades and Perdido Streets, which
said lots are designated by the nos. 7 and 8, square 270, and measure together
forty-six feet front on Poydras Street by a depth of sixty-four feet. Said lots
are designated nos. 5 and 6 on the assessment rolls of the City of New Orleans.
<PAGE>
Schedule 2(C)
Description of D.C. Property
1112 19th Street, N.W., Washington, D.C. (Lot 877, square 117).
<PAGE>
Schedules 3.1(A)
June 30, 1998 Financial Statements
None.
<PAGE>
Schedule 3.1(B)
Material Adverse Changes in Financial Condition
None.
<PAGE>
Schedule 3.13
Tradenames
1. The Borrower and its Subsidiaries use the following tradenames and/or
"doing business as" names:
a. "Cite"
b. "Cite Grill"
c. "Maloney & Porcelli"
d. "Mrs. Park's Tavern"
e. "Park Avenue Cafe"
f. "Manhattan Ocean Club"
2. Pursuant to the License Agreement, dated August 16, 1996, between the
Borrower and St. James Associates, L.P., the Borrower licensed the right
to use the trademark "Smith & Wollensky" and related marks in certain
geographic areas.
<PAGE>
Schedule 3.16
Management Agreements
1. Restaurant Management Agreement, dated January 24, 1993, among Nabil
Chartouni and Fouad Chartouni and The New York Restaurant Group, Inc., as
amended by First Amendment to Restaurant management Agreement, dated
December 6, 1994, between Post House Investors, L.P. and The New York
Restaurant Group, Inc. and Second Amendment to Restaurant Management
Agreement, dated October 29, 1996, between Post House Investors, L.P. and
The New York Restaurant Group, L.L.C.
2. Restaurant Management Agreement, dated April 18, 1996, between 37 East
50th Street Corp. and Restaurant Group Management Services, L.L.C.
3. Submanagement Agreement dated June 9, 1995, between Doubletree Partners
and Mrs. Parks Management Company, L.L.C.
4. Management Agreement, dated as of January 1, 1996, between Thomas H. Lee
Capital, LLC and The New York Restaurant Group, L.L.C., as amended.
<PAGE>
Schedules 3.18
Leases
1. Agreement of Lease, dated as of November 1, 1991, between Beekman Tenants
Corporation and White & Witkowsky, Inc., for space at 575 Park Avenue, New
York, New York, as modified by Letter Agreement, dated November 21, 1991,
between Beekman Tenants Corporation and White & Witkowsky, Inc. and
Assignment and Assumption of Lease, dated September 9, 1992, between White
& Witkowsky, Inc., as assignor, and Atlantic & Pacific Grill Associates,
L.P., as assignee.
2. Agreement of Lease, dated as of August 31, 1983, between Holrod Associates
and Thursday's Supper Pub, Inc., for space at 7 West 58th Street, New
York, New York, as modified by Supplemental Agreement and First Amendment
to Lease, dated as of May 3, 1993, among Holrod Associates, Manhattan
Ocean Club Associates and Thursday's Supper Pub, Inc., Second Amendment to
Lease, dated as of April 1, 1995, between Holrod Associates and Manhattan
Ocean Club Associates and Letter of Consent, dated January 10, 1996,
between Thursday's Supper Pub, Inc. and Holrod Associates.
3. Lease, dated June 21, 1988, between Rockefeller Center North, Inc. and
White & Witkowsky, Inc., for space at 111 West 50th Street, New York, New
York, as modified by Assignment and Assumption of Lease, dated as of June
7, 1990, among La Cite, Inc. (formerly White & Witkowski, Inc.), as
assignor, La Cite Associates, L.P., as assignee, and Rockefeller Center
North, Inc., as landlord, Supplemental Indenture, dated as of January 1,
1991, between Rockefeller Center North, Inc. and La Cite Associates, L.P.
and Supplemental Indenture, dated as of January 1, 1992, between
Rockefeller Center North, Inc. and La Cite Associates, L.P.
4. Lease, dated October 19, 1988, between First 61 Partners and The New York
Restaurant Group, Inc., for 1114 First Avenue, 6th Floor, New York, New
York, as amended by Agreement, dated May 1, 1992, between First 61
Partners and The New York Restaurant Group, Inc. and Assignment and
Assumption of Lease, dated January 10, 1996, between The New York
Restaurant Group, L.L.C., as assignor, and New York RGI Sub, L.L.C., as
assignee.
5. Lease, dated May, 1997, between Marina City Hotel Enterprises, L.L.C. and
S&W Chicago, L.L.C., for space at Marina City, Chicago, Illinois.
<PAGE>
6. Lease With an Option to Purchase dated February 9, 1998 between S&W of Las
Vegas, L.L.C. and The Somphone Limited Partnership for space located at
3767 Las Vegas Boulevard South, Las Vegas, Nevada.
7. Lease between S&W D.C., L.L.C. and 1112 Nineteenth Street Associates for
space located at 1112 Nineteenth Street, N.W., Washington, D.C.
<PAGE>
Schedule 7.1(b)
Indebtedness
1. In 1995, the IRS agreed with the Borrower and its Subsidiaries and their
employees that all employees will report all the tips they receive. The
IRS has stated separately that, so long as employees start reporting their
tips accurately, the IRS will not make further assessments on the Borrower
and its Subsidiaries with respect to FICA relating to underreported tips
for prior periods. However, as of December 30, 1996, employees of the
Borrower and its Subsidiaries were still underreporting their tips, and
the Borrower continues to accrue 7.65% of the underreported amount (the
amount of FICA tax the Borrower and its Subsidiaries would owe on those
amounts). The Borrower accrued $134,000, in the aggregate, for 1995 and
expects to accrue an additional $120,000, in the aggregate, for 1996.
2. Obligations assumed by S&W of Miami, L.L.C.:
a. One Washington Avenue Corporation:
i. Dade County 1995 and 1996 property taxes.
ii. Muskat Group
iii. Ocean Bank loan described in Schedule 1.
iv. SBA loan described in Schedule 1.
b. South Pointe Hospitality, Inc.
i. Florida state taxes
ii. Federal taxes
iii. Miscellaneous obligations to trade creditors.
3. S&W New Orleans, L.L.C.: Mortgage loan by First Bank & Trust described in
Schedule 1.
<PAGE>
Schedule 7.1(d)
Permitted Letters of Credit
1. Letter of Credit No. PB-284294, dated March 7, 1994, issued by Morgan
Guaranty Trust Company of New York in favor of Beekman Tenants Corporation
for the account of Atlantic & Pacific Grill Associates, L.P., for up to an
aggregate amount of $50,000, as amended.
2. Letter of Credit No. PB-283538, dated September 14, 1988, issued by Morgan
Guaranty Trust Company of New York in favor of Rockefeller Center North,
Inc. for the account of La Cite, Inc. (formerly for the account of White &
Witkowsky, Inc.) for up to an aggregate amount of $169,125, as amended.
3. Letter of Credit to be issued by Morgan Guaranty Trust Company of New York
in favor of First 61 Partners for the account of The New York Restaurant
Group, L.L.C. for up to an aggregate amount of $25,000.
<PAGE>
SECOND AMENDMENT
TO
LOAN AGREEMENT
among
THE NEW YORK RESTAURANT GROUP, INC.
as Borrower,
the GUARANTORS
that are a party hereto,
and
FLEET BANK, N.A.
as Lender
Dated as of June 29, 1999
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of
June 29, 1999, is entered into by and among THE NEW YORK RESTAURANT GROUP, INC.,
a Delaware corporation (the "Borrower"), The Manhattan Ocean Club Associates,
L.L.C., a Delaware limited liability company, La Cite Associates, L.L.C., a
Delaware limited liability company. Atlantic & Pacific Grill Associates, L.L.C.,
a Delaware limited liability company, Mrs. Parks Sub, LLC, a Delaware limited
liability company, New York RGI Sub, LLC, a Delaware limited liability company,
Restaurant Group Management Service, LLC, a Delaware limited liability company,
S & W Chicago, LLC, a Delaware limited liability company, S & W of Miami,
L.L.C., a Delaware limited liability company, MOC D.C., L.L.C., a Delaware
limited liability company, S & W Las Vegas, L.L.C., a Delaware limited liability
company, S & W New Orleans, L.L.C., a Delaware limited liability company, S & W
D.C., L.L.C., a Delaware limited liability company, and MOC of Miami, L.L.C., a
Delaware limited liability company (each of the thirteen (13) foregoing entities
is referred to herein as a "Guarantor and collectively as the "Guarantors") and
FLEET BANK, N.A., a national banking association organized under the laws of the
United States (the "Lender").
W I T N E S S E T H :
WHEREAS, the Borrower entered into a senior secured revolving credit
facility for up to an aggregate principal amount not to exceed $15,000,000 (the
"Original Commitment") with the Lender pursuant to that certain Loan Agreement
dated as of September 1, 1998, and the First Amendment to Loan Agreement dated
as of June 8, 1999, which inter alia temporarily increased the Original
Commitment to $16,500,000 (the "Revised Commitment") (together the "Agreement");
(all capitalized terms used herein and not defined herein shall have the
meanings ascribed respectively thereto in the Agreement);
WHEREAS, pursuant to Borrower's request, Lender has agreed to
decrease the Revised Commitment to $15,000,000 and modify the Agreement and the
other Loan Documents, as more particularly hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Agreement and the other Loan
Documents are hereby modified as follows:
1. Commitment. The term "Commitment", as defined in Section 2.1 of
the Agreement, is hereby amended to mean S 15,000,000.
2. Conversion Date. The term "Conversion Date", as defined in
Section 2.6 of the Agreement is hereby amended to mean January 15, 2000.
3. EBITDA. The definition of EBITDA in Section 1.1 of the Agreement
is hereby amended in its entirety to read as follows:
"'EBITDA' shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, the sum of (a)
<PAGE>
Adjusted Net Income, plus (b) Interest Expense, plus (c)
depreciation and amortization, plus (d) any non-cash extraordinary
or nonrecurring charges, plus (e) deferred rent, plus (f) Federal,
state and local income taxes, computed in accordance with GAAP."
4. Termination Date. The term "Termination Date", as defined in
Section 1.1 of the Agreement is hereby amended to mean January 15, 2000.
5. Final Term Loan Maturity Date. The final Maturity Date of the
Term Loan as set forth in Section 27 of the Agreement is hereby amended to mean
January 15, 2003.
6. Rolling Four Quarter EBITDA. Section 1.1 is hereby amended to add
the following definition after the definition of Revolving Loan Note:
"'Rolling Four Quarter EBITDA' shall mean the EBITDA for the prior
four consecutive fiscal quarters ending with the most recent fiscal
quarter:"
7. Working Capital Sublimit. The definition of the term "Working
Capital Sublimit" in Section 1.1 of the Agreement, is hereby deleted.
8. Working Capital Advances. Sections 2.5 and 8(c) are hereby
deleted in their entirety.
9. Procedure for Requesting Advances. The second sentence of Section
2.3 of the Agreement is hereby amended in its entirety to read as follows:
"Such Borrowing Notice shall (a) identify the Project to which such
proposed borrowing relates or identify such proposed borrowing as a
Working Capital Advance, (b) state whether the Borrower requests the
Advance to bear interest at the Adjusted LIBOR Rate, and if so, for
what LIBOR Interest Period, and (e) provide certification from the
Chief Financial Officer of the Borrower that taking into account the
proposed borrowing, the Borrower will be in compliance with the
covenants in Sections 6 and 7 on a pro forma basis."
10. Amendments to Financial Ratios.
(a) Section 6.1(a) of the Agreement is hereby amended in its
entirety to read as follows:
"(a) Consolidated Fixed Charge Coverage Ratio. Borrower and its
Subsidiaries on a consolidated basis will maintain a Consolidated
Fixed Charge Coverage Ratio, calculated on a rolling four quarter
basis, of not less than 1.50 to 1.0 from the last day of the 1999
fiscal year end and thereafter."
-2-
<PAGE>
(b) Section 6.1(b) of the Agreement is hereby amended in its
entirety to read as follows:
"(b) Consolidated EBITDA. The Consolidated EBITDA of the Borrower
and its Subsidiaries shall be not less than: $1,500,000 for the
second fiscal quarter of 1999, $O for the third fiscal quarter of
1999; $2,750,000 for the fourth fiscal quarter of 1999, $2,750,000
for the first fiscal quarter of 2000; $2,350,000 for the second
fiscal quarter of 2000; $1,000,000 for the third fiscal quarter of
2000; and $4,400.000 for the fourth fiscal quarter of 2000 and
thereafter."
(c) Minimum Rolling Four Quarter EBITDA. Section 6.1 of the
Agreement is hereby amended to add the following Section 6.1(c) to read as
follows:
"(c) Minimum Rolling Four Quarter EBITDA. The Minimum Rolling Four
Quarter EBITDA of the Borrower and its Subsidiaries shall be not
less than: $5,850,000 for the fourth fiscal quarter of 1999,
$7,125,000 for the first fiscal quarter of 2000; $7,900,000 for the
second fiscal quarter of 2000; $8,900,000 for the third fiscal
quarter of 2000; and $10,500,000 for the fourth fiscal quarter of
2000 and thereafter."
11. Fees. In consideration of the Lender agreeing to enter into this
Amendment, and granting the waivers set forth in paragraph 15 below, the
Borrower hereby agrees to pay to Lender a Loan Fee of $50,000 on the date hereof
(the "Closing Date").
12. Effect of Amendment. All references in the Loan Documents to the
"Loan Agreement" shall be deemed to refer to the Agreement as modified pursuant
to the terms hereof. All references in any one of the Loan Documents to any of
the other Loan Documents shall be deemed to refer to such other Loan Documents
as modified pursuant to the terms hereof. In the event of any inconsistency or
conflict between the terms and provisions of any of the Loan Documents and the
terms and provisions of this Amendment, the terms and provisions of this
Amendment shall control and be binding, it being the agreement and intent of the
Borrower, Guarantors and the Lender that the terms and provisions contained or
referred to in the Loan Documents shall hereby be and be deemed to be amended
and modified to the extent, but only to the extent, necessary to give effect to
the terms and provisions of this Amendment.
13. Consent of Borrower and Guarantor. By execution of this
Amendment, Borrower and Guarantors hereby expressly consent to the modification
and amendments relating to the Loan Agreement as set forth herein, and
Guarantors and Borrower hereby acknowledge, represent and agree that the
Guaranty, the Revolving Note, the Security Agreement and the other Loan
Documents to which each is a party remain in full force and effect and
constitute the valid and legally binding obligation of Guarantors and Borrowers,
enforceable against such Person in accordance with its terms, that the Guaranty,
the Revolving Note, the Security Agreement and the other Loan Documents extend
to and apply to the Loan Agreement as modified and amended, and that the
execution and deliver of this Amendment does not constitute and shall not be
deemed to
-3-
<PAGE>
constitute, a release, waiver or satisfaction of Guarantors' or Borrowers'
obligations under the Guaranty, the Revolving Note, the Security Agreement or
other Loan Documents.
14. Borrower's Representations, Warranties and Covenants. Borrower
and Guarantors hereby certify that the following statements are true on the
date hereof:
(a) No Default or Event of Default has occurred and is continuing;
(b) All representations and warranties contained in the Agreement
and the other Loan Documents, before and after giving affect to this
Amendment, are true and correct in all material respects with the same
effect as though such representations and warranties are being made as of
the date hereof.
(c) Except with respect to compliance with Sections 5.3 and 6.1, the
Borrower, before and after giving effect to this Amendment is in
compliance in all material respects with all covenants in Sections 5, 6
and 7 of the Loan Agreement and all other covenants and agreements
contained in the Agreement and the other Loan Documents;
(d) There has been no material adverse change in the financial
condition or business of the Borrower and Guarantors;
(e) Except as expressly modified hereby, the Agreement and other
Loan Documents remain unmodified and in full force and effect and are
hereby ratified and confirmed in all respects; and
(f) The Borrower has no offsets, counterclaims or defenses to the
enforcement of, or otherwise with respect to, the Agreement and/or other
Loan Documents as hereby modified.
15. Limited Waiver. (a) The Lender hereby waives the failure of
Borrower to have provided the timely annual audited financial statements and the
financial covenant compliance letter and calculation for the year ending
December 28, 1998, provided that the consolidated audited financial statements
of the Borrower for the fiscal year ended December 28, 1998, as required by
Section 5.3(a) of the Agreement to be audited by KPMG Peat Marwick shall be
received by the Lender on or before July 1, 1999, in form and substance
satisfactory to the Lender.
(b) Lender waives compliance by Borrower of the covenants set forth
in Sections 6.1(a) and (b) for the fiscal quarter ending March 29, 1999.
(c) Except as specifically set forth in this paragraph 15, Lender
has not waived any covenant of Borrower or any Guarantor contained in any of the
Loan Documents.
16. New Covenant. Section 7 of the Agreement is amended by adding a
Section 7.13 to read as follows:
"7.13 New Construction. Borrowers agrees that so long as any of the
Loans arc outstanding, Borrower and its Subsidiaries shall not
-4-
<PAGE>
commence construction, conversion or development of any new
restaurant without the consent of the Lender, which may be withheld
or conditioned in its sole discretion. This section 7.13 shall not
apply to Smith & Wollensky in Washington. D.C. or to Maloney &
Porcelli in Washington, D.C."
17. Subordinated Debt Transaction. Simultaneously with the closing
of this Amendment, Borrower shall have entered into a subordinated debt
transaction with Magnetite Asset Investors, LLC on terms and conditions
satisfactory to Lender.
18. Execution in Counterparts. This Amendment may be executed in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
19. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws of the State of New York.
20. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
THE NEW YORK RESTAURANT, INC., a Delaware corporation
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
THE MANHATTAN OCEAN CLUB
ASSOCIATES, L.L.C., a Delaware Limited
liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
LA CITE ASSOCIATES, L.L.C.,
a Delaware limited liability company
<PAGE>
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
ATLANTIC & PACIFIC GRILL
ASSOCIATES, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MRS. PARKS SUB, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
NEW YORK RGI SUB, LLC., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
RESTAURANT GROUP MANAGEMENT
SERVICE, LLC, a Delaware, limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W Chicago, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W OF MIAMI, L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MOC D.C., L.L.C., a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
S & W LAS VEGAS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W NEW ORLEANS, LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
S & W D.C., LLC, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MOC of MIAMI, L.L.C, a Delaware
limited liability company
By: The New York Restaurant Group, Inc.,
its Manager
By:
-------------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
<PAGE>
FLEET BANK, N.A.
By:
-------------------------------------------
Name:
Title: Vice President
<PAGE>
EXHIBIT 10.16
EXECUTION COPY
================================================================================
$10,000,000
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
Dated as of June 29, 1999
Between
THE NEW YORK RESTAURANT GROUP, INC.
and
MAGNETITE ASSET INVESTORS L.L.C.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.1 Defined Terms ................................................ 1
1.2 Accounting Terms; UCC Terms .................................. 14
1.3 Certain Matters of Construction .............................. 14
ARTICLE II
AUTHORIZATION, SALE, PURCHASE
AND PREPAYMENT OF NOTES
2.1 Authorization of Notes ....................................... 14
2.2 Sale and Purchase of Notes ................................... 14
2.3 Prepayment of Notes .......................................... 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Financial Condition .......................................... 17
3.2 Due Existence and Authority; Compliance with Law ............. 17
3.3 Power and Authority; Authorization; Enforceable Obligations .. 18
3.4 Legal Bar .................................................... 18
3.5 No Material Litigation ....................................... 18
3.6 No Default ................................................... 18
3.7 No Burdensome Restrictions ................................... 19
3.8 Taxes ........................................................ 19
3.9 Federal Regulations .......................................... 19
3.10 Liens on Properties .......................................... 19
3.11 Ownership; Leasehold Interests and Liens ..................... 19
3.12 Information .................................................. 19
3.13 Tradenames ................................................... 20
3.14 Solvency ..................................................... 20
3.15 Brokers ...................................................... 20
i
<PAGE>
3.16 Management Agreements; Material Contracts .................... 20
3.17 Leases ....................................................... 20
3.18 Environmental Compliance ..................................... 20
3.19 No Material Adverse Change ................................... 22
3.20 No Default under Senior Debt ................................. 23
3.21 Year 2000 Compliance ......................................... 23
3.22 Private Offering by the Company .............................. 24
3.23 Use of Proceeds; Margin Regulations .......................... 24
3.24 Status under Certain Statutes ................................ 25
3.25 Organization and Ownership of Shares of Subsidiaries;
Affiliates ................................................... 25
3.26 Outstanding Indebtedness ..................................... 26
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
4.1 Purchase for Investment ...................................... 26
4.2 Source of Funds .............................................. 26
ARTICLE V
CONDITIONS TO CLOSING
5.1 Notes ........................................................ 28
5.2 Subsidiaries' Guaranty ....................................... 28
5.3 Warrants ..................................................... 28
5.4 Legal Opinion ................................................ 28
5.5 Resolutions and Certificates ................................. 28
5.6 Environmental Reports ........................................ 28
5.7 Appraisals ................................................... 28
5.8 Payment of Special Counsel Fees .............................. 29
5.9 Representations and Warranties ............................... 29
5.10 Additional Matters ........................................... 29
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Compliance with Laws, Etc .................................... 29
6.2 Preservation of Existence .................................... 29
6.3 Financial Information and Compliance Certificates ............ 29
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6.4 Defaults ..................................................... 30
6.5 Insurance .................................................... 31
6.6 Preservation of Properties ................................... 31
6.7 Taxes ........................................................ 31
6.8 Notice of Litigation ......................................... 31
6.9 Alan Stillman ................................................ 31
6.10 Subsidiaries' Guaranty ....................................... 31
6.11 New Restaurants .............................................. 31
6.12 Inspection of Property; Books and Records; Discussions ....... 32
6.13 Environmental Laws ........................................... 32
6.14 Payment of Obligations ....................................... 32
6.15 Further Assurances ........................................... 32
ARTICLE VII
FINANCIAL COVENANTS
7.1 Covenants .................................................... 33
ARTICLE VIII
NEGATIVE
8.1 Indebtedness ................................................. 34
8.2 Mergers and Sales of Assets .................................. 34
8.3 Loans; Investments ........................................... 34
8.4 Liens ........................................................ 35
8.5 Contingent Liabilities ....................................... 35
8.6 Sales of Receivables; Sale - Leasebacks ...................... 35
8.7 Nature of Business ........................................... 35
8.8 Accounting Changes ........................................... 35
8.9 Transactions with Affiliates ................................. 35
8.10 Dividends and Distributions and Investments .................. 35
8.11 Subsidiaries ................................................. 36
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
9.1 Events of Default ............................................ 36
9.2 Acceleration ................................................. 39
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9.3 Other Remedies ............................................... 39
9.4 Rescission ................................................... 40
9.5 No Waivers or Election of Remedies, Expenses, etc ............ 40
ARTICLE X
SUBORDINATION
10.1 Agreement to Subordinate ..................................... 40
10.2 Liquidation, Dissolution, Bankruptcy ......................... 40
10.3 Default on Senior Indebtedness ............................... 42
10.4 Acceleration of Payment of Notes ............................. 42
10.5 Distributions to Noteholders ................................. 43
10.6 Subrogation .................................................. 43
10.7 Relative Rights .............................................. 43
10.8 Subordination May Not Be Impaired by Company ................. 43
10.9 Distribution or Notice to Representative ..................... 43
10.10 Article 10 Not to Prevent Events of Default or Limit Right
to Accelerate ................................................ 43
10.11 Reliance by Holders of Senior Indebtedness on
Subordination Provisions ..................................... 44
ARTICLE XI
MISCELLANEOUS
11.1 Notices ...................................................... 44
11.2 No Waiver; Cumulative Remedies ............................... 45
11.3 Survival of Representations and Warranties ................... 45
11.4 Payment of Expenses; Examination ............................. 45
11.5 Waiver of Jury Trial, Setoff and Counterclaim ................ 45
11.6 Waiver of Automatic Stay ..................................... 46
11.7 Modification and Waiver; Voting .............................. 46
11.8 Severability ................................................. 47
11.9 Successors and Assigns ....................................... 47
11.10 Governing Law; Consent to Jurisdiction ....................... 47
11.11 Entire Agreement ............................................. 47
11.12 Interest Adjustment .......................................... 48
11.13 Section Titles ............................................... 48
11.14 Counterparts ................................................. 48
11.15 Indemnities .................................................. 48
11.16 Transfer and Exchange of Notes ............................... 49
11.17 Place of Payment ............................................. 50
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11.18 Cooperation as to Certain Matters ............................ 50
Table of Exhibits and Schedules:
EXHIBIT 5.1 Form of Note
EXHIBIT 5.2 Form of Subsidiaries' Guaranty
EXHIBIT 5.3 Form of Warrant Agreement
EXHIBIT 5.4 Form of Opinion of Hutchins, Wheeler & Dittmar
SCHEDULE 3.1 Contingent Obligations
SCHEDULE 3.10 Liens
SCHEDULE 3.13 Trademarks
SCHEDULE 3.16 Management Agreements and Material Contracts
SCHEDULE 3.17 Leases
SCHEDULE 3.25 Subsidiaries and Affiliates
SCHEDULE 3.26 Outstanding Indebtedness
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SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT, dated as of June 29, 1999,
between THE NEW YORK RESTAURANT GROUP, INC., a Delaware corporation (the
"Company"), with its principal place of business at 1114 First Avenue, New York,
New York 10021, and MAGNETITE ASSET INVESTORS L.L.C., a Delaware limited
liability company (the "Purchaser"), with its principal place of business at 345
Park Avenue, 29th Floor, New York, New York 10154.
In consideration of the mutual covenants hereinafter contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. In addition to the defined terms appearing above or
defined in subsequent Sections of this Agreement, as used herein the following
terms shall have the following meanings:
"Acquired Indebtedness" shall mean Indebtedness of a Person (a) existing
at the time such Person becomes a Subsidiary or (b) assumed in connection with
the acquisition of assets, in each case not Incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
Incurred on the date the acquired Person becomes a Subsidiary or the date of the
acquisition of such assets.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" shall mean this Senior Subordinated Note Purchase Agreement,
as the same from time to time may be amended, supplemented or modified, and any
appendices, exhibits or schedules hereto.
"Asset Acquisition" shall mean (a) an Investment by the Company or any
Subsidiary in any other Person pursuant to which such Person shall become a
Subsidiary, or shall be
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merged with or into the Company or any Subsidiary, or (b) the acquisition by the
Company or any Subsidiary of the assets of any Person (other than a Subsidiary)
which constitute all or substantially all of the assets of such Person or
comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Construction" shall mean the construction by the Company or any
Subsidiary of a new restaurant owned and operated by the Company or any
Subsidiary, which restaurant has been open for business and fully operational
for at least three months prior to the relevant Transaction Date (as such term
is defined in the definition of "Pro Forma Consolidated Fixed Charge Coverage
Ratio").
"Blockage Notice" shall have the meaning given in Section 10.3.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are required or permitted by law to
remain closed.
"Capitalized Lease" shall mean any lease the obligations to pay rent or
other amounts under which constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations" shall mean as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Flow Positive" shall have the meaning given in Section 6.11
"CERCLA" shall have the meaning given in Section 3.18(a).
"Change of Control" means the occurrence of one or more of the following
events:
(a) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole to any
Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a "Group"), together with any Affiliates thereof
(whether or not otherwise in compliance with the provisions of this
Agreement) other than to a wholly-owned Subsidiary of the Company;
(b) the liquidation or dissolution of the Company;
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(c) any Person or Group shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 50% of
the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Company; provided that this clause
shall not applied to any Person or Group that owns as of the date
hereof, directly or indirectly, beneficially or of record, 10% of
the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Company; or
(d) the replacement of a majority of the Board of Directors of the
Company over a two-year period from the directors who constituted
the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by a vote
of at least a majority of the Board of Directors of the Company then
still in office who either were members of such Board of Directors
at the beginning of such period or whose election as a member of
such Board of Directors was previously so approved;
(e) Alan Stillman and/or his wife, executor or heirs shall fail to own,
directly or indirectly, at least 75% of the voting interests of the
Company owned by Alan Stillman as of the date hereof.
"Charges" shall have the meaning given in Section 11.12.
"Closing Date" shall mean the date of this Agreement.
"Consolidated EBITDA" shall mean for any period, Consolidated Net Income
for such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period, the sum
of (a) Federal, state and local income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness,
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary, unusual or non-recurring expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business) and (f) any other non-cash charges (including
any amortization of deferred rent) and minus, to the extent included in the
statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business), any gains
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resulting from the effect of inflationary accounting and (c) any other non-cash
income, all as determined on a consolidated basis.
"Consolidated Fixed Charge Coverage Ratio" shall mean for any period, the
ratio of (a) Consolidated EBITDA plus Consolidated Lease Expense (to the extent
actually paid) for such period to (b) Consolidated Fixed Charges for such
period.
"Consolidated Fixed Charges" means, for any period the sum of: (a)
Consolidated Interest Expense; (b) scheduled amortization of Indebtedness,
determined on a consolidated basis in accordance with GAAP, for the period
involved and discount or premium relating to any such Indebtedness for any
period involved, whether expensed or capitalized; and (c) Consolidated Lease
Expense, determined without duplication of items included in Consolidated
Interest Expense, in each case of the Company and its Subsidiaries.
"Consolidated Interest Expense" means, for any period the amount of
interest expense, both expensed and capitalized, of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period on the aggregate principal amount of their Indebtedness, determined
on a consolidated basis in accordance with GAAP; provided, however, that there
shall be excluded any interest attributable to the original issue discount
attributable to the Notes.
"Consolidated Lease Expense" means, for any period, the aggregate amount
of fixed and contingent rentals payable by the Company and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for such period with
respect to leases of real and personal property.
"Consolidated Leverage Ratio" shall mean as of the date of determination,
the ratio of Consolidated Total Debt less cash on hand as of the date of such
determination to Consolidated EBITDA for the four consecutive fiscal quarters
immediately preceding the date of such determination.
"Consolidated Net Income" shall mean for any period, net income of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Total Debt" shall mean as of the date of determination, all
Indebtedness of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"Contractual Obligations" shall mean as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
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"Default" shall mean the occurrence of any of the events specified in this
Agreement which would give rise to an "Event of Default", whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Designated Senior Indebtedness" shall mean (i) the Senior Loan and (ii)
any other Senior Indebtedness that, at the date of determination, has an
aggregate principal amount equal to or under which, at the date of
determination, the holders thereof are committed to lend up to, at least
$1,000,000 and is specifically designated by the Company in an agreement or
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Agreement.
"Disputed Taxes" shall mean taxes the validity and amount of which are
being contested in good faith, and as to which no executable lien has been
entered, or if such a lien has been entered, the Company has established
reasonable segregated reserves with respect thereto.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Environmental Engineer" shall mean a firm of independent professional
engineers or other scientists generally recognized as expert in the detection,
analysis and remediation of Hazardous Substances and related environmental
matters.
"Environmental Laws" shall have the meaning given in Section 3.18(a).
"EPA" shall have the meaning given in Section 3.18(b).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall mean any of the events specified in this
Agreement under "Events of Default"; provided, that, any requirement for the
giving of notice, the lapse of time, or both, or any other condition, has been
satisfied.
"Financing Documents" shall mean this Agreement and each document,
agreement and instrument executed in connection herewith or pursuant hereto,
including, without limitation, the Note, the Subsidiaries' Guarantees, the
Warrants and the Warrant Agreement.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a consistent basis.
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"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing.
"Guarantee" of or by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness,
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"Hazardous Substances" shall have the meaning given in Section 3.18(b).
"Immaterial Vendors" shall have the meaning given in Section 3.21(a).
"Incur" shall have the meaning given in Section 8.1(a).
"Indebtedness" shall mean, with respect to any Person, (a) all obligations
of such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) except items in dispute, all obligations of
such Person for the deferred purchase price of property or services, except
current accounts payable arising in the ordinary course of business and not
overdue beyond 120 days, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such
Person, (e) all payment obligations of such Person with respect to interest rate
or currency protection agreements, (f) all obligations of such Person as an
account party under any letter of credit or in respect of bankers' acceptances,
(g) all obligations of any third party secured by property or assets of such
Person (regardless of whether or not such Person is liable for repayment of such
obligations), (h) all Guarantees of such Person, and (i) all obligations of such
Person upon which interest charges are customarily paid.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of Subsidiaries (a) in any Person, whether by
acquisition of stock,
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Indebtedness or other obligation or security, or by loan, Guarantee, advance,
capital contribution or otherwise, or (b) in any property.
"Las Vegas Property" shall mean the leasehold interest in the Real
Property more particularly described on Schedule 2(A) to the Senior Loan as the
"Las Vegas Property."
"Leases" shall mean the leases, licenses and agreements, whether written
or oral, relating to the use or occupancy of the space in or on the Mortgaged
Property.
"Lien" shall mean any mortgage, pledge, security interest, hypothecation,
assignment, deposit arrangement, encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the UCC or
comparable law of any jurisdiction), except for protective filings of financing
statements under the UCC or comparable law of any jurisdiction with respect to
any true leases of property by the Company or any of its Subsidiaries.
"March Financial Statements" shall have the meaning given in Section 3.1.
"Material Adverse Effect" shall mean an event, occurrence or fact that
could reasonably be expected to have a material adverse effect on the assets,
business, operation or financial condition or other condition of the Company,
individually, or of the Company and its Subsidiaries, taken as a whole.
"Material Contracts" shall mean any contract pursuant to which the Company
or any Subsidiary could reasonably be expected to receive or pay at least
$500,000 over the term thereof, any contract pursuant to which the Company or
any Subsidiary is restricted from competing, or any other contract which is
material to the business of the Company and its Subsidiaries, taken as a whole.
"Maximum Rate" shall have the meaning given in Section 11.12.
"Mortgaged Property" shall mean collectively, the New Orleans Property,
the Las Vegas Property and the Washington Property, which is conveyed to and
accepted by the Senior Lender as security for the obligations in connection with
the Senior Loan.
"NAIC Annual Statement" shall have the meaning given in Section 4.2(g).
"Net Proceeds of Capital Stock" shall mean, with respect to any period,
cash proceeds (net of all costs and out-of-pocket expenses in connection
therewith, including,
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without limitation, placement, underwriting and brokerage fees and expenses),
received by the Company during such period, from the sale of all capital stock
(other than Redeemable capital stock) of the Company, including in such net
proceeds: (a) the net amount paid upon issuance and exercise during such period
of any right to acquire any capital stock, or paid during such period to convert
a convertible debt security to capital stock (but excluding any amount paid to
the Company upon issuance of such convertible debt security); and (b) any amount
paid to the Company upon issuance of any convertible debt security issued after
March 31, 1999, and thereafter converted to capital stock during such period.
"New Orleans Property" shall mean the Real Property more particularly
described on Schedule 2(B) to the Senior Loan as the "New Orleans Property".
"Notes(s)" shall have the meaning given in Section 2.1.
"Noteholder(s)" shall mean the holder(s) of any of the Note(s) from time
to time.
"Obligations" shall have the meaning given under the Senior Loan.
"Officer's Certificate" shall mean a certificate of the Chief Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"Payment Blockage Period" shall have the meaning given in Section 10.3.
"Permitted Indebtedness" shall mean, without duplication, each of the
following: (a) Indebtedness of the Company under this Agreement; (b)
Indebtedness which existed on the date of this Agreement and is set forth on
Schedule 3.26, reduced by the amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent reductions therein; (c)
the incurrence by the Company or any of its Subsidiaries of intercompany
Indebtedness between or among the Company and any such Subsidiaries; provided,
however, that: (i) such Indebtedness is expressly subordinated to the prior
payment in full in cash of all amounts due with respect to the Notes and (ii)
(A) any subsequent issuance or transfer of capital stock that results in any
such Indebtedness being held by a Person other than the Company or a Subsidiary
thereof and (B) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Subsidiary thereof shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be, that was not permitted by this clause (c); (d)
Purchase Money Indebtedness; (e) Refinancing Indebtedness of the Company or any
Subsidiary; (f) all Obligations under the Senior Loan not to exceed at any time
$16,500,000 in aggregate principal amount outstanding; and (g) Indebtedness of
the Company or any Subsidiary arising from the honoring by a bank or other
financial institution of a check, draft or similar
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instrument inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within five Business Days of
Incurrence.
"Permitted Liens" shall mean (a) Liens for taxes not yet due and payable,
and tax Liens relating to taxes due and payable, the validity and amount of
which are being diligently contested in good faith and as to which the Company
has segregated adequate reserves; provided, that, any Liens for any amount in
excess of $500,000 arising from the failure of the Company or any Subsidiary to
pay or withhold any employment related tax obligations shall not be "Permitted
Liens", (b) mechanic's, worker's, materialmen's or other Liens arising in the
ordinary course of business, (c) Liens securing Purchase Money Indebtedness,
provided that (i) such Liens shall be created simultaneously with the incurrence
of such Purchase Money Indebtedness, (ii) such Liens do not at any time encumber
any property other than the property financed by such Purchase Money
Indebtedness, (iii) such Liens are not modified to secure other Indebtedness and
the amount of such Purchase Money Indebtedness is not increased and (iv) the
principal amount of Purchase Money Indebtedness secured by any such Lien shall
at no time exceed 80% of the original price of such property; provided such
obligations arise in the ordinary course of business on ordinary and customary
terms, (d) Liens described in Schedule 3.10, securing Indebtedness permitted by
clause (b) of the definition of Permitted Indebtedness (including Liens in favor
of the Senior Lender), provided that no such Lien is amended after the Closing
Date to cover any additional property or to secure additional Indebtedness, (e)
Liens existing on the personal property of any Subsidiary prior to it becoming a
Subsidiary of the Company, securing Acquired Indebtedness, provided that (i)
such Liens existed at the time such Person became a Subsidiary and were not
created in anticipation thereof, (ii) any such Lien does not by its terms cover
any property or assets after the time such Person becomes a Subsidiary which
were not covered immediately prior thereto and (iii) any such Lien does not by
its terms secure any Indebtedness other than Indebtedness existing immediately
prior to the time such Person becomes a Subsidiary, (f) Liens in favor of the
holders under the Senior Loan, and (g) Liens and encumbrances in favor of any
one or more landlord covering the machinery, equipment, furniture, furnishings,
fixtures, tools and motor vehicles related to the specific restaurant leased
from such landlord, but which Liens and encumbrances do not cover any wine
inventory or art of the Company or any Subsidiary.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or any
other juridical entity, or a government or state or any agency or political
subdivision thereof.
"Plan" shall mean any plan of a type described in Section 4021(a) of
ERISA, and/or such other Sections of ERISA applicable to entities of a type such
as the Company, in respect
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of which the Company is an "employer" as defined in Section 3(5) of ERISA,
and/or such other Sections of ERISA applicable to the Company.
"Post Default Rate" shall mean at any time the rate of interest which
would otherwise be applicable to the Notes plus two percent (2%) per annum.
"Pro Forma Consolidated Interest Coverage Ratio" shall mean, with respect
to any Person, the ratio of (x) Consolidated EBITDA of such Person during the
four full fiscal quarters (the "Four Quarter Period") ending on or prior to the
date of the transaction giving rise to the need to calculate the Pro Forma
Consolidated Interest Coverage Ratio (the "Transaction Date") to (y)
Consolidated Interest Expense of such Person for such Four Quarter Period. In
addition to and without limitation of the foregoing, for purposes of this
definition only, "Consolidated EBITDA" and "Consolidated Interest Expense" shall
be calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the Incurrence, repayment, repurchase, defeasement or other
discharge of any Indebtedness of such Person or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any Incurrence, repayment, repurchase, defeasement or other
discharge of other Indebtedness (and the application of the proceeds thereof)
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average daily balance
of such Indebtedness during such four-quarter period), occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such Incurrence,
repayment, repurchase, defeasement or other discharge, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period, and (ii) any asset sales, discontinuance of operations (as
determined in accordance with GAAP), Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (including any
Person who becomes a Subsidiary as a result of the Asset Acquisition) Incurring,
assuming or otherwise being liable for Acquired Indebtedness and also including
any Consolidated EBITDA (including any pro forma expense and cost reductions as
determined in accordance with Regulation S-X under the Exchange Act)
attributable to the assets which are the subject of the Asset Acquisition, asset
sale or Asset Construction during the Four Quarter Period) occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such asset sale,
discontinuance, Asset Acquisition or Asset Construction (including the
Incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If such Person or any of its
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Subsidiary of such Person had directly
incurred or otherwise assumed such guaranteed Indebtedness. If since the
beginning of such period any Person (that subsequently became a Subsidiary or
was merged with or into the
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Company or any Subsidiary since the beginning of such period) shall have made
any Asset Acquisition, Asset Construction or asset sale that would have required
adjustment pursuant to this definition, then the Pro Forma Consolidated Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect thereto as if
such Asset Acquisition, Asset Construction or asset sale had occurred at the
beginning of the applicable Four Quarter Period. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; provided that, to the
extent such interest is covered by agreements relating to Interest Rate
Agreements, interest thereon shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements and (2) if it
bears, at the option of the Company or the relevant Subsidiary, a fixed or
floating rate of interest, interest thereon will be computed by applying, at the
option of the Company, either the fixed or floating rate. If any Indebtedness
which is being given pro forma effect was Incurred under a revolving credit
facility, the interest expense on such Indebtedness shall be computed based upon
the average daily balance of such Indebtedness during the applicable period. For
purposes of this definition, whenever pro forma effect is to be given to a
transaction, the pro forma calculation shall be made in good faith by the Chief
Financial Officer of the Company, provided that whenever pro forma effect is to
be given to an Asset Construction, the pro forma calculation will be made based
on good faith estimated projections ratified by the Board of Directors of the
Company, and provided further that in no event shall the projections with
respect to the Consolidated EBITDA attributable to an Asset Construction reflect
an annual internal rate of return in excess of 30% on the related Investment nor
shall there be any pro forma inclusion of any Consolidated EBITDA for any
restaurant that has not been fully operational for at least 3 months prior to
such Transaction Date.
"PTE" shall have the meaning given in Section 4.2(b).
"Purchase Money Indebtedness" shall mean any Indebtedness incurred or
assumed to pay all or any part of the purchase price or cost of construction, of
property (or any improvement thereon) acquired or constructed by the Company or
a Subsidiary after the date of the Closing in an aggregate principal amount not
exceeding $500,000 at any time outstanding.
"Purchase Price" shall have the meaning given in Section 2.2
"Qualified Offering" shall mean a public or private offering of securities
of the Company.
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"RCRA" shall have the meaning given in Section 3.18(a).
"Real Properties" shall mean the real properties listed on Schedule 2(D)
and all other real property and interests in real property now owned or
hereafter acquired by the Company or the Subsidiaries. Real Property shall
include, without limitation, (i) land, (ii) any and all rights, easements,
licenses and privileges appurtenant thereto, (iii) any and all improvements from
time to time located thereon, (iv) any and all fixtures, equipment, machinery,
appliances, furniture, furnishings and other tangible personal property now or
hereafter attached thereto, installed therein or used or intended to be used in
connection therewith (other than personal property of tenants) and (v) in the
case of a Real Property held in whole or in part pursuant to a ground lease,
such leasehold estate.
"Redeemable" shall mean, with respect to the capital stock of any Person,
each share of such Person's capital stock that is: (a) redeemable, payable or
required to be purchased or otherwise retired or extinguished, or convertible
into Debt of such Person (i) at a fixed or determinable date, whether by
operation of sinking fund or otherwise, (ii) at the option of any Person other
than such Person, or (iii) upon the occurrence of a condition not solely within
the control of such Person; or (b) convertible into other Redeemable capital
stock.
"Refinancing Indebtedness" shall mean any refinancing, modification,
replacement, restatement, refunding, deferral, extension, substitution,
supplement, reissuance or resale of existing or future Indebtedness (other than
intercompany Indebtedness), including any additional Indebtedness incurred to
pay interest or premiums required by the instruments governing such existing or
future Indebtedness as in effect at the time of issuance thereof ("Required
Premiums") and fees in connection therewith; provided that any such event shall
not (i) directly or indirectly result in an increase in the aggregate principal
amount of Permitted Indebtedness (except to the extent such increase is a result
of a simultaneous incurrence of additional Indebtedness (A) to pay Required
Premiums and related fees or (B) otherwise permitted to be incurred under this
Agreement) of the Company and its Subsidiaries; or (ii) create Indebtedness with
a Weighted Average Life to Maturity at the time such Indebtedness is Incurred
that is less than the Weighted Average Life to Maturity at such time of the
Indebtedness being refinanced, modified, replaced, renewed, restated, refunded,
deferred, extended, substituted, supplemented, reissued or resold.
"Release" shall have the meaning given in Section 3.18(c)(iii).
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requirements of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law,
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treaty, rule or regulation, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"SARA" shall have the meaning given in Section 3.18(a).
"Securities Act" shall mean the Securities Act of 1933, as amended and
regulations and rulings promulgated thereunder.
"Senior Indebtedness" means, with respect to the Company, the following
obligations, whether outstanding on the date of this Agreement or thereafter
issued, without duplication: (a) the Senior Loan, and (b) all obligations
consisting of the principal of and premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, all other Indebtedness of the Company, unless, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that the obligations in respect of such
Indebtedness are not senior in right of payment to the Notes; provided, however,
that Senior Indebtedness shall not include (i) any obligation of the Company to
any Subsidiary, (ii) any liability for Federal, state, foreign, local or other
taxes owed or owing by the Company, (iii) any accounts payable or other
liability to trade creditors (including Guarantees thereof or instruments
evidencing such liabilities), (iv) any Indebtedness of the Company (or Guarantee
by the Company of any Indebtedness) that is expressly subordinated in right of
payment to any other Indebtedness of the Company (or Guarantee by the Company of
any Indebtedness), (v) any capital stock of the Company, (vi) that portion of
any Indebtedness of the Company that is Incurred by the Company in violation of
Section 8.1 or (vii) any other liability not constituting Indebtedness. If any
Senior Indebtedness is disallowed, avoided or subordinated pursuant to the
provisions of Section 548 of Title 11 of the United States Code or any
applicable state fraudulent conveyance law, such Senior Indebtedness
nevertheless will constitute Senior Indebtedness.
"Senior Lender" shall mean Fleet Bank, N.A., a national banking
association, as lender under the Senior Loan, and any Lender with respect to
Refinancing Indebtedness thereof.
"Senior Loan" shall mean all Obligations under the Loan Agreement, dated
as of September 1, 1998, as has been amended and may be amended from time to
time, between the Company and the Senior Lender and any Refinancing Indebtedness
incurred with respect thereto.
"Source" shall have the meaning given in Section 4.2.
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"Subsidiaries' Guaranty" shall mean the jointly and severally,
unconditional Guaranty by the Company's Subsidiaries which are parties thereto
of the Company's obligations with respect to the Notes, substantially in the
form attached hereto as Exhibit 5.2.
"Subsidiary" shall mean as of any date each of the Company's then
existing, direct or indirect, corporate, limited liability company or
partnership subsidiaries.
"UCC" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Warrant Agreement" shall mean the warrant agreement to be entered between
the Company and the Purchaser with respect to the issuance of warrants for the
benefit of the Purchaser, substantially in the form attached hereto as Exhibit
5.3.
"Warrants" shall have the meaning given in Section 2.4.
"Washington Property" shall mean the leasehold interest in the Real
Property more particularly described on Schedule 2(C) to the Senior Loan as the
"Washington Property".
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the then
outstanding aggregate principal amount of such Indebtedness into (ii) the sum of
the total of the products obtained by multiplying (A) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof by (B) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
1.2 Accounting Terms; UCC Terms. As used herein and in any certificate or
other document made or delivered pursuant hereto, accounting terms not
specifically defined herein shall have the respective meanings given to them
under GAAP. All other undefined terms contained in this Agreement shall, unless
the context indicates otherwise, have the meanings provided for by the UCC as in
effect in the State of New York, to the extent the same are used or defined
therein.
1.3 Certain Matters of Construction. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the Exhibits and Schedules hereto, as the same may from time to
time be amended, modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement. Any reference to a "Section",
"Exhibit" or "Schedule" shall refer to the relevant Section of, or Exhibit or
Schedule to, this Agreement, unless specifically indicated to the contrary.
Wherever from the context it appears appropriate, each term stated in either the
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singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. The term "including" shall not be limiting or
exclusive, unless specifically indicated to the contrary.
ARTICLE II
AUTHORIZATION, SALE, PURCHASE
AND PREPAYMENT OF NOTES
2.1 Authorization of Notes. The Company will authorize the issue of
$10,000,000 aggregate principal amount of its 12 1/2% Senior Subordinated Notes
due June 29, 2006 (the "Notes").
2.2 Sale and Purchase of Notes. Subject to the terms and conditions of
this Agreement, the Company will sell to the Purchaser, and the Purchaser will
purchase from the Company, Notes in the principal amount of $10,000,000. The
sale and purchase of the Notes to be purchased by the Purchaser shall occur at
the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022,
at 10:00 a.m., Eastern Daylight Time, at a closing (the "Closing") on June 29,
1999, or such other Business Day thereafter on or prior to July 2, 1999 as may
be agreed upon by the Company and the Purchaser. At the Closing the Company will
deliver to the Purchaser Notes in the aggregate principal amount of $10,000,000,
against delivery by the Purchaser to the Company or its order of immediately
available funds in the amount of $10,000,000 (the "Purchase Price") by wire
transfer for the account of the Company to Fleet Bank, N.A., 1185 Avenue of the
Americas, New York, New York 10036, ABA No. 021200339, Account No. 9405777935.
If at the Closing the Company shall fail to tender such Notes to the Purchaser
as provided above in this Section 2.2, or any of the conditions specified in
Article V shall not have been fulfilled to the Purchaser's satisfaction, the
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights the Purchaser may have by
reason of such failure or such nonfulfillment.
2.3 Prepayment of Notes. (a) Voluntary Payment. (i) Prior to June 29,
2002, the Notes will not be prepayable, except pursuant to clause (ii) of this
Section 2.3(a) or pursuant to Section 2.3(b). The Company may, at its option,
upon notice as provided below, prepay the Notes, in whole or in part, at any
time after June 29, 2002, at the principal amount so prepaid, plus the premium
(a percentage of such principal amount) applicable in accordance with the
following table, depending on the date such prepayment occurs:
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Period Premium
------ -------
June 29, 2002 to June 28, 2003 6.25%
June 29, 2003 to June 28, 2004 4.6875%
June 29, 2004 to June 28, 2005 3.125%
June 29, 2005 to June 28, 2006 1.5625%
(ii) The Company may, at its option, upon notice as provided below,
prepay the Notes, in whole (but not in part), at any time on or prior to
June 29, 2002, with the Net Proceeds of Capital Stock of a Qualified
Offering at the principal amount so prepaid, provided, however, that no
prepayment may be made unless the Senior Loan existing on the date hereof
shall have been satisfied on or prior to the date of such prepayment, plus
the premium (a percentage of such principal amount) applicable in
accordance with the following table, depending on the date such prepayment
occurs:
Period Premium
------ -------
June 29, 1999 through December 31, 1999 1%
January 1, 2000 through June 28, 2000 4%
June 29, 2000 through June 28, 2001 3%
June 29, 2001 through June 28, 2002 2%
(iii) All prepayments shall be accompanied by payment of accrued
interest on the amount being prepaid through the date of prepayment and
any other amounts then due to the Noteholders. Partial prepayments shall
be in an aggregate principal amount of $1,000,000 or a whole multiple of
$100,000 in excess thereof.
In the case of each partial prepayment of the Notes, the principal amount
of the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
(b) Mandatory Prepayment. Upon the consummation of a Change in Control,
the Company shall give prompt written notice thereof to the Noteholders, which
notice shall contain a written, irrevocable offer by the Company to prepay, on a
date specified in such
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notice (which date shall be not less than 30 days and not more than 60 days
after the date of such notice), the Notes, either all or in part (at the option
of each Noteholder), such prepayment to be made at the principal amount of the
Notes so prepaid, plus a premium equal to 1% of such principal amount and
accrued and unpaid interest thereon, if any, to the date of such prepayment,
upon the acceptance of such offer by each Noteholder mailed to the Company at
least five days prior to the date of prepayment specified in the Company's
offer. Any offer by the Company to prepay the Notes pursuant to this Section
2.3(b) shall be accompanied by an Officers' Certificate certifying that the
foregoing conditions have been fulfilled and specifying the particulars of such
fulfillment.
2.4 Allocation of Purchase Price. The parties agree to allocate $972,000
of the Purchase Price to the warrants issued under the Warrant Agreement (the
"Warrants"). The remaining amount ($9,028,000) shall be allocated to the
issuance and sale of the Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchaser to enter into this Agreement, the other
financial Documents and to purchase the Notes, the Company hereby covenants,
represents and warrants to the Purchaser that:
3.1 Financial Condition. The Company has previously furnished to the
Purchaser true and complete copies of the consolidated balance sheets as at
December 30, 1996, December 29, 1997 and December 28, 1998 and the related
combined statements of income and owners' equity for the fifty-two-week period
ended December 30, 1996, December 29, 1997 and December 28, 1998, respectively,
of the Company and its Subsidiaries, certified, with respect to the December 30,
1996 financial statements, by Goldstein Golub Kessler & Company, P.C., and with
respect to the December 29, 1997 and December 28, 1998 financial statements,
certified and audited by KPMG LLP. The Company also has furnished to the
Purchaser certain unaudited financial statements of the Company as follows: a
consolidated and consolidating balance sheet of the Company and its Subsidiaries
as of March 29, 1999, and consolidated and consolidating statements of
operations of the Company and its Subsidiaries for the three month period then
ended (collectively, the "March Financial Statements"). Except as set forth in
Schedule 3.1 and except for the absence of footnotes, the March Financial
Statements fairly present in all material respects, in accordance with GAAP, the
financial position and results of operations of the Company and its Subsidiaries
as of the date and for the fiscal period shown therein on a basis consistent
with prior periods, subject to year-end audit adjustments. Except as provided in
Schedule 3.1 and the other Schedules to this Agreement, none of the Company or
its Subsidiaries has any material
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contingent obligations, contingent liabilities or liabilities for taxes,
long-term leases or unusual forward or long-term commitments, which are not
reflected in the foregoing statements or in the notes thereto.
3.2 Due Existence and Authority; Compliance with Law. The Company and its
Subsidiaries (a) are duly organized, validly existing and in good standing under
the laws of the jurisdiction of their formation, (b) have the power and
authority and the legal right to own and operate their property, and to conduct
the business in which they are currently engaged, (c) are duly qualified as a
foreign entity and in good standing under the laws of each jurisdiction where
their ownership or operation of property or the conduct of their business
require such qualification, and (d) are in compliance with all Requirements of
Law, except to the extent that the failure to so qualify as a foreign entity as
required by clause (c) of this Section or to comply with all Requirements of Law
as required by clause (d) of this Section could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and could not
materially adversely affect the ability of the Company or any of its
Subsidiaries to perform their obligations under this Agreement or any of the
other Financing Documents.
3.3 Power and Authority; Authorization; Enforceable Obligations. The
Company and its Subsidiaries have the power and authority and the legal right to
make, execute, deliver and perform their obligations under this Agreement and
the other Financing Documents to which they are a party, and to borrow
hereunder, and have taken all necessary action to authorize the sale of the
Notes on the terms and conditions of this Agreement and the other Financing
Documents to which they are a party, and to authorize the execution, delivery
and performance of this Agreement and the other Financing Documents to which
they are a party. No consent or authorization of, filing with, or other act by
or in respect of any other Person (including stockholders and creditors of the
Company or any of its Subsidiaries) or any Governmental Authority is required in
connection with the sale of Notes hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Financing Documents. This Agreement and the other Financing Documents will be
duly executed and delivered on behalf of the Company and each of its
Subsidiaries which is a party thereto, and this Agreement and the other
Financing Documents, when executed and delivered, will each constitute the
legal, valid and binding obligations of the Company and each of its Subsidiaries
which is a party thereto, enforceable against the Company and its Subsidiaries
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally.
3.4 Legal Bar. The execution, delivery and performance of this Agreement
and the other Financing Documents, and the sale of Notes hereunder and the use
of the proceeds thereof by the Company or its Subsidiaries, will not violate any
Requirement of Law or any Contractual Obligation of the Company or any of its
Subsidiaries, and will not result in, or
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require, the creation or imposition of any Lien on any properties or revenues of
the Company or any of its Subsidiaries pursuant to any Requirement of Law or
Contractual Obligation.
3.5 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending by or against the
Company or any of its Subsidiaries or against any of their respective properties
or revenues (a) with respect to this Agreement, any of the other Financing
Documents or any of the transactions contemplated hereby or thereby, or (b)
which, if adversely determined, would have a Material Adverse Effect.
3.6 No Default. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect which
could have a Material Adverse Effect, or which could materially and adversely
affect the ability of the Company or its Subsidiaries to perform their
respective obligations under this Agreement or any of the other Financing
Documents. No Default or Event of Default has occurred and is continuing.
3.7 No Burdensome Restrictions. No Contractual Obligation of the Company
or any of its Subsidiaries and no Requirement of Law materially adversely
affects the Company or any of its Subsidiaries, or insofar as the Company may
reasonably foresee could reasonably be expected to have a Material Adverse
Effect.
3.8 Taxes. The Company and its Subsidiaries have filed or caused to be
filed all tax returns which, to the knowledge of the Company and its
Subsidiaries, are required to be filed by the Company or any of its
Subsidiaries, and have paid all taxes shown to be due and payable by the Company
or any of its Subsidiaries on said returns or on any assessments made against
them or any of their property, except for Disputed Taxes.
3.9 Federal Regulations. Neither the Company nor any of its Subsidiaries
is engaged nor will they engage, principally or as one of their important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" (as such terms are defined in Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect). No part of the proceeds of the Notes hereunder will
be used for "purchasing" or "carrying" "margin stock" (as so defined) or for any
purpose which violates the provisions of the Regulations of such Board of
Governors.
3.10 Liens on Properties. There are no Liens of any nature whatsoever on
any Real Property, property or asset of the Company or any of its Subsidiaries,
except for Permitted Liens (all Liens pursuant to clause (d) of such definition
are listed on Schedule 3.10). Neither the Company nor any Subsidiary is a party
to any contract, agreement, lease
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or instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of any Lien on the
property or assets of the Company or any of its Subsidiaries or otherwise result
in a violation of any Financing Document, except for Permitted Liens.
3.11 Ownership; Leasehold Interests and Liens. The Company and/or its
Subsidiaries has good, marketable and insurable fee simple title (or good,
marketable and insurable leasehold interest in the case of any leasehold
properties), and good title (or valid leasehold interests in the case of any
leasehold properties) in all of the Real Property, and none of such Real
Properties is subject to any Lien, except for Permitted Liens.
3.12 Information. Neither the draft registration statement of the Company,
dated June 18, 1999, nor this Agreement or any other Financing Document is
inaccurate in any material respect as of the date it is or will be dated or
(except as otherwise disclosed to the Purchaser, as the case may be, at such
time) as of the date so furnished, contains any material misstatement of fact,
or omits to state a material fact or any fact necessary to make the statements
contained therein not materially misleading in the light of the circumstances
under which they were made, in each case, considered in light of all of the
information furnished to the Purchaser at or prior to such time. Any financial
projections furnished to the Purchaser or contained in either such draft
registration statement, or this Agreement or any other Financing Document are,
or will have been, based on good faith projections of, and assumptions believed
to be reasonable by, the management of the Company as of the date such
statements were prepared and as of the date hereof; provided that the Company
can give no assurance that such assumptions will prove to have been correct.
3.13 Tradenames. Neither the Company nor any Subsidiary has any
tradenames, fictitious names, assumed names or "doing business as" names, except
as set forth on Schedule 3.13.
3.14 Solvency. Both before and after giving effect to the transactions
contemplated by this Agreement: (i) neither the Company nor any Subsidiary will
have an unreasonably small amount of capital for the operation of the business
in which it is engaged and is proposed to be engaged, and (ii) each of the
Company and its Subsidiaries anticipates that it will be able to pay its
Indebtedness as it or any part thereof becomes due.
3.15 Brokers. Except for Bear Stearns & Co. Inc., no broker or finder has
acted on behalf of the Company or its Subsidiaries to obtain, make or close this
Agreement or the purchase of the Notes, and the neither the Company nor any
Subsidiary has any obligation to any Person in respect of any finder's or
brokerage fees or commissions in connection with any of the foregoing. The
Company and its Subsidiaries indemnify and agree to hold harmless the Purchaser
against and from any and all claims by any Person for any such fees or
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commissions. Any finder's or brokerage fees or commissions owing to Bear Stearns
& Co. Inc. arising out of the sale and purchase of the Notes will be paid in
full at Closing.
3.16 Management Agreements; Material Contracts. Neither the Company nor
any of its Subsidiaries is a party to any management, consulting or similar
agreement with any other Person with respect to the business, operations or
other assets of the Company or any of its Subsidiaries, or any other Material
Contract, in each case except for the management agreements or any Material
Contracts listed on Schedule 3.16 or 3.17.
3.17 Leases. Neither the Company nor any of its Subsidiaries is a party to
any real property leases, except for the leases listed on Schedule 3.17.
3.18 Environmental Compliance. The Company or an Affiliate or agent
thereof has conducted or caused to be conducted Phase I environmental site
assessments with respect to the past usage and condition of the Mortgaged
Property and the operations conducted thereon, and is familiar with the present
condition and usage of the Mortgaged Property and the operations conducted
thereon and, based upon such reports and knowledge, makes the following
representations and warranties:
(a) With respect to the Real Properties, none of the Company or any
Subsidiary, or any operations at such Real Properties is in
violation, or alleged violation, of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental
matters, including, without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any state or local
statute, regulation, ordinance, order or decree relating to the
environment (hereinafter "Environmental Laws"), which violation
involves the Mortgaged Property, and would have a material adverse
effect on the environment or the continued operation of the Real
Properties or the business, assets or financial condition of the
Company and its Subsidiaries, taken as a whole, or materially impair
the fair saleable value of such Real Properties.
(b) Neither the Company nor any Subsidiary has received any notice from
any third party, including, without limitation, any federal, state
or local governmental authority, (i) that it has been identified by
the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix
B (1986); (ii) that any hazardous waste, as defined
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by 42 U.S.C. ss.9601(5), any hazardous substances as defined by 42
U.S.C. ss.9601(14), any pollutant or contaminant as defined by 42
U.S.C. ss.9601(33) or any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has generated,
transported or disposed of have been found at any site at which a
federal, state or local agency or other third party has conducted or
has ordered that such Person conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law;
or (iii) that it is or shall be a named party to any claim, action,
cause of action, complaint, or legal or administrative proceeding
(in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances.
(c) With respect to the Real Properties: (i) no portion of the Real
Properties has been used for the handling, processing, storage or
disposal of Hazardous Substances except in accordance with
applicable Environmental Laws, and no underground tank or other
underground storage receptacle for Hazardous Substances is located
on any portion of the Real Properties; (ii) in the course of any
activities conducted by the Company, any Subsidiary or the operators
of such Real Properties, no Hazardous Substances have been generated
or are being used on any Real Properties except in the ordinary
course of business and in accordance with applicable Environmental
Laws; (iii) to the best of the Company's and each Subsidiary's
knowledge, there has been no past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping (a "Release") or
threatened Release of Hazardous Substances on, upon, into or from
the Real Properties, which Release would have a material adverse
effect on the value of any of the Real Properties or adjacent
properties or the environment; (iv) to the best of the Company's and
each Subsidiary's knowledge, there have been no Releases on, upon,
from or into any real property in the vicinity of any of the Real
Properties which, through soil or groundwater contamination, may
have come to be located on, and which would have a material adverse
effect on the value of, the Real Properties; and (v) to the best of
the Company's and each Subsidiary's knowledge and belief, any
Hazardous Substances that have been generated on any of the
Mortgaged Property have been transported off-site only by carriers
having an identification number issued by the EPA or approved by a
state or local environmental regulatory authority having
jurisdiction regarding the transportation of such substance and, to
the best knowledge of the Company and each Subsidiary without
independent investigation, treated or disposed of only by treatment
or disposal facilities maintaining valid permits as required under
all applicable Environmental Laws, which transporters and facilities
have
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been and are, to the best of the Company's and each Subsidiary's
knowledge, operating in compliance with such permits and applicable
Environmental Laws.
(d) Neither the Company, any Subsidiary nor any of the Real Properties
is required by any applicable Environmental Law to perform Hazardous
Substances site assessments, or remove or remediate Hazardous
Substances, or give notice to any governmental agency or to record
or deliver to other Persons an environmental disclosure document or
statement by virtue of the transactions set forth herein and
contemplated hereby.
3.19 No Material Adverse Change. Except as set forth on Schedule 3.19
since December 28, 1998, there has occurred no materially adverse change in the
business, operations, assets or financial condition or other condition of the
Company and its Subsidiaries taken as a whole, as shown on or reflected in the
balance sheet of the Company and its Subsidiaries, as of December 28, 1998, or
its consolidated statement of operations or cash flows for the fiscal year then
ended.
3.20 No Default under Senior Debt. No default or event of default exists
under any Senior Indebtedness, and there has been no payment default by the
Company or any Subsidiary under any Senior Indebtedness.
3.21 Year 2000 Compliance. To the Company's knowledge, all of the Internal
MIS Systems of the Company and its Subsidiaries are Year 2000 Compliant, except
for such Internal MIS Systems that the failure to be Year 2000 Compliant would
not have a Material Adverse Effect.
(a) To the Company's knowledge, all vendors of products or services to
the Company, its Subsidiaries and their respective products,
services and operations, are Year 2000 Compliant, except for vendors
whose failure to be Year 2000 Compliant would not have a material
adverse effect on the business, operations, property or financial or
other condition of the Company or its Subsidiaries ("Immaterial
Vendors").
(b) The Company and its Subsidiaries agree to furnish any Noteholder
with a true, correct and complete copy of any internal
investigations, memoranda, budget plans, forecasts or reports
concerning the Year 2000 Compliance of the products, services,
operations, systems, supplies and facilities of the Company, its
Subsidiaries and their vendors.
(c) For purposes of this Section 3.21, the following terms shall have the
meanings specified below:
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"Internal MIS Systems" means any computer software and systems (including
hardware, firmware, operating system software, utilities and applications
software) used in the ordinary course of the business of the Company and its
Subsidiaries by or on behalf of the Company and its Subsidiaries, including
payroll, accounting, billing/receivables, inventory, asset tracking, customer
service, human resources and e-mail systems of the Company and its Subsidiaries.
"Year 2000 Compliant" means that (1) the products, services or other
item(s) at issue accurately process, provide and/or receive all date/time data
(including calculating, comparing, sequencing, processing and outputting)
within, from, into and between centuries (including leap year calculations), and
(2) neither the performance nor the functionality nor the provision by the
Company and its Subsidiaries of products, services and other item(s) will be
affected by any dates/times prior to, on, after or spanning January 1, 2000. The
design of the products, services and other item(s) at issue to ensure compliance
with the foregoing warranties and representations includes proper date/time data
century recognition and recognition of 1999 and 2000, calculations that
accommodate single century and multi-century formulae and date/time values
before, on, after and spanning January 1, 2000, and date/time data interface
values that reflect the century, 1999 and 2000. In particular, but without
limitation, (i) no value for current date/time will cause any error,
interruption, or decreased performance in or for such product(s), service(s) and
other item(s), (ii) all manipulations of date and time related data (including
calculating, comparing, sequencing, processing and outputting) will produce
correct results for all valid dates and times when used independently or in
combination with other products, services, and/or items, (iii) date/time
elements in interfaces and data storage will specify the century to eliminate
date ambiguity without human intervention, including leap year calculations,
(iv) where any date/time element is represented without a century, the correct
century will be unambiguous for all manipulations involving that element, (v)
authorization codes, passwords and zaps (purge functions) will function normally
and in the same manner during, prior to, on and after January 1, 2000, including
the manner in which they function with respect to expiration dates and CPU
serial numbers, and (vi) the Company's and each Subsidiary's supply of the
product(s), service(s) and other item(s) will not be interrupted, delayed,
decreased or otherwise affected by the advent of the year 2000.
3.22 Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has directly or indirectly offered the Notes or any part
thereof or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
anyone other than the Purchaser and not more than two (2) other institutional
investors. Neither the Company nor anyone acting on its behalf has taken or will
take any action which would subject the issuance and sale of the
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Notes to the registration and prospectus delivery provisions of the Securities
Act of 1933, as amended.
3.23 Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the Notes to repay outstanding advances under the Senior Loan used
to meet working capital requirements and no part of the proceeds of the Note
will be used, directly or indirectly, for the purpose of "purchasing" or
"carrying" any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, or for the purpose of buying or
carrying or trading in any securities under such circumstances as to involve the
Company or any Subsidiary in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of said
Board (12 CFR 220). Margin stock does not constitute more than 5% of the value
of the consolidated assets of the Company and its Subsidiaries and the Company
does not have any present intention that margin stock will constitute more than
5% of the value of such assets. As used in this Section, the terms "margin
stock" and "purchasing" or "carrying" shall have the meanings assigned to them
in said Regulation U.
3.24 Status under Certain Statutes. Neither the Company nor any Subsidiary
is subject to regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the Interstate
Commerce Act, as amended, or the Federal Power Act, as amended.
3.25 Organization and Ownership of Shares of Subsidiaries; Affiliates.
Schedule 3.25 contains (except as noted therein) complete and correct lists of
(i) the Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary, (ii) the Company's Affiliates, other than
Subsidiaries, and (iii) the Company's directors and senior officers.
(a) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 3.25 as being owned
by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed
in Schedule 3.25).
(b) Each Subsidiary identified in Schedule 3.25 is a corporation or
other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is
duly qualified as a foreign corporation or other legal entity and is
in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not,
individually or in the
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aggregate, reasonably be expected to have a material adverse effect.
Each such Subsidiary has the corporate or other power and authority
to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes
to transact.
(c) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 3.25 and customary limitations imposed
by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries
that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
3.26 Outstanding Indebtedness. Except as described therein, Schedule 3.26
sets forth a complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of the date hereof. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
4.1 Purchase for Investment. The Purchaser represents that it is
purchasing the Notes for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of
the Purchaser's or their property shall at all times be within the Purchaser's
or their control. The Purchaser understands that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
4.2 Source of Funds. The Purchaser represents that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source") to be used by it to pay the purchase price of the Notes to be
purchased by it hereunder:
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(a) if you are an insurance company, the Source does not include assets
allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other
than a separate account that is maintained solely in connection with
your fixed contractual obligations under which the amounts payable,
or credited, to such plan and to any participant or beneficiary of
such plan (including any annuitant) are not affected in any manner
by the investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption
("PTE") 90-1 (issued January 29, 1990), or (ii) a bank collective
investment fund, within the meaning of the PTE 91-38 (issued July
12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated
to such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V
of the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the
same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part
1(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns
a 5% or more interest in the Company and (i) the identity of such
QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the
Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (e); or
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(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
(g) the funds to be used by the Purchaser for purchase of the Notes
directly or indirectly constitute general account assets of an
insurance company, and the amount of the reserves and liabilities
for the general account contract(s) held by or on behalf of any
Benefit Plan (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance
Commissioners (the "NAIC Annual Statement")) together with the
amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other Benefit Plans
maintained by the same employer (or affiliate thereof as defined in
PTCE-95-60) or by the same employee organization (as defined by the
NAIC Annual Statement) in the general account do not exceed 10% of
the total reserves and liabilities of the general account (exclusive
of separate account liabilities) plus surplus as set forth in the
NAIC Annual Statement filed with the state of domicile of the
insurance company.
As used in this Section 4.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
ARTICLE V
CONDITIONS TO CLOSING
The obligation of the Purchaser to purchase and pay for the Notes at the
Closing is subject to the fulfillment to the satisfaction of the Purchaser,
prior to or at the Closing, of the following conditions:
5.1 Notes. The Purchaser shall have received the Notes substantially in
the form of Exhibit 5.1, duly executed and delivered by the Company.
5.2 Subsidiaries' Guaranty. The Purchaser shall have received the
Subsidiaries' Guaranty substantially in the form of Exhibit 5.2, duly executed
and delivered by each of its Subsidiaries which is a party thereto.
5.3 Warrants. The Purchaser shall have received the (i) Warrant Agreement
substantially in the form of Exhibit 5.3, duly executed by parties thereto, and
(ii) the Warrants substantially in the form of Exhibit A to the Warrant
Agreement, duly executed and delivered by the Company.
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5.4 Legal Opinion. The Purchaser shall have received the legal opinion of
Hutchins, Wheeler & Dittmar, A Professional Corporation, substantially in the
form of Exhibit 5.4.
5.5 Resolutions and Certificates. The Purchaser shall have received (i)
copies of the resolutions of the manager of the Company and of the members or
other appropriate authority of its Subsidiaries authorizing the execution,
delivery and performance of this Agreement and the other Financing Documents,
certified by the Secretary or an Assistant Secretary of each such entity; (ii) a
certificate of the Secretary or an Assistant Secretary of the Company and its
Subsidiaries certifying the names and true signatures of the officers and
authorized signatories of each such entity authorized to sign any and all
documents to be delivered by each such entity or as required or contemplated
hereunder; and (iii) an Officer's Certificate, dated the Closing Date,
certifying that the conditions specified herein have been fulfilled.
5.6 Environmental Reports. The Purchaser shall have received (i) any
environmental site assessment report for the Mortgaged Property prepared by an
Environmental Engineer and which has been delivered to the Senior Lender under
the Senior Loan, and (ii) an Officer's Certificate indicating that, to his/her
knowledge, there has been no material adverse change in the environmental
condition of the Mortgaged Property and such other properties and any buildings
thereon since the date of such environmental site assessment report.
5.7 Appraisals. The Purchaser shall have received any Appraisal of the
Mortgaged Property delivered to the Senior Lender under the Senior Loan.
5.8 Payment of Special Counsel Fees. Without limiting the provisions of
Section 11.4, the Company shall have paid on or before the Closing the fees,
charges and disbursements of special counsel to the Purchaser to the extent
reflected in a statement of such counsel rendered to the Company at least one
Business Day prior to the Closing.
5.9 Representations and Warranties. The representations and warranties
made by the Company herein, in the other Financing Documents or which are
contained in any certificate, document or financial or other statement furnished
at any time under or in connection herewith, shall be correct in all material
respects on and as of the date of the Closing as if made on and as of such date,
except to the extent expressly made with respect to another date.
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5.10 Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement and the other
Financing Documents shall be satisfactory in form and substance to the Purchaser
and its counsel.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as any of the Notes remain
outstanding and unpaid the Company will and (except in the case of delivery of
financial information, reports and notices) shall cause each of its Subsidiaries
to:
6.1 Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders with respect to its business and
properties (including, without limitation, any fiscal and accounting rules and
regulations) and maintain all licenses, permits, charters and registrations
which are material to the conduct of its business.
6.2 Preservation of Existence. Observe in all material respects all
procedures required to preserve and maintain its legal existence, and all
rights, franchises and privileges in the jurisdiction of its organization, and
qualify and remain qualified to do business and in good standing in each
jurisdiction where the nature of its business requires it to do so, except where
the failure to be so qualified and in good standing would not have a Material
Adverse Effect or materially and adversely affect the Company's ability to
perform its obligations under this Agreement or any other Financing Document to
which it is a party.
6.3 Financial Information and Compliance Certificates. (a) Keep their
books of account in accordance with good accounting practices and furnish to
each Noteholder, within 120 days after the last day of each fiscal year,
consolidated balance sheets of the Company and its Subsidiaries as at such last
day of the fiscal year and statements of income and retained earnings and cash
flows for such fiscal year each prepared in accordance with GAAP and certified
by a firm of independent certified public accountants of recognized national
reputation; and, within 45 days after the close of each of the first three
quarters of each fiscal year, consolidated and consolidating balance sheets,
statements of income and retained earnings and cash flows of the Company and its
Subsidiaries as of the last day of and for such quarter and for the period of
the fiscal year ended as of the close of the particular quarter, all such
quarterly statements to be in reasonable detail and certified by the chief
financial or accounting officer of the Company as having been prepared in
accordance with GAAP (subject to year-end adjustments and the absence of
footnotes). The Company will also furnish, within forty-five days after the end
of a calendar month, monthly profit and loss statements of each existing and new
restaurant owned or managed by the Company or any
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of its Subsidiaries, internally prepared and certified by the chief financial
officer of the Company. The Company will, with reasonable promptness, furnish
such other data as may be reasonably requested by the Noteholders, including,
without limitation, copies of all material contracts and agreements. The Company
agrees that (i) at the Noteholders' expense, at any time but not exceeding once
in a calendar year, or (ii) after an Event of Default has occurred and is
continuing, at the Company's expense, at any time and from time to time, the
Noteholders by or through any of its officers, agents, employees, attorneys or
accountants may, upon reasonable notice to the Company, conduct an examination
and make extracts of the Company's books and records.
(b) At the same time as it delivers the financial statements called for by
Section 6.3(a), the Company shall deliver a certificate of the chief executive
officer and the chief financial or accounting officer of the Company evidencing
a computation of compliance with the provisions of Article VII and stating that
in each case except as disclosed in such certificate, the person making such
certificate has no knowledge of any Default or Event of Default. To the extent
delivered to the Senior Lender under the Senior Loan, the Company's certified
public accountants shall deliver, together with their delivery of the annual
certified financial statements, a certificate stating that such accountants have
no knowledge of any Default or Event of Default, which shall be addressed to the
Company and the Noteholders.
6.4 Defaults. Promptly notify the Noteholders of (a) any Default or Event
of Default and (b) any default or event of default under any Senior
Indebtedness or any other material Contractual Obligation, which if not cured
could reasonably be expected to cause a Material Adverse Effect, setting forth
the details of such defaults or event of defaults and the actions which the
Company is taking or proposes to be taken with respect thereto.
6.5 Insurance. Maintain policies of hazard, general liability insurance,
business interruption insurance and other insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Company
operates.
6.6 Preservation of Properties. Maintain and preserve all of their
respective properties which are used or which are useful in the conduct of their
respective businesses in good working order and condition, ordinary wear and
tear excepted.
6.7 Taxes. Duly pay and discharge all taxes or other claims which might
become a Lien upon any of their respective properties, except to the extent that
any thereof are being in good faith appropriately contested with adequate
reserves provided therefor, and so long as the failure to pay such taxes would
not give rise to a Lien which is not a Permitted Lien.
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6.8 Notice of Litigation. Promptly notify the Noteholders of any
litigation, legal proceeding or dispute affecting the Company or any of its
Subsidiaries (other than (i) disputes in the ordinary course of business
involving amounts less than $500,000 in any single instance or (ii) litigation
arising in the ordinary course of business which the Company reasonably believes
to be covered by insurance and not reasonably likely, even if adversely
determined, to have a Material Adverse Effect) whether or not fully covered by
insurance, and regardless of the subject matter thereof (excluding, however, any
actions relating to workers' compensation claims or negligence claims relating
to use of motor vehicles, if fully covered by insurance, subject to
deductibles).
6.9 Alan Stillman. Employ and continue to employ Alan Stillman as a key
officer of the Company and maintain in force a $5,000,000 life insurance policy
on the life of Alan Stillman.
6.10 Subsidiaries' Guaranty. Cause each future Subsidiary of the Company
to execute and deliver a counterpart of the Subsidiaries' Guaranty promptly upon
the formation of such Subsidiary.
6.11 New Restaurants. Cause each new restaurant established by Company or
its Subsidiaries to have a positive monthly Consolidated EBITDA for at least one
full month no later than the twelfth month after such new restaurant's opening
("Cash Flow Positive"), such positive Consolidated EBITDA to be demonstrated by
the new restaurant's monthly profit and loss statement provided to the
Noteholders in accordance with Section 6.3, provided that the Company and its
Subsidiaries may have at any point in time one such new restaurant that is not
Cash Flow Positive.
6.12 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit, and
cause its Subsidiaries to permit upon reasonable notice to the Company (i) at
the Noteholders' expense, at any time but not exceeding once in a calendar year,
or (ii) after an Event of Default has occurred and is continuing, at the
Company's expense, at any time and from time to time, the Noteholders by or
through any of its officers, agents, employees, attorneys or accountants to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records and discuss the business, operations, properties and
financial and other condition of the Company and its Subsidiaries with officers
and employees of the Company and its Subsidiaries and with its independent
certified public accountants.
6.13 Environmental Laws. (a) Comply with and provide for compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply
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in all material respects with and maintain, and ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain, any and
all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that any such failure to do
so could not be reasonably expected to have a Material Adverse Effect; and
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, (i) except where non-compliance with any such order or directive could not
reasonably be expected to have a Material Adverse Effect or (ii) other than any
such order or directive as to which an appeal or other appropriate contest is or
has been timely and properly taken, is being diligently pursued in good faith,
and as to which appropriate reserves have been established in accordance with
GAAP, and, if the effectiveness of such order or directive has not been stayed,
the pendency of such appeal or other appropriate contest does not give rise to a
Material Adverse Effect.
6.14 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith or where the failure to do so would not
have a Material Adverse Effect.
6.15 Further Assurances. From time to time execute and deliver, or cause
to be executed and delivered, such additional instruments, certificates or
documents, and take all such actions, as the Noteholders may reasonably request,
for the purposes of implementing or effectuating the provisions of this
Agreement and the other Financing Documents. Upon the exercise by the Noteholder
of any power, right, privilege or remedy pursuant to this Agreement or the other
Financing Documents which requires any consent, approval, recording,
qualification or authorization of any Governmental Authority, the Company will
execute and deliver, or will cause the execution and delivery of all
applications, certifications, instruments and other documents and papers that
the Noteholders may be required to obtain from the Company or any of its
Subsidiaries for such governmental consent, approval, recording, qualification
or authorization.
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ARTICLE VII
FINANCIAL COVENANTS
7.1 Covenants. So long as any of the Notes remain outstanding and unpaid:
(a) Consolidated Fixed Charge Coverage Ratio. The Company and its
Subsidiaries on a consolidated basis will maintain a Consolidated
Fixed Charge Coverage Ratio, calculated on a rolling four-quarter
basis, of not less than 1.1 to 1.0 from the date of Closing through
September 30, 1999; and of 1.30 to 1.0 thereafter.
(b) Consolidated EBITDA. The Consolidated EBITDA of the Company and its
Subsidiaries shall be not less than: $1,275,000 for the second
fiscal quarter of 1999; $0 for the third fiscal quarter of 1999;
$2,338,000 for the fourth fiscal quarter of 1999; $2,338,000 for the
first fiscal quarter of 2000; $2,000,000 for the second fiscal
quarter of 2000; $850,000 for the third fiscal quarter of 2000;
$3,740,000 for the fourth fiscal quarter of 2000; $3,000,000 for the
first fiscal quarter of 2001 and for each first fiscal quarter
thereafter; $2,700,000 for the second fiscal quarter of 2001 and for
each second fiscal quarter thereafter; $1,300,000 for the third
fiscal quarter and for each third fiscal quarter thereafter; and
$4,700,000 for the fourth fiscal quarter and for each fourth fiscal
quarter thereafter.
(c) Consolidated Leverage Ratio. The Company and its Subsidiaries on a
consolidated basis will maintain a Consolidated Leverage Ratio,
calculated on a rolling four-quarter basis, of not less than 8.50 to
1.0 through September 30, 1999; 5.50 to 1.0 through December 31,
1999; 4.50 to 1.0 through March 30, 2000; 4.00 to 1.0 through June
30, 2000 and 3.50 to 1.0 thereafter.
ARTICLE VIII
NEGATIVE COVENANTS
The Company hereby agrees that, so long as any of the Notes remain
outstanding and unpaid neither the Company nor any Subsidiary will:
8.1 Indebtedness. Create, issue, assume, enter into any guarantee of or in
any manner become directly or indirectly liable for the payment of, or otherwise
incur (collectively, "Incur"), any Indebtedness (including any Acquired
Indebtedness) other than, so long as no Event of Default has occurred and is
continuing, Permitted Indebtedness; provided that,
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if no Event of Default shall have occurred and be continuing at the time of, or
will occur as a result of, the incurrence of any such Indebtedness, the Company
may Incur such Indebtedness (whether or not constituting Permitted Indebtedness)
if at the time of such Incurrence, and after giving effect to the Incurrence
thereof, the Pro Forma Consolidated Interest Coverage Ratio is at least equal to
3.5 to 1.0. Acquired Indebtedness shall be considered Incurred at the time the
obligor or guarantor thereof becomes a Subsidiary of the Company.
8.2 Mergers and Sales of Assets. Enter into any merger or consolidation or
liquidate, wind up or dissolve the Company or any Subsidiary (other than
pursuant to a merger with the Company) or sell, transfer or lease or otherwise
dispose of all or any substantial part of their respective assets (other than
sales of inventory and obsolete equipment in the ordinary course of business) or
acquire by purchase or otherwise the business or assets of, or stock of, another
business entity.
8.3 Loans; Investments. Lend or advance money, credit or property to or
invest in (by capital contribution, loan, purchase or otherwise) any other
Person, except (a) Investments in United States Government obligations,
certificates of deposit or money market funds of any banking institution with
combined capital and surplus of at least $200,000,000; (b) capital contributions
or loans or advances to Subsidiaries; (c) reasonable loans to any employee of
the Company or its Subsidiaries not exceeding $75,000 per employee and not
exceeding in the aggregate $250,000 outstanding at any time; (d) reasonable and
customary expense advances made to employees of the Company and its Subsidiaries
in the ordinary course of their business; (e) Investments in any Person other
than a wholly-owned Subsidiary, provided that no Default or Event of Default
would exist and, immediately after giving effect to such action, the Company
shall be in compliance with Section 8.10; and (f) Investments by the Company in
a wholly-owned Subsidiary or by a wholly-owned Subsidiary in another
wholly-owned Subsidiary or in the Company.
8.4 Liens. Create, incur, assume or permit to exist any Lien (other than
Permitted Liens) on any property or assets (including stock or other securities
of any Person, including any Subsidiary) now owned or hereafter acquired by it
or on any income or revenues or rights in respect of any thereof.
8.5 Contingent Liabilities. Assume, endorse, be or become liable for or
guarantee any obligation of (a) any Person which is not an Affiliate of the
Company and a member of the Company's consolidated group for financial reporting
purposes, excluding, however, the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, or (b) an Affiliate of
the Company which is a member of the Company's consolidated group for financial
reporting purposes, without the prior written consent of the Noteholders, which
consent will not be unreasonably withheld so long as such proposed action would
not
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(i) result in a violation by the Company of any financial covenant set forth in
this Agreement or any of the other Financing Documents, or (ii) otherwise result
in any Default or Event of Default. Notwithstanding the foregoing, so long as
such guarantee does not cause the Company to violate any financial covenant
contained in the Financing Documents, the Company or any of its Subsidiaries may
guarantee Indebtedness that is otherwise permissible under Section 8.1.
8.6 Sales of Receivables; Sale - Leasebacks. Sell, discount or otherwise
dispose of notes, accounts receivable or other obligations owing to the Company
or any Subsidiary, with or without recourse, except for the purpose of
collection in the ordinary course of business; or sell any asset pursuant to an
arrangement to thereafter lease such asset from the purchaser thereof.
8.7 Nature of Business. Materially alter the nature of their business.
8.8 Accounting Changes. Make any change in their accounting treatment or
financial reporting practices, except as required or permitted by GAAP.
8.9 Transactions with Affiliates. Except as otherwise specifically set
forth in this Agreement, directly or indirectly purchase, acquire or lease any
property or assets from, or sell, transfer or lease any property or assets to,
or enter into any other transaction with, any Affiliate, except that the Company
or any Subsidiary may engage in any of the foregoing transactions in the
ordinary course of business at prices and on terms and conditions not less
favorable to it than those which would have been obtained in an arm's-length
transaction with a non-affiliated third party.
8.10 Dividends and Distributions and Investments. Declare or pay, or incur
any liability to declare or pay, directly or indirectly, any dividend or
distribution to any shareholder, member or partner, or make an Investment in any
Person other than a wholly-owned Subsidiary, unless immediately after giving
effect to such action:
(i) the aggregate amount of such dividends, distributions or
Investments declared, paid or made by the Company and its Subsidiaries
during the period commencing on March 31, 1999, and ending on the date
such dividend, distribution or Investment is declared, paid or made,
inclusive, would not exceed the sum of (A) 50% of Consolidated Net Income
for such period, plus (B) the aggregate amount of Net Proceeds of Capital
Stock for such period; and
(ii) no Default or Event of Default would exist;
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provided, however, that any wholly-owned Subsidiary of the Company may
declare and pay dividends or distributions to the Company, or authorize a
dividend or distribution that is not payable within 60 days of
authorization.
8.11 Subsidiaries. Own any Subsidiaries that are not wholly-owned,
directly or indirectly, by the Company.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
9.1 Events of Default. An "Event of Default" shall exist if any one of the
following conditions or events shall occur and be continuing:
(a) the Company shall fail to pay any principal of the Note when due, or
shall fail to pay interest or any other amount payable hereunder or
under any other Financing Document, and such failure to pay interest
or any other amount other than principal continues for three
Business Days; or
(b) any representation or warranty made or deemed made by the Company
herein or in any of the other Financing Documents or which is
contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this
Agreement or any of the other Financing Documents shall prove to
have been false in any material respect on or as of the date made or
deemed made; or
(c) the Company shall breach any other covenant or default in the
observance or performance of any other provision contained in this
Agreement or any other Financing Document; provided, however, that,
except for a breach of the covenants set forth in Section 7.1, 8.1,
8.2, 8.4, or 8.10 of this Agreement, if such breach or default is
susceptible of cure, such breach or default shall not constitute an
Event of Default unless such default shall continue unremedied for a
period of 30 days after written notice thereof is given to the
Company by the Noteholders; provided, further, that if such default
is susceptible of cure, and the Company is diligently proceeding to
effectuate such cure, but such cure can not be completed within such
30 day period, such period may be extended, at the reasonable
discretion of the Noteholders, for such reasonable period (not to
exceed an aggregate of 120 days) as the Noteholders may permit so
long as the Company continues to diligently pursue such cure; or
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(d) the Company or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its
assets, or the Company or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or
(i) there shall be commenced against the Company or any of its
Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment
and (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or
(ii) there shall be commenced against the Company or any of its
Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its
assets which results in the entry of an order for any such
relief which shall have not been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry
thereof; or
(iii) the Company or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i),
(ii) or (iii) of this Section 8(d); or
(iv) the Company or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(e) the Company or any of its Subsidiaries shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code) involving any Plan, (ii)
any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which Reportable
Event or institution of proceedings is, in the reasonable opinion of
the Noteholders, likely to result in the termination of such Plan
for purposes of
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Title IV of ERISA, and, in the case of a Reportable Event, such
Reportable Event shall continue unremedied for ten days after notice
of such Reportable Event pursuant to Section 4043(a), (c) or (d) of
ERISA is given or such proceedings shall continue for ten days after
commencement thereof, as the case may be, (iv) any Plan shall
terminate for purposes of Title IV of ERISA, and in each case in
clauses (i) - (iv) above, such event or condition could reasonably
be expected to subject the Company and any of its Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in
relation to the business, operations or property of the Company and
its Subsidiaries, considered as a whole; or
(f) the rendition by any court of a final judgment against the Company
or any of its Subsidiaries in an amount in excess of $500,000 which
shall not be satisfactorily stayed, discharged, vacated, bonded or
set aside within 60 days of the making thereof; or the attachment of
any property of the Company or any of its Subsidiaries which has not
been released or provided for to the reasonable satisfaction of the
Noteholders within 60 days after the making thereof; or
(g) the Subsidiaries' Guaranty shall cease to be in full force and
effect as to any Subsidiary which is a party thereto; or
(h) the Company or any Subsidiary shall breach or default in its
obligations under any Indebtedness with respect to which the damages
for such breach or default might reasonably be expected to exceed
$1,000,000, and as a result of such breach or default the holder of
such Indebtedness accelerates such Indebtedness before it shall
become due and payable; or
(i) the Company or any Subsidiary shall fail to pay any due and unpaid
taxes, except for Disputed Taxes the existence of which does not
cause the Company to violate any other covenant in this Agreement;
9.2 Acceleration. If an Event of Default with respect to the Company or
any Subsidiary described in Sections 9.1(d)(i), (ii) or (iii) occurred, all the
Notes then outstanding shall automatically become immediately due and payable.
(a) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 51% in principal amount of the Notes
at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.
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(b) If any Event of Default described in Section 9.1(a) has occurred and
is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company, declare
all the Notes held by it or them to be immediately due and payable.
(c) Upon any Notes becoming due and payable under this Section 9.2,
whether automatically or by declaration, such Notes will forthwith
mature and the entire unpaid principal amount of such Notes, plus
(x) all accrued and unpaid interest thereon and (y) the Make-Whole
Amount determined in respect of such principal amount as if such
Notes were prepaid pursuant to Section 2.3(a)(i) as of the date of
acceleration (with a premium of 12 1/2% due upon an acceleration
prior to June 29, 2002) (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice, all of
which are hereby waived. The Company acknowledges, and the parties
hereto agree, that each Noteholder has the right to maintain its
investment in the Notes free from repayment by the Company (except
as herein specifically provided for) and that the provision for
payment of a premium by the Company in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right
under such circumstances.
9.3 Other Remedies. If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 9.2, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
Noteholder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
9.4 Rescission. At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 9.2 the holders of not less
than 51% in principal amount of the Notes then outstanding, by written notice to
the Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived, and
(c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
9.4 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
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9.5 No Waivers or Election of Remedies, Expenses, etc. No course of
dealing and no delay on the part of any Noteholder in exercising any right,
power or remedy shall operate as a waiver thereof or otherwise prejudice such
Noteholder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any Noteholder thereof shall be exclusive of
any other right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise. Without limiting
the obligations of the Company under Section 11.4, the Company will pay to each
Noteholder on demand such further amount as shall be sufficient to cover all
costs and expenses of such Noteholder incurred in any enforcement or collection
under this Section 9, including, without limitation, reasonable attorneys' fees,
expenses and disbursements.
ARTICLE X
SUBORDINATION
10.1 Agreement to Subordinate. The Noteholders agree that the Indebtedness
evidenced by the Notes is subordinated in right of payment, to the extent and in
the manner provided in this Article 10, to the prior payment of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
any holder of Senior Indebtedness.
10.2 Liquidation, Dissolution, Bankruptcy. (a) Upon any payment or
distribution of all or any of the assets of the Company to creditors upon a
total or partial liquidation or a total or partial dissolution of the Company or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property or upon a general assignment for the
benefit of creditors or any other marshalling of the assets and liabilities of
the Company:
(i) the holders of Senior Indebtedness shall be entitled to receive
payment in full of the Senior Indebtedness before the Noteholders shall be
entitled to receive any payment of principal of or interest on the Notes;
and
(ii) until the Senior Indebtedness is paid in full, any payment or
distribution to which the Noteholders would be entitled but for this
Article 10 shall be made to the holders of Senior Indebtedness as their
interests may appear, except that the Noteholders may receive shares of
stock and any debt securities that are subordinated to at least the same
extent as the Notes ("Permitted Junior Securities").
(b) All payments or distributions upon or with respect to the Notes, other
than Permitted Junior Securities, which are received by any Noteholder contrary
to the provisions
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of this Article 10 shall be received in trust for the benefit of the holders of
the Senior Indebtedness, shall be segregated from other funds and property held
by the recipient in the same form as so received (with any necessary
indorsement) to be applied to the payment or prepayment in full of the Senior
Indebtedness in accordance with their terms.
(c) The holders of the Senior Indebtedness are hereby authorized to demand
specific performance of this Agreement, whether or not the Company shall have
complied with any of the provisions hereof applicable to it, at any time when
the Company shall have failed to comply with any of the provisions of this
Agreement applicable to it. Purchaser hereby irrevocably waives any defense
based on the adequacy of a remedy at law, which might be asserted as a bar to
such remedy of specific performance.
(d) Unless otherwise agreed by the holders of the Senior Indebtedness,
Purchaser, any transferee of Purchaser and the Company will cause each Note and
each other instrument evidencing the Notes to be endorsed with the following
legend:
"This Note is expressly subordinated in right of payment, to the extent
and in the manner provided in Article 10 of the Note Purchase Agreement,
to the prior payment in full of all Senior Indebtedness (as defined
therein)."
(e) Purchaser will not:
(i) sell, assign, pledge, encumber or otherwise dispose of the
Notes or any Interest therein unless such sale, pledge,
encumbrance or disposition is made expressly subject to this
Article 10; or
(ii) permit this Article 10 to be amended.
(f) This Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by Lender upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.
10.3 Default on Senior Indebtedness. The Company may not pay the principal
of, premium (if any) or interest on the Notes if (i) any Senior Indebtedness is
not paid when due or (ii) any other default on Senior Indebtedness occurs and
the maturity of such Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, (x) the default has been cured or waived and any
such acceleration has been rescinded or (y) such Senior Indebtedness has been
paid in full; provided, however, that the Company may repay the Notes without
regard to the foregoing if the Company receives written notice approving such
payment from an authorized representative for the Designated Senior Indebtedness
with
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respect to which such default has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Senior Indebtedness pursuant to
which the maturity thereunder may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Company may not repay the
Notes for a period (a "Payment Blockage Period") commencing upon the receipt by
the Company of written notice (a "Blockage Notice") of such default from an
authorized representative for such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter (or
earlier if such Payment Blockage Period is terminated (i) by written notice to
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because such Designated Senior Indebtedness has been repaid in full or (iii)
because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section 10.3), unless the holders of such Designated Senior
Indebtedness or an authorized representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company may
resume payments on the Notes after the end of such Payment Blockage Period,
including any missed payments. Not more than one Blockage Notice may be given in
any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period; provided, however,
that in no event may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period.
10.4 Acceleration of Payment of Notes. If payment of the Notes is
accelerated because of an Event of Default, the Company shall promptly notify
the holders of the Designated Senior Indebtedness (or the authorized
representatives of such holders) of the acceleration. The Company shall not pay
the Notes until ten Business Days after such holders or the authorized
representatives of such holders receive notice of such acceleration and,
thereafter, may pay the Notes only if permitted under this Article 10.
10.5 Distributions to Noteholders. If a distribution is made to the
Noteholders that because of this Article 10 should not have been made to such
Noteholders, the Noteholders shall hold it in trust for the holders of Senior
Indebtedness and pay it over to such holders of Senior Indebtedness as such
holders' interests may appear.
10.6 Subrogation. After all Senior Indebtedness is paid in full and until
the Notes are paid in full, the Noteholders shall be subrogated to the rights of
the holders of Senior Indebtedness to receive distributions applicable to such
Senior Indebtedness. A distribution made under this Article 10 to the holders of
Senior Indebtedness which otherwise would have been made to the Noteholders is
not, as between the Company, its creditors other than the
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holders of such Senior Indebtedness and the Noteholders, a payment by the
Company on such Senior Indebtedness.
10.7 Relative Rights. Nothing in this Agreement shall:
(a) impair, as between the Company and the Noteholders, the obligation
of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their
terms; or
(b) prevent the Noteholders from exercising their available remedies
upon a Default, subject to the rights of the holders of Senior
Indebtedness to receive distributions otherwise payable to the
Noteholders.
10.8 Subordination May Not Be Impaired by Company. No right of any holder
of Senior Indebtedness to enforce the subordination of the Notes shall be
impaired by any act or failure to act by the Company or by its failure to comply
with this Agreement.
10.9 Distribution or Notice to Representative. Whenever a distribution is
to be made or a notice given to holders of Senior Indebtedness, the distribution
may be made and the notice given to their authorized representatives (if any).
10.10 Article 10 Not to Prevent Events of Default or Limit Right to
Accelerate. The failure to make a payment pursuant to the Note Purchase
Agreement by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Noteholders to accelerate the maturity of the
Notes.
10.11 Reliance by Holders of Senior Indebtedness on Subordination
Provisions. The Noteholders acknowledge and agree that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness of the Company, whether
such Senior Indebtedness was created or acquired before or after the Closing
Date, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holders of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.
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ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests and demands to or upon the respective
parties hereto shall be in writing (unless otherwise expressly provided herein)
and shall be deemed to have been duly given or made when delivered by hand, or
by telecopy, receipt acknowledged, or five (5) calendar days after having been
deposited in the mail addressed as follows, or to such address as may be
hereafter notified in writing by the respective parties hereto and any future
holders of any Note:
The Company: The New York Restaurant Group, Inc.
1114 First Avenue
New York, New York 10021
Attn: Mr. Mark K. Levine, Executive Vice President
with a copy to: Hutchins, Wheeler & Dittmar, A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
The Noteholders: Magnetite Asset Investors L.L.C.
c/o BlackRock Financial Management, Inc.
345 Park Avenue, 29th Floor
New York, New York 10154
Attn: Dennis M. Schaney
with copies to: Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Attn: James J. Connors, II, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attn: John M. Vasily, Esq.
11.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Noteholders, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy,
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power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right.
11.3 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement, the Notes and the other Financing Documents.
11.4 Payment of Expenses; Examination. (a) The Company agrees to pay or
reimburse each Noteholder promptly for all its reasonable out-of-pocket costs
and expenses incurred in connection with (i) the preparation of, or any
amendment, modification or waiver of, or consent with respect to, or any payment
under or termination of, any or all of the Financing Documents, including,
without limitation, the reasonable fees and disbursements of one firm of
attorneys for the Noteholders, (ii) the enforcement or preservation of any
rights under this Agreement, the Note, any of the other Financing Documents or
any other instrument or agreement entered into in connection herewith or
therewith, including, without limitation, the reasonable fees and disbursements
of one firm of attorneys for the Noteholders, (iii) any claim or action brought
successfully against the Noteholders arising out of or relating to any extent to
this Agreement, the Note, any of the other Financing Documents or any instrument
or agreement entered into in connection with the transactions contemplated
hereby or thereby, including, without limitation, the reasonable fees and
disbursements of one firm of attorneys for the Noteholders, and (iv) the
transactions contemplated hereby, including, without limitation, search fees,
recording and filing fees and fees and costs of one firm of attorneys, or other
experts retained by the Noteholders or (iv) any inspection of the Company's
properties, books and records pursuant to Sections 6.3 and 6.12 hereof.
(b) The obligations set forth in this Section 11.4 shall be in addition to
any other obligations or liabilities of the Company to the Noteholders hereunder
or at common law or otherwise. The provisions of this Section 11.4 shall survive
the payment of the Notes and the termination of this Agreement.
11.5 Waiver of Jury Trial, Setoff and Counterclaim. THE COMPANY AND THE
NOTEHOLDERS IN ANY LITIGATION (WHETHER OR NOT ARISING OUT OF OR RELATING TO THIS
AGREEMENT) IN WHICH THEY SHALL BE ADVERSE PARTIES WAIVE THE RIGHT OF TRIAL BY
JURY AND THE COMPANY WAIVES THE RIGHT TO INTERPOSE ANY SETOFF OR COUNTERCLAIM OF
ANY KIND OR DESCRIPTION IN ANY SUCH LITIGATION.
11.6 Waiver of Automatic Stay. THE COMPANY AGREES THAT, IN THE EVENT THAT
THE COMPANY SHALL (I) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT JURISDICTION
OR BE THE SUBJECT OF ANY PETITION UNDER
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TITLE 11 OF THE U.S. CODE, AS AMENDED ("BANKRUPTCY CODE"), (II) BE THE SUBJECT
OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE, (III) FILE OR BE THE
SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR
FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER
RELIEF FOR DEBTORS, (IV) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE
APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR OR LIQUIDATOR, OR (V) BE THE
SUBJECT OF ANY ORDER, JUDGMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT
JURISDICTION APPROVING A PETITION FRED AGAINST SUCH PARTY FOR ANY
REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR RELIEF FOR DEBTORS, THE
NOTEHOLDERS SHALL THEREUPON BE ENTITLED AND THE COMPANY IRREVOCABLY CONSENTS TO
IMMEDIATE AND UNCONDITIONAL RELIEF FROM ANY AUTOMATIC STAY IMPOSED BY SECTION
362 OF THE BANKRUPTCY CODE, OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE
RIGHTS AND REMEDIES OTHERWISE AVAILABLE TO THE NOTEHOLDERS AS PROVIDED FOR
HEREIN, IN THE NOTE, OR ANY OTHER FINANCING DOCUMENTS DELIVERED IN CONNECTION
HEREWITH AND AS OTHERWISE PROVIDED BY LAW, AND THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO OBJECT TO SUCH RELIEF AND WILL NOT CONTEST ANY MOTION BY THE
NOTEHOLDERS SEEKING RELIEF FROM THE AUTOMATIC STAY AND THE COMPANY WILL
COOPERATE WITH THE NOTEHOLDERS, IN ANY MANNER REQUESTED BY THE NOTEHOLDERS, IN
ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION.
11.7 Modification and Waiver; Voting. (a) This Agreement and the Notes may
be amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that no such amendment
or waiver may, without the written consent of the holder of each Note at the
time outstanding affected thereby, (i) subject to the provisions of Article IX
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of premium on, the Notes, (ii)
change the percentage of the principal amount of the Notes the holders of which
are required to consent to any such amendment or waiver, or (iii) amend any of
Sections 2.3, 9.1(a), 9.2, 9.3, 9.4 or 11.7.
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(b) Except as otherwise provided herein, all actions to be taken by the
Noteholders shall be in accordance with the instructions of the holders of 51%
of the aggregate outstanding principal amounts of the Notes (the "Required
Holders").
11.8 Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Financing Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
11.9 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, the Noteholders, all future holders of the
Notes and their respective successors and assigns, except that the Company may
not assign or transfer any of its rights under this Agreement without the prior
written consent of the Noteholders, and any attempt at such assignment without
such consent shall be void, and at the option of the Noteholders, be deemed a
Default under this Agreement. The term "Noteholders" as used in this Agreement
shall be deemed to include the Purchaser and its successors, endorsees and
assigns, and the Notes connected with or contemplated by this transaction may be
assigned, serviced and/or participated in (either in whole or in part) by the
Noteholders and/or their successors and assigns.
11.10 Governing Law; Consent to Jurisdiction. This Agreement, the Note
and any documents and instruments delivered in connection herewith and therewith
and the rights and duties of the parties hereunder and thereunder shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York, and the Company consents to the non-exclusive jurisdiction of
the courts of the State of New York in any action brought to enforce any rights
of the Noteholders under this Agreement, the Note and any document and
instrument related hereto.
11.11 Entire Agreement. This Agreement and any other agreements,
documents and instruments executed and delivered pursuant to or in connection
with the Notes contain the entire agreement between the parties relating to the
subject matter hereof and thereof. The Company expressly acknowledges that the
Noteholders have not made and the Company is not relying on any oral
representations, agreements or commitments of the Noteholders or any officer,
employee, agent or representative thereof.
11.12 Interest Adjustment. Notwithstanding anything to the contrary
contained in this Agreement or in the Note, if at any time the applicable rate
of interest payable on the Note, together with all fees and charges which are
treated as interest under applicable law
48
<PAGE>
(collectively, the "Charges"), as provided for in this Agreement, the Notes or
in any other document executed in connection herewith or therewith, or otherwise
contracted for, charged, received, taken or reserved by the Noteholders, shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Noteholders in accordance with
applicable law, the rate of interest payable under the Notes held by the
Noteholders, together with all Charges payable to the Noteholders, shall be
limited to the Maximum Rate. The Company hereby agrees to give the Noteholders
prior written notice in the event that any interest payment made to the
Noteholders with respect to the Note will cause the total interest payments
collected in any one year to be illegal under applicable law. In the event that
the interest referred to hereunder or the Notes would be illegal in the
Noteholders' opinion, the Noteholders reserve the right to reduce the interest
payable by the Company or apply any sum in excess of the maximum collectible
interest in reduction of principal.
11.13 Section Titles. The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever, and
are not a part of the agreement among the parties hereto.
11.14 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
11.15 Indemnities. (a) The Company hereby indemnifies and agrees to hold
harmless each Noteholder and its officers, directors, employees and agents
against and from any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including reasonable attorneys' fees and
expenses) which may be instituted or asserted against or incurred by such
indemnified Person arising out of, in any way connected with, or as a
consequence of any of the following:
(i) the use of any proceeds of the Notes; or
(ii) this Agreement, any of the other Financing Documents, the performance
by the parties hereto and thereto of their respective obligations
hereunder and thereunder, and consummation of the transactions
contemplated hereby and thereby; or
(iii) default in payment of the principal amount of the Notes or any part
thereof or interest accrued thereon, or any other amount due in connection
with any of the Financing Documents; or
(iv) the occurrence of any other Default or Event of Default under this
Agreement; or
49
<PAGE>
(v) any claim, litigation, investigation or proceeding relating to any of
the foregoing, whether or not such indemnified Person is a party thereto.
(b) A certificate as to any additional amounts payable pursuant to this
Section 11.15 setting forth the basis and method of determining such amounts
shall be conclusive, absent manifest error, as to the determination by such
Noteholder or such other indemnified Person set forth therein if made reasonably
and in good faith. The Company shall pay any amounts so certified to it by such
Noteholder or such other indemnified Person within ten (10) days of receipt of
any such certificate. The provisions of this Section 11.15 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any or all of the Notes, the invalidity or unenforceability of any
term of this Agreement or any of the other Financing Documents, or any
investigation made by or on behalf of the Noteholders or any other indemnified
Person.
11.16 Transfer and Exchange of Notes. Upon surrender of any Note at the
principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or his attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 5.1. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of Notes.
Notes shall not be transferred in denominations of less than $100,000, provided
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representation set
forth in Section 6.2 or shall make a comparable representation with respect to
the source of funds used to purchase the Note.
11.17 Place of Payment. The Company will pay all sums becoming due on such
Note by wire transfer of immediately available funds to Chase Bank Texas, NA
Houston, Texas, ABA Routing No. 113000609, Wire Clearing - Asset Backed, Account
No. 00102619468, for further credit to Magnetite Asset Investors L.L.C., Account
No. 2303901, or by such other method or at such other address as any Noteholder
shall have from time to
50
<PAGE>
time specified to the Company in writing for such purpose as to its Note(s),
without the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, each
Noteholder shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
place of payment most recently designated by the Company. Prior to any sale or
other disposition of any Note held by any Noteholder will, at its election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 11.17 The Company will
afford the benefits of this Section 11.17 to any Person that is the direct or
indirect transferee of any Note purchased by any Noteholder under this Agreement
and that has made the same agreement relating to such Note as such Noteholder
have made in this Section 11.17. All payments with respect to any Note shall be
made by the Company from within the United States.
11.18 Cooperation as to Certain Matters. The Noteholders shall reasonably
cooperate with the Company, upon written request, in order to enable it or any
underwriter of the Company's securities to respond to any inquiries made by the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc. and take commercially reasonable remedial steps, if any,
necessitated by any action thereby, provided that such remedial steps shall not,
taken as a whole, reduce the economic benefit to the Noteholders of the
transactions contemplated hereby and by the Warrant Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
THE NEW YORK RESTAURANT GROUP, INC.
By: /s/ Mark K. Levine
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MAGNETITE ASSET INVESTORS L.L.C.
By: BLACKROCK FINANCIAL MANAGEMENT, INC.,
as Managing Member
By:
-----------------------------------------
Name: Dennis M. Schaney
Title: Managing Director
52
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
THE NEW YORK RESTAURANT GROUP, INC.
By:
-----------------------------------------
Name: Mark K. Levine
Title: Executive Vice President
MAGNETITE ASSET INVESTORS L.L.C.
By: BLACKROCK FINANCIAL MANAGEMENT, INC.,
as Managing Member
By: /s/ Dennis M. Schaney
-----------------------------------------
Name: Dennis M. Schaney
Title: Managing Director
52
<PAGE>
EXHIBIT 5.1
THE NEW YORK RESTAURANT GROUP INC.
12 1/2% Senior Subordinated Note due June 29, 2006 (the "Note")
No. 1 New York, N.Y.
$10,000,000 June 29, 1999
THE NEW YORK RESTAURANT GROUP INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to Magnetite Asset
Investors L.L.C., a Delaware limited company ("Magnetite"), or registered
assigns the principal sum of ten million Dollars ($10,000,000) on June 29, 2006;
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid principal balance hereof from the date of this Note at the
rate of 12 1/2% per annum, semiannually on January 1 and July 1 of each year,
commencing on January 1, 2000, until the principal amount hereof shall become
due and payable (whether on maturity or at a date fixed for prepayment or by
declaration or otherwise); and to pay any interest on any overdue principal
(including any overdue prepayment of principal) and premium, if any, and (to the
extent permitted by applicable law) on any overdue payment of interest, at the
rate of 2% per annum until paid, payable semiannually as aforesaid or, at the
option of the holder hereof, on demand.
Payments of principal, premium, if any, and interest on this Note shall be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts by check
mailed and addressed to the holder hereof at the address shown in the register
maintained by the Company for such purpose, or, at the option of the holder
hereof, in such manner and at such other place in the United States of America
as the holder hereof shall have designated to the Company in writing.
This Note is one of the Company's 12 1/2% Senior Subordinated Notes due
June 29, 2006 (the "Notes"), originally issued in the aggregate principal amount
of ten million Dollars ($10,000,000.00) pursuant to the Company's Senior
Subordinated Note Purchase Agreement with Magnetite, dated June 29, 1999, as
from time to time amended (the "Note Purchase
<PAGE>
Agreement"). The holder of this Note is entitled to the benefits of such Note
Purchase Agreement and may enforce the agreements of the Company contained
therein and exercise the remedies provided thereby or otherwise available in
respect thereof. As provided in such Note Purchase Agreement, this Note is
subject to payment, in whole or in part, in certain cases without premium and in
other cases with a premium as specified in said Note Purchase Agreement. The
Company agrees to make required payments on account of the Notes in accordance
with the provisions of such Note Purchase Agreement.
This Note is expressly subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Note Purchase Agreement, to the
prior payment in full of all Senior Indebtedness (as defined therein).
This Note is a registered Note and is transferable only upon surrender of
this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed by the registered holder of this
Note or his attorney duly authorized in writing.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID"). THE COMPANY
WILL MAKE AVAILABLE TO EACH HOLDER, UPON REASONABLE REQUEST THEREOF DIRECTED TO
THE COMPANY'S CHIEF FINANCIAL OFFICER, MARK LEVINE, AT (212) 838-2061, RELEVANT
OLD CALCULATIONS WITH RESPECT TO THIS NOTE.
In case an Event of Default (as defined in the Note Purchase Agreement)
shall occur and be continuing, the unpaid balance of the principal of this Note
may be declared due and payable in the manner and with the effect provided in
such Note Purchase Agreement, subject to the subordination provisions referenced
above.
This Note is made and delivered in New York, New York, and shall be
governed by and construed in accordance with the laws of the State of New York.
THE NEW YORK RESTAURANT GROUP INC.
By
--------------------------------------
Name:
Title:
(CORPORATE SEAL)
2
<PAGE>
EXHIBIT 5.2
================================================================================
SUBSIDIARIES' GUARANTY
June 29, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS ...........................................................2
2. GUARANTY ..............................................................2
2.1 The Guaranty .................................................2
2.2 Guaranty Absolute ............................................2
2.3 Continuing Guaranty ..........................................5
2.4 Waivers ......................................................5
2.5 Several Obligations ..........................................7
2.6 Stay of Acceleration .........................................7
2.7 Subrogation ..................................................7
2.8 General Limitation on Guaranteed Obligations .................8
3. REPRESENTATIONS AND WARRANTIES ........................................9
3.1 Representations and Warranties of Guarantors .................9
4. COVENANTS OF GUARANTORS ..............................................11
4.1 Covenants of Guarantors .....................................11
4.2 Subordination of Subsidiaries' Subordinated Indebtedness ....12
4.3 Subordination to Senior Guaranteed Obligations ..............13
5. MISCELLANEOUS ........................................................14
5.1 Notices .....................................................14
5.2 No Waiver ...................................................14
5.3 Amendments and Waivers ......................................15
5.4 Costs, Expenses and Taxes; Indemnity ........................15
5.5 Severability ................................................15
5.6 Captions ....................................................15
5.7 Continuing Guarantee; Transfer of Obligations ...............15
5.8 Limitation by Law ...........................................16
5.9 Waiver ......................................................16
5.10 Submission to Jurisdiction ..................................16
<PAGE>
5.11 Governing Law ...............................................17
Schedules
SCHEDULE 3.1(d) -- Required Authorizations
<PAGE>
EXHIBIT 5.2
THIS SUBSIDIARIES' GUARANTY, dated as of June 29, 1999, made by The
Manhattan Ocean Club Associates, LLC, La Cite Associates, L.L.C., Atlantic &
Pacific Grill Associates, L.L.C., Mrs. Park Sub, LLC, New York RGI Sub, LLC,
Restaurant Group Management Service, LLC, S&W Chicago, L.L.C., S&W of Miami,
L.L.C., S&W of Las Vegas, L.L.C., S&W D.C., L.L.C., MOC D.C., L.L.C., S&W New
Orleans, L.L.C. and MOC of Miami, L.L.C. (collectively, the "Guarantors") in
favor of the Purchaser (as hereinafter defined) under the Senior Subordinated
Note Agreement described below, and the holders, including the Purchaser, from
time to time of the Notes (as hereinafter defined) issued pursuant thereto;
W I T N E S S E T H:
WHEREAS, The New York Restaurant Group Inc., a Delaware corporation
(the "Company"), has entered into a Senior Subordinated Note Purchase Agreement,
dated as of June 29, 1999 (as amended, modified or supplemented from time to
time, the "Note Purchase Agreement") with Magnetite Asset Investors L.L.C., a
Delaware limited liability company (the "Purchaser"), pursuant to which the
Company will sell the 12 1/2% Senior Subordinated Notes due June 29, 2006 (the
"Notes") to the Purchaser from time to time; and
WHEREAS, to induce the Purchaser to purchase the Notes and in
consideration of the purchase of the Notes, the Guarantors are executing and
delivering this Subsidiaries' Guaranty; and
WHEREAS, the sale of the Notes by the Company under the Note
Purchase Agreement is of material benefit to the Guarantors; and
WHEREAS, as of the date of this Subsidiaries' Guaranty, the proceeds
of the sale of the Notes by the Company under the Note Purchase Agreement will
be used by the Company to repay outstanding advances under the Senior Loan (as
defined hereinafter), the proceeds of which were, directly or indirectly, used
for the benefit of, among the others, the Guarantors, and for other general
working capital purposes; and
WHEREAS, each Guarantor has determined, reasonably and in good
faith, that it has adequate capital to conduct its business as presently
conducted and as proposed
<PAGE>
to be conducted and that it will be able to meet its obligations hereunder and
in respect of its other existing and future indebtedness and liabilities as and
when the same shall become due and payable; and
WHEREAS, each Guarantor has determined that the execution and
delivery of this Subsidiaries' Guaranty is in furtherance of its corporate
purposes and is in its best interests, having regard to all relevant facts and
circumstances;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Guarantors, the Guarantors hereby agree as follows:
1. DEFINITIONS.
Terms defined in the Note Purchase Agreement and not otherwise
defined herein are used herein as therein defined.
2. GUARANTY.
2.1 The Guaranty.
Each Guarantor hereby unconditionally and irrevocably guarantees to
the Purchaser and to the holders from time to time of the Notes, the due,
punctual, complete and irrevocable payment of all present and future amounts
payable by the Company to such Purchaser and to such holders evidenced by or
arising out of the Note Purchase Agreement and the Notes, including, but not
limited to, the payment of principal of and premium, if any, and interest on the
Notes and of all other sums now or hereafter owed by the Company to such
Purchaser and to such holders under the Note Purchase Agreement or the Notes or
under any other Financing Document, as and when the same shall become due and
payable, whether at maturity or by required or optional prepayment or by
declaration or otherwise, according to the terms thereof (the "Guaranteed
Obligations").
2.2 Guaranty Absolute.
This Subsidiaries' Guaranty is a guaranty of payment and not of
collectability and is in no way conditioned or contingent upon any attempt to
collect from or enforce performance or compliance by the Company or upon any
other event, contingency or circumstance whatsoever. If for any reason
whatsoever the Company shall fail or be unable duly, punctually, fully and
irrevocably to pay such amounts to the Purchaser hereunder as and
2
<PAGE>
when the same shall become due and payable, even if such failure or inability
shall not constitute an "Event of Default" under any Financing Document, the
Guarantors, without demand, presentment, protest or notice of any kind, will
forthwith pay or cause to be paid such amounts (together with interest to the
extent provided for under such Financing Document) to such Purchaser and to the
holders of the Notes or other Persons entitled thereto under the terms of such
Financing Document, in lawful money of the United States, at the place specified
in the Note Purchase Agreement; and each Guarantor hereby independently promises
to pay to such Purchaser and to each holder of the Notes all amounts when due
with respect to the Guaranteed Obligations to the extent not theretofore
irrevocably duly paid by the Company. The obligations of each Guarantor
hereunder are independent of the obligations of the Company under the Note
Purchase Agreement and the Notes, and a separate action or proceeding may be
brought and prosecuted against any Guarantor whether or not action is brought
against the Company and whether or not the Company is joined in any such action
or proceeding. Each Guarantor hereby agrees that, to the fullest extent
permitted by applicable law, the liability of such Guarantor under this
Subsidiaries' Guaranty shall be absolute and unconditional, and shall not be
affected or released in any way, irrespective of:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under any Financing
Document;
(b) any modification or amendment of, or supplement to, any
Financing Document;
(c) any adjustment, waiver, amendment, consent to departure,
settlement, indulgence, forbearance, termination, release or compromise
that might be granted or given by the holders of the Notes to the Company
or any Guarantor or any other Person liable on the Guaranteed Obligations;
(d) the insolvency, bankruptcy, suspension of payments, arrangement,
adjustment, composition, liquidation, disability or lack of power of the
Company or any Guarantor or any other Person at any time liable for the
payment of all or part of the Guaranteed Obligations or any dissolution of
the Company, any Guarantor or any other Person liable for payment of the
Guaranteed Obligations or any sale, lease or transfer of any or all of the
assets of the Company, any Guarantor or any other Person liable for
payment of the Guaranteed Obligations, or any changes in the shareholders,
partners or any reorganization of the Company, any Guarantor or any other
Person liable for payment of the Guaranteed Obligations;
3
<PAGE>
(e) any change in the corporate existence, structure or ownership of
the Company or any Guarantor or any other Person, or any insolvency,
bankruptcy, suspension of payments, reorganization or other similar
proceeding affecting the Company, any Guarantor or any other Person or its
assets;
(f) the existence of any claim, set-off or other rights that any
Guarantor may have at any time against the Company, the holders of the
Notes or any other Person, whether or not arising in connection with this
Subsidiaries' Guaranty, or any Financing Document; provided, however, that
nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
(g) any invalidity or unenforceability relating to or against the
Company for any reason under any Financing Document, or any provision of
applicable law or any regulation purporting to prohibit the payment by the
Company of any Guaranteed Obligation;
(h) any act or omission to act or delay of any kind by the Company,
any holder of a Note or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of any Guaranteed Obligation;
(i) any failure, omission or delay on the part of the Company to
conform or comply with any term of any Financing Agreement, or any
failure, omission or delay on the part of the holder of any of the Notes
to enforce, assert or exercise any right, power or remedy conferred on it
in this Subsidiaries' Guaranty;
(j) any limitation on the liability or obligations of the Company or
any other Person under any Financing Document, or any discharge,
termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any Financing Document; or
(k) any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether
foreseen or unforeseen, and any other circumstance that might otherwise
constitute a legal or equitable defense or discharge of the liabilities of
a guarantor or surety or that might otherwise limit recourse against any
Guarantor.
This Subsidiaries' Guaranty shall continue to be effective or be
automatically reinstated, as the case may be, if at any time any payment of any
Guaranteed Obligation, or
4
<PAGE>
any part thereof, is rescinded or reduced in amount or must otherwise be
restored or returned by the holders of the Notes upon the insolvency,
bankruptcy, suspension of payments or reorganization of the Company, or any
Guarantor or any other Person or otherwise, all as though such payment had not
been made. The obligations of each Guarantor under this guaranty shall not be
affected by the amount of credit that may be extended to the Company, the number
of transactions with the Company, any repayment by the Company to the holders of
the Notes other than the full and final payment of all of the Guaranteed
Obligations, allocation by the holders of the Notes of any repayment, any
compromise or discharge of the Guaranteed Obligation, or any further advances to
the Company, or for any other reason. Each Guarantor agrees that this
Subsidiaries' Guaranty shall not be discharged except by complete performance of
the Guaranteed Obligations.
2.3 Continuing Guaranty.
This is a continuing guaranty, and all extensions of credit and
financial accommodations heretofore, concurrently herewith or hereafter made by
the holders of the Notes to the Company and all indebtedness of the Company now
owned or hereafter acquired by the holders of the Notes shall be conclusively
presumed to have been made or acquired in acceptance hereof.
2.4 Waivers.
Each Guarantor hereby unconditionally and irrevocably waives, to the
fullest extent permitted by applicable law:
(a) notice of any of the matters referred to in Section 2.2;
(b) notice to such Guarantor of the incurrence of any of the
Guaranteed Obligations, notice to such Guarantor or the Company of any
breach or default by the Company with respect to any of the Guaranteed
Obligations or any other notice that may be required, by statute, rule of
law or otherwise, to preserve any rights of any holder of any of the Notes
against such Guarantor;
(c) presentment to or demand of payment from the Company or such
Guarantor with respect to any Note or protest for nonpayment or dishonor;
(d) any right to the enforcement, assertion or exercise by any
holder of any of the Notes of any right, power, privilege or remedy
conferred in the Note Purchase Agreement or any other Financing Document
or otherwise;
5
<PAGE>
(e) any requirement of diligence on the part of any holder of any of
the Notes;
(f) any requirement to exhaust any remedies or to mitigate the
damages resulting from any default under any Financing Document;
(g) any notice of any sale, transfer or other disposition of any
right, title to or interest in any Note by any holder thereof or in any
other Financing Document;
(h) any release of such Guarantor from its obligations hereunder
resulting from any loss by it of its rights of subrogation hereunder;
(i) any requirement of acceptance of this Subsidiaries' Guaranty by
or on behalf of any beneficiary hereof;
(j) any benefit of any statute of limitations affecting such
Guarantor's liabilities hereunder or the enforcement hereof; and
(k) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge, release or defense of a
guarantor or surety or which might otherwise limit recourse against such
Guarantor.
Each Guarantor authorizes the holders of the Notes, without notice
or demand and without affecting any of such Guarantor's liability hereunder, to
take and hold security for the payment of this guaranty and/or the indebtedness
guaranteed hereby and to exchange, enforce, waive and release any such security
and to apply such security and direct the order or manner of sale thereof as the
holders of the Notes in their discretion may determine; and to obtain a guaranty
of the Guaranteed Obligations from any one or more Persons and at any time or
times to enforce, waive, rearrange, modify, limit or release any of such other
Persons from their obligations under such guaranties. If the holders of the
Notes seek to enforce the obligations of any Guarantor by action in any court,
such Guarantor waives any necessity, substantive or procedural, that a judgment
previously be rendered against the Company, such Guarantor, any other Guarantor
or any other Person, or that any action be brought against the Company or any
other Person, or that the Company, such Guarantor, any other Guarantor or any
other Person should be joined in such cause. Such waiver shall be without
prejudice to the holders of the Notes at their option to proceed against the
Company, such Guarantor, any other Guarantor or any other Person, whether by
separate action or by joinder. The holders of the Notes shall not be required to
mitigate damages or take any action to reduce, collect or enforce the Guaranteed
Obligations.
6
<PAGE>
2.5 Several Obligations.
The obligations of each Guarantor hereunder are several from the
Company, any other Guarantor or any other Person, and are primary obligations
concerning which such Guarantor is the principal obligor, and are not subject to
any counterclaim, set-off, deduction, diminution, abatement, recoupment,
suspension, deferment or defense based upon any claim such Guarantor or any
other Person may have against the Company, the holders of the Notes, any other
Guarantor or any other Person, and shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not such Guarantor or the
Company shall have any knowledge or notice thereof).
2.6 Stay of Acceleration.
If an event permitting the acceleration of any of the Guaranteed
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
the Company of a case or proceeding under any bankruptcy or insolvency law, each
Guarantor agrees that, for purposes of this Subsidiaries' Guaranty and its
obligations hereunder, the Guaranteed Obligations shall be deemed to have been
accelerated and such Guarantor shall forthwith pay such Guaranteed Obligations
(including, without limitation, interest that but for the filing of a petition
in bankruptcy, suspension of payments or reorganization with respect to the
Company, would accrue on such Guaranteed Obligations), and the other obligations
hereunder, without any further notice or demand.
2.7 Subrogation.
Upon the making by any Guarantor of any payment hereunder for the
account of the Company, such Guarantor shall be subrogated to the rights of the
payee against the Company with respect to such payment; provided, that such
Guarantor shall not enforce any right or receive any payment by way of
subrogation, reimbursement or indemnity until all Guaranteed Obligations shall
have been paid in full.
2.8 General Limitation on Guaranteed Obligations.
(a) In any action or proceeding involving any foreign or state
corporate law, or any foreign, state or Federal bankruptcy, insolvency,
suspension of payments, reorganization or other law affecting the rights
of creditors generally, if the Guaranteed Obligations would otherwise,
taking into account the provisions of
7
<PAGE>
Section 2.7 hereof, be held or determined to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on
account of the amount of any Guarantor's liability for the Guaranteed
Obligations, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action
by such Guarantor, any holders of Notes or any other Person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
(b) Without in any way modifying or affecting any Guarantor's
obligations hereunder, to the extent such Guarantor makes any payment
hereunder that, when added to all preceding payments made by such
Guarantor hereunder would result in the aggregate payments hereunder by
such Guarantor exceeding its Percentage (as hereinafter defined) of all
payments then or theretofore made by all Guarantors under this
Subsidiaries' Guaranty, such Guarantor shall have a right of contribution
against each other Guarantor whose aggregate payments under this
Subsidiaries' Guaranty at any time of determination are less than its
Percentage of all payments made by all the other Guarantors, in an amount,
and with the effect, that after giving effect to any such contribution
rights, such Guarantor will be responsible only for its Percentage of all
payments made by all the other Guarantors under this Subsidiaries'
Guaranty. As used in this Section 2.8, such Guarantor's "Percentage" shall
mean the percentage obtained by dividing (i) the amount of such
Guarantor's obligation hereunder, as such amount would be determined
pursuant to subsection (a) of this Section 2.8 without taking into account
its subrogation and contribution rights, by (ii) the aggregate of the
amounts of all the other Guarantors' obligations under this Subsidiaries'
Guaranty, as such amounts would be determined pursuant to subsection (a)
of this Section 2.8 without taking into account the subrogation and
contribution rights of any such other Guarantors under this Subsidiaries'
Guaranty.
(c) To the extent set forth in Section 2.8(a), but only to the
extent that the obligations of any Guarantor would otherwise be subject to
avoidance under Section 2.8(a) if such Guarantor is not deemed to have
received valuable consideration, fair value, fair consideration or
reasonably equivalent value for such transfers or obligations, or if such
transfers or obligations of such Guarantor hereunder would render such
Guarantor insolvent, or leave such Guarantor with an unreasonably small
capital or unreasonably small assets to conduct its business, or cause
such Guarantor to have incurred debts (or to have intended to have
incurred debts) beyond its ability to pay such debts as they mature, in
each case as of the time any of the obligations of such Guarantor are
deemed to have been incurred and
8
<PAGE>
transfers are made under Section 2.8(a), then the obligations of such
Guarantor hereunder shall be reduced to that amount that, after giving
effect thereto, would not cause the obligations of such Guarantor
hereunder (or any other obligations of such Guarantor to the Purchaser or
any other Person holding any of the Notes), as so reduced, to be subject
to avoidance.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of Guarantors.
Each Guarantor hereby represents and warrants as follows:
(a) Organization; Power and Authority. Each Guarantor is duly
organized, validly existing and in good standing under the laws of its
formation and is duly qualified to transact business and is in good
standing in each foreign jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to
be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Guarantor has the power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver
this Subsidiaries' Guaranty and to perform the provisions hereof and
thereof.
(b) Authorization, etc.. This Subsidiaries' Guaranty has been duly
authorized by all necessary action on the part of each Guarantor, and this
Subsidiaries' Guaranty constitutes, a legal, valid and binding obligation
of such Guarantor enforceable against such Guarantor in accordance with
its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, suspension of payments,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity.
(c) Compliance with Laws, Other Instruments, etc.. The execution,
delivery and performance by each Guarantor of this Subsidiaries' Guaranty
will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
such Guarantor under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter, partnership
agreement, constituting agreement or by-laws, or any other agreement or
instrument to which such Guarantor is bound or by which such Guarantor or
any of its properties may be bound or affected, (ii) conflict with or
result in a breach of any
9
<PAGE>
of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any Governmental Authority applicable to such Guarantor or (iii)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Guarantor.
(d) Governmental Authorizations, etc.. Except as disclosed in
Schedule 3.1(d), no consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Authority is
required to be made or obtained by any Guarantor in connection with the
execution, delivery or performance by such Guarantor of this Subsidiaries'
Guaranty.
(e) Changes, Etc. Since December 28, 1998, (i) there has been no
change in the assets, liabilities or financial condition of any Guarantor,
other than changes which do not, either in any case or in the aggregate,
constitute a Material Adverse Effect, (b) there has been no material
change in the assets, liabilities or financial condition of any Guarantor,
other than changes in the ordinary course of business, and (c) the
business, operations or affairs or any of the properties or assets of each
Guarantor have not been affected by any occurrence or development (whether
or not insured against) which constitutes, either in any case or in the
aggregate, a Material Adverse Effect.
(f) Litigation, Etc. There is no action, proceeding or investigation
pending or threatened in writing against any Guarantor which questions the
validity of this Subsidiaries' Guaranty. There is no action, proceeding or
investigation pending or threatened in writing which might, if adversely
determined, qould have a Material Adverse Effect, or in any liability on
the part of such Guarantor, which would be material to such Guarantor.
(g) Compliance with Other Instruments, Etc. Any Guarantor is in
violation of any term of its charter documents, constituting agreements or
by-laws, and any Guarantor is in violation in any material respect of any
term of any agreement or instrument to which it is a party or by which it
is bound or any term of any applicable law, ordinance, rule or regulation
of any governmental authority or any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority, the
consequences of which violation might have a Material Adverse Effect; the
execution and delivery by such Guarantor of, and performance of the
obligations of such Guarantor under, this Subsidiaries' Guaranty will not
result in any violation of or be in conflict with or constitute a default
under any such term or result in the
10
<PAGE>
creation of (or impose any obligation on such Guarantor to create) any
lien upon any of the properties or assets of such Guarantor pursuant to
any such term, which violation, conflict, default or lien might have a
Material Adverse Effect or upon the ability of such Guarantor to perform
its obligations under this Subsidiaries' Guaranty; and there is no such
term which might have a Material Adverse Effect.
4. COVENANTS OF GUARANTORS.
4.1 Covenants of Guarantors.
Each Guarantor hereby agrees that, so long as it remains obligated
hereunder:
(a) Information. Each Guarantor will deliver to each of the holders
of the Notes from time to time such information regarding its financial
position or business as any such holder may reasonably request.
(b) Covenants. Each Guarantor hereby covenants and agrees that it
shall comply with all of the obligations, requirements and restrictions in
the covenants contained in Sections 6, 7 and 8 of the Note Purchase
Agreement, to the extent they are expressly applicable to such Guarantor,
except that, if compliance with any such obligation, requirement or
restriction has been waived by the holders of the Notes before or after a
default with respect thereto, such waiver shall relieve such Guarantor
from such obligation, requirement or restriction hereunder only to the
extent of such waiver.
(c) Further Assurances. Each Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as the Purchaser or
the holders of the Notes may from time to time reasonably request in order
to effectuate fully the purposes of this Subsidiaries' Guarantee and to
establish and perfect the rights and remedies intended to be created in
favor of the holders of the Notes hereunder or under any of the Financing
Documents. Each Guarantor shall cooperate with the Purchaser and the
holders of the Notes to procure the due payment by the Company of the
Guaranteed Obligations.
4.2 Subordination of Subsidiaries' Subordinated Indebtedness.
(a) Each Guarantor hereby agrees that until such time as all of the
Guaranteed Obligations shall be paid and performed in full, the
Subsidiaries' Subordinated Indebtedness (as hereinafter defined) is and
shall be expressly subordinated, to the
11
<PAGE>
extent and in the manner hereinafter set forth, in right of payment to the
prior payment of the Guaranteed Obligations.
(b) The term "Subsidiaries' Subordinated Indebtedness" shall mean,
at any time, the then outstanding aggregate principal amount of all
indebtedness of the Company to any Guarantor, in each case in respect of
borrowed money, fees, royalties or other intercompany advance or
arrangement (including any subrogation rights with respect to this
Subsidiaries' Guaranty), all accrued and unpaid interest and premium, if
any, thereon and all expenses incurred by and all indemnities payable to
such Guarantor pursuant to any agreement between the Company and such
Guarantor, in respect of any such indebtedness or otherwise.
(c) Upon the happening of an "Event of Default" under the Note
Purchase Agreement, unless and until such Event of Default shall have been
remedied or waived, no direct or indirect payment (in cash, property or
securities or by set-off or otherwise) shall be made or agreed to be made
on account of the Subsidiaries' Subordinated Indebtedness and any
Guarantor shall demand, collect or receive any payment on account of the
Subsidiaries' Subordinated Indebtedness.
(d) In the event of any insolvency, bankruptcy, receivership,
liquidation, suspension of payments, reorganization or other similar
proceedings relating to the Company, or in the event of any proceedings
for the voluntary or involuntary liquidation, dissolution or other
winding-up of the Company, whether or not involving insolvency, bankruptcy
or suspension of payments proceedings, all of the Guaranteed Obligations
(including any interest accruing at the legal rate after the commencement
of any such proceedings and any additional interest that would have
accrued but for the commencement of such proceedings) shall first be paid
in full before any payment or distribution, whether in cash, securities or
other property, shall be made to any Guarantor on account of any
Subsidiaries' Subordinated Indedebtedness. Any payment or distribution,
whether in cash, securities or other property, that would otherwise (but
for these subordination provisions) be payable or deliverable in respect
of Subsidiaries' Subordinated Indebtedness shall be paid or delivered
directly to the holders of the Notes (or to a banking institution selected
by the court or designated by the holders of the Notes) and to the holders
of all other senior indebtedness of the Company then outstanding in
accordance with the priorities then existing among such holders until all
of the Guaranteed Obligations shall have been paid in full.
(e) If any payment or distribution of any character, whether in
cash, property or otherwise, shall be received by any Guarantor in
contravention of any of the terms
12
<PAGE>
of these subordination provisions, such payment or distribution shall be
paid over to the holders of the Notes. Upon payment in full of all of the
Guaranteed Obligations, such Guarantor shall be subrogated to such holders
to receive payments or distributions of assets made with respect to the
Guaranteed Obligations to the extent of amounts payable to such Guarantor
that, pursuant to these subordination provisions, were paid to such
holders and, for the purposes of such subrogation, no payments to the
holders of the Notes of any character to which such Guarantor would be
entitled except for the provisions hereof shall, as between the Company
and their creditors other than such holders, on the one hand, and such
Guarantor, on the other, be deemed to be a payment or distribution by the
Company to or on account of the Guaranteed Obligations.
4.3 Subordination to Senior Guaranteed Obligations.
(a) Each Guarantor hereby agrees that until such time as all of the
Senior Guaranteed Obligations (as defined hereinafter) shall be paid and
performed in full, the Guaranteed Obligations hereunder are and shall be
expressly subordinated in right of payment to such Senior Guaranteed
Obligations, to the same extent and in the same manner set forth in
Article 10 of the Note Purchase Agreement, as if each Guarantor were a
party thereunder.
(b) The term "Senior Guaranteed Obligations" shall mean, the
guaranty by each Guarantor of the payment of all amounts payable by the
Company to the Senior Lender (as hereinafter defined) evidenced by or
arising out of the Loan Agreement, dated October 31, 1997, as amended (the
"Senior Loan"), between the Company and Fleet Bank, N.A. (the "Senior
Lender"), including, but not limited to, the payment of principal of and
premium, if any, and interest on the notes issued pursuant thereto and of
all other sums now or hereafter owed by the Company to such Senior Lender,
as and when the same shall become due and payable, whether at maturity or
by required or optional prepayment or by declaration or otherwise,
according to the terms thereof
5. MISCELLANEOUS.
5.1 Notices.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail
13
<PAGE>
with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice must be sent:
(a) if to the Purchaser or its nominee, to such Purchaser or nominee
at the address specified in the Note Purchase Agreement, or at such other
address as such Purchaser or such nominee shall have specified to the
Company in writing,
(b) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing,
(c) if to the Company, to the address specified in the Note Purchase
Agreement or at such other address as the Obligor shall have specified to
the holder of each Note in writing,
(d) if to any Guarantor to the address set forth below such
Guarantor's signature herein or at such other address as such Guarantor
shall have specified to the holder of each Note in writing.
Notices under this Section 5.1 will be deemed given only when actually
received.
5.2 No Waiver.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy under any Financing Document shall
operate as a waiver thereof or otherwise prejudice such holder's rights, powers
or remedies. No right, power or remedy conferred by any Financing Document or
any Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. The Guarantors will pay to the holder of each
Note on demand such further amount as shall be sufficient to cover all
reasonable costs and expenses of such holder incurred in any enforcement or
collection under this Section 5.2, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.
5.3 Amendments and Waivers.
This Subsidiaries' Guaranty may be amended, and the observance of
any term hereof may be waived (either retroactively or prospectively), with (and
only with) the written consent of all the Guarantors and the holder or holders
of at least 66 2/3% in principal amount
14
<PAGE>
of the Notes at such time outstanding. Such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
5.4 Costs, Expenses and Taxes; Indemnity.
The Guarantors agree to pay, and cause to be paid, on demand all
reasonable costs and expenses actually incurred by the holders of the Notes in
connection with the preparation, execution, delivery and administration of this
Subsidiaries' Guaranty, including, without limitation, the reasonable fees and
out-of-pocket expenses of outside counsel for the holders of the Notes with
respect thereto and with respect to advising the holders of the Notes as to
their rights and responsibilities under this Subsidiaries' Guaranty, and all
reasonable costs and expenses, if any (including reasonable counsel fees and
expenses), in connection with the enforcement of this Subsidiaries' Guaranty.
The Guarantors agree to pay interest on any expenses or other sums due to the
holders of the Notes under this Section 5.4 that are not paid when due at a rate
per annum equal to the Post Default Rate with respect to the Notes.
5.5 Severability.
Any provision of this Subsidiaries' Guaranty that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition shall (to the fullest
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.
5.6 Captions.
The captions in this Subsidiaries' Guaranty have been inserted for
convenience only and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this Subsidiaries' Guaranty.
5.7 Continuing Guarantee; Transfer of Obligations.
This Subsidiaries' Guaranty is a continuing guaranty and shall (a)
remain in full force and effect until payment in full of the Guaranteed
Obligations and all other amounts payable under this Subsidiaries' Guaranty; (b)
be binding upon each Guarantor, its successors and assigns; and (c) inure to the
benefit of and be enforceable by the holders of the Notes and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), the holders of the Notes may assign or otherwise transfer
the
15
<PAGE>
Guaranteed Obligations to any other Person or entity and such other Person or
entity shall thereupon become vested with all the rights and benefits in respect
thereof granted to the holders of the Notes herein or otherwise. Any Guarantor
may assign its rights or delegate its obligations hereunder without the prior
written consent of all of the holders of the Notes.
5.8 Limitation by Law.
All rights, remedies and powers provided in this Subsidiaries'
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this
Subsidiaries' Guaranty are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they will not render this guaranty invalid, unenforceable, in
whole or in part, or not entitled to be recorded, registered or filed under the
provisions of any applicable law.
5.9 Waiver.
Each Guarantor hereby waives to the fullest extent allowable by law
any right to require or request a bank guaranty or similar instrument or
security in connection with any action or proceeding in connection with this
Subsidiaries' Guaranty.
5.10 Submission to Jurisdiction.
Each Guarantor hereby irrevocably agrees that any legal action, suit
or proceeding brought by or against it with respect to any matter under or
arising out of or in any way connected with this Subsidiaries' Guaranty or any
document delivered pursuant hereto or thereto or for recognition or enforcement
of any judgment rendered in any such action, suit or proceeding (a "Proceeding")
may be brought in the courts of the State of New York or in the District Court
for the Southern District of New York, at the election of the party bringing
suit. By execution and delivery of this Subsidiaries' Guaranty, each Guarantor
hereby irrevocably accepts and submits to the non-exclusive jurisdiction of the
aforesaid courts in person, generally and unconditionally, with respect to any
Proceeding for itself and in respect of any of its property, assets and
revenues. Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any Proceeding brought in any such court, and hereby
further irrevocably and unconditionally waives and agrees, to the fullest extent
permitted by law, not to plead or claim that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum, or any
right to require the proceeding to be conducted in any other jurisdiction by
reason of its present or future domicile. Each
16
<PAGE>
Guarantor agrees that a final judgment in any such Proceeding brought in such a
court shall be conclusive and binding upon it and may be enforced in any court
to the jurisdiction of which it is subject by a suit upon such judgment. Each
Guarantor waives personal service of process upon it may be made by certified or
registered mail, return receipt requested, at its address specified or
determined in accordance with the provisions of Section 5.1, and service so made
shall be deemed completed on the third business day after mailing. Nothing
contained in this Section 5.10 shall be deemed to affect the right of the
Purchaser or any subsequent holder of a Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Guarantor in any jurisdiction.
5.11 Governing Law.
THIS SUBSIDIARIES' GUARANTY SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
17
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Subsidiaries' Guaranty
to be duly executed as of the date first above written.
THE MANHATTAN OCEAN CLUB
ASSOCIATES, L.L.C.
By
-----------------------------------------
Name:
Title:
LA CITE ASSOCIATES, L.L.C.
By
-----------------------------------------
Name:
Title:
ATLANTIC & PACIFIC GRILL
ASSOCIATES, L.L.C.
By
-----------------------------------------
Name:
Title:
MRS. PARK SUB, L.L.C.
By
-----------------------------------------
Name:
Title:
18
<PAGE>
NEW YORK RGI SUB, L.L.C.
By
-----------------------------------------
Name:
Title:
RESTAURANT GROUP MANAGEMENT
SERVICE, L.L.C.
By
-----------------------------------------
Name:
Title:
S&W CHICAGO, L.L.C.
By
-----------------------------------------
Name:
Title:
S&W OF MIAMI, L.L.C.
By
-----------------------------------------
Name:
Title:
19
<PAGE>
S&W OF LAS VEGAS, L.L.C.
By
-----------------------------------------
Name:
Title:
S&W D.C., L.L.C.
By
-----------------------------------------
Name:
Title:
MOC D.C., L.L.C.
By
-----------------------------------------
Name:
Title:
S&W NEW ORLEANS, L.L.C.
By
-----------------------------------------
Name:
Title:
20
<PAGE>
MOC OF MIAMI, L.L.C.
By
-----------------------------------------
Name:
Title:
21
<PAGE>
EXHIBIT 5.3
================================================================================
WARRANT AGREEMENT
Dated as of
June 29, 1999
among
THE NEW YORK RESTAURANT GROUP, INC.
and
MAGNETITE ASSET INVESTORS L.L.C.
------------------------------------
Warrants for
Common Stock of
THE NEW YORK RESTAURANT GROUP, INC.
------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1.
Defined Terms
SECTION 1.1 Definitions ..................................................... 1
SECTION 1.2 Other Definitions ............................................... 4
SECTION 1.3 Rules of Construction ........................................... 5
ARTICLE 2.
Warrant Certificates
SECTION 2.1 Form and Dating of Warrant Certificates ......................... 5
SECTION 2.2 Execution of Warrant Certificates ............................... 6
SECTION 2.3 Certificate Register ............................................ 6
SECTION 2.4 Transfer and Exchange of Warrant Certificates ................... 6
SECTION 2.5 Replacement Warrant Certificates ................................ 7
SECTION 2.6 Temporary Warrant Certificates .................................. 8
SECTION 2.7 Cancellation of Warrant Certificates ............................ 8
ARTICLE 3.
Exercise Terms
SECTION 3.1 Exercise Price .................................................. 8
SECTION 3.2 Exercise Periods ................................................ 8
SECTION 3.3 Expiration ...................................................... 8
SECTION 3.4 Manner of Exercise .............................................. 9
SECTION 3.5 Issuance of Warrant Shares ...................................... 9
SECTION 3.6 Fractional Warrant Shares .......................................10
SECTION 3.7 Reservation of Warrant Shares ...................................10
SECTION 3.8 Compliance with Law .............................................11
i
<PAGE>
Page
----
ARTICLE 4.
Antidilution Provisions
SECTION 4.1 Changes in Common Stock .........................................11
SECTION 4.2 Cash Dividends and Other Distributions ..........................11
SECTION 4.3 [Intentionally omitted.] ........................................12
SECTION 4.4 Combination; Liquidation ........................................12
SECTION 4.5 Tender Offers: Exchange Offers ..................................13
SECTION 4.6 Other Events ....................................................13
SECTION 4.7 Superseding Adjustment ..........................................13
SECTION 4.8 Minimum Adjustment ..............................................14
SECTION 4.9 Notice of Adjustment ............................................14
SECTION 4.10 Notice of Certain Transactions .................................15
SECTION 4.11 Adjustment to Warrant Certificate ..............................15
ARTICLE 5.
Tag-Along Rights
SECTION 5.1 Tag-Along Rights on Transfers ...................................15
ARTICLE 6.
Certain Agreements of the Company
SECTION 6.1 Reporting and Inspection Covenants ..............................16
SECTION 6.2 Nature of Business ..............................................17
SECTION 6.3 Transactions with Affiliates ....................................17
SECTION 6.4 Issuance of Additional Classes of Stock .........................17
SECTION 6.5 Waiver of Preemptive Rights .....................................17
ARTICLE 7.
Registration Rights
SECTION 7.1 Registration Rights .............................................18
ii
<PAGE>
Page
----
ARTICLE 8.
Transferability
SECTION 8.1 Legend ..........................................................18
SECTION 8.2 Lock-Ups ........................................................19
ARTICLE 9.
Miscellaneous
SECTION 9.1 Financial Information ...........................................19
SECTION 9.2 Persons Benefitting .............................................19
SECTION 9.3 Indemnity .......................................................20
SECTION 9.4 Rights of Holders ...............................................20
SECTION 9.5 Amendment .......................................................20
SECTION 9.6 Notices .........................................................20
SECTION 9.7 Governing Law ...................................................22
SECTION 9.8 Successors ......................................................22
SECTION 9.9 Multiple Originals ..............................................22
SECTION 9.10 Table of Contents ..............................................22
SECTION 9.11 Severability ...................................................22
SECTION 9.12 Termination ....................................................22
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B - Certificate to be Delivered Upon Exchange or Registration of
Transfer of Warrant Certificates
iii
<PAGE>
WARRANT AGREEMENT, dated as of June 29, 1999 (this "Agreement"), among THE
NEW YORK RESTAURANT GROUP, INC., a Delaware corporation (the "Company"), and
MAGNETITE ASSET INVESTORS L.L.C., a Delaware limited liability company
("Magnetite").
W I T N E S S E T H :
WHEREAS, the Company has agreed to issue to Magnetite, and Magnetite has
agreed to purchase, warrants (the "Warrants") from the Company, each Warrant
initially entitling the holder thereof to purchase one share of Common Stock (as
defined below) of the Company representing in the aggregate 1 1/2 % of the
Common Stock of the Company or, upon the occurrence of certain events, one and
one-third shares of Common Stock of the Company representing in the aggregate 2%
of the Common Stock of the Company, subject to adjustment as provided herein;
and
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE 1.
Defined Terms
SECTION 1.1 Definitions. All terms defined in the Senior Subordinated Note
Purchase Agreement, dated as of June 29, 1999, between the Company and Magnetite
(the "Note Purchase Agreement") shall have such defined meanings when used
herein unless otherwise defined herein. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
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"Business Day" a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.
"Cashless Exercise Ratio" means a fraction, the numerator of which is the
excess of the Current Market Value per share of Common Stock on the date of
exercise over the Exercise Price per share as of the date of exercise and the
denominator of which is the Current Market Value per share of the Common Stock
on the date of exercise.
"Closing Date" means the date of the Note Purchase Agreement.
"Combination" means an event in which the Company consolidates with,
merges with or into, or sells all or substantially all its property and assets
to another Person.
"Common Stock" means the common stock of the Company with $.O1 par value
per share issued or issuable upon exercise of the Warrants.
"Current Market Value" per share of Common Stock or any other security at
any date means (i) if the security is not registered under the Exchange Act, the
value of the security as determined in good faith by the Board not taking into
account the absence of an active trading market or the minority nature of the
investment; or (ii) if the security is registered under the Exchange Act, the
average of the daily closing bid prices for each Business Day during the period
commencing 15 Business Days before such date and ending on the date one day
prior to such date, or if the security has been registered under the Exchange
Act for less than 15 consecutive Business Days before such date, then the
average of the daily closing bid prices for all of the Business Days before such
date for which daily closing bid prices are available. The Company shall pay the
reasonable fees and expenses of any investment bank referred to in Article 4
involved in the determination of Current Market Value.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the tenth anniversary of the Closing Date.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a consistent basis.
"Holder" means the duly registered holder of a Warrant under the terms of
this Warrant Agreement.
"Initial Public Offering" or "IPO" means the first time a Registration
Statement (other than Registration Statements on Form S-4 or Form S-8) filed
under the Securities Act with the SEC respecting an offering, whether primary or
secondary, of Common Stock (or securities
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convertible into, or exchangeable for, Common Stock, or rights to acquire Common
Stock or such securities), which is underwritten on a firmly committed basis, is
declared effective and the securities so registered are issued and sold.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any of the Warrants, Warrant Shares or other
Registrable Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"Registrable Securities" means (a) any Warrant Shares or other securities
issued or issuable upon exercise of any Warrants (which shall be deemed, for the
purposes of this definition, to have been issued to, and to be held by, the
Holders of such Warrants) and (b) any securities issued or issuable with respect
to any such Warrant Shares or other securities by way of stock dividend or stock
split or in connection with a combination of Shares of Common Stock of the
Company, recapitalization, merger, consolidation, reorganization or otherwise.
As to any such Registrable Securities, once issued such Shares of Common Stock
or securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such Registrable Securities shall have
been declared effective and such securities shall have been disposed of in
accordance with such Registration Statement, (ii) they shall have been or
thereafter can be offered and sold by a person that is not an affiliate of the
Company pursuant to Rule 144 without compliance with the provisions of Rule
144(e)(2), (iii) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them shall not require
registration under the Securities Act or qualification of them under state blue
sky laws, or (iv) they shall have ceased to be outstanding.
"Registration Statement" means a registration statement that is in
compliance with the Securities Act.
"Requirements of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents or such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other governmental authority, in each
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case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subordinated Notes" means the 12 1/2 % Senior Subordinated Notes issued
pursuant to the Note Purchase Agreement.
"Transfer" means any sale, assignment, gift, bequest, transfer,
distribution, pledge, hypothecation or other encumbrance or disposition.
"Transfer Restricted Securities" means the Warrants and the Common Stock
which may be issued to Holders upon exercise of the Warrants, whether or not
such exercise has been effected. Each such security shall cease to be a Transfer
Restricted Security when (i) it has been disposed of pursuant to a registration
statement of the Company filed with the SEC and declared effective by the SEC
that covers the disposition of such Transfer Restricted Security, (ii) it has
been distributed pursuant to Rule 144 (or any similar provisions under the
Securities Act then in effect) or (iii) it has been otherwise transferred and
may be resold without registration under the Securities Act.
"Underlying Securities" means the Warrant Shares and other securities
issuable or issued upon exercise of the Warrants.
"Warrant Shares" means the shares of Common Stock of the Company received,
or issued and received, as the case may be, upon exercise of the Warrants.
SECTION 1.2 Other Definitions
Defined in
Term Section
---- -------
"Agreement" ................................ Introductory Paragraph
"Cashless Exercise" ........................ 3.4
"Certificate Register" ..................... 2.3
"Company" .................................. Introductory Paragraph
"Exercise Price" ........................... 3.1
"Fair Value" ............................... 4.2
"Letter Agreement" ......................... 9.5(b)
"Magnetite" ................................ Introductory Paragraph
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"Note Purchase Agreement" .................. 1.1
"QIB" ...................................... 2.4(a)
"Registrar" ................................ 2.7
"Shareholders" ............................. 5.1
"Successor Company" ........................ 4.4(a)
"THL Shareholders' Agreement" .............. 5.1
"Transfer Agent" ........................... 3.5
"Warrants" ................................. Introductory Paragraph
"Warrant Certificates" ..................... 2.1
SECTION 1.3 Rules of Construction. Unless the text otherwise required.
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect from
time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE 2.
Warrant Certificates
SECTION 2.1 Form and Dating of Warrant Certificates. The Warrant
Certificates shall be substantially in the form of Exhibit A, the terms of which
are hereby incorporated in and expressly made a part of this Agreement. The
Warrant Certificates may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company) and shall bear the legend required by Section 8.1.
Each Warrant Certificate shall be dated the date of its countersignature.
The Warrants shall be issued initially in definitive form represented by a
Warrant Certificate (such certificate and all other certificates representing
physical delivery of Warrants in definitive form being called "Warrant
Certificates"), representing Warrants to purchase 1 1/2% of the Common Stock of
the Company, increasing to 2% of the Common Stock of the Company
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(as outstanding on the date hereof) if the Subordinated Notes shall not have
been paid in full by June 29, 2001, which shall be issued and delivered to
Magnetite.
SECTION 2.2 Execution of Warrant Certificates. Two Officers shall sign the
Warrant Certificates for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Warrant Certificate and may be in facsimile form.
SECTION 2.3 Certificate Register. The Company shall keep a register
("Certificate Register") of the Warrant Certificates and of their transfer and
exchange. The Certificate Register shall show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates. The Company may deem and treat the Person in
whose name a Warrant Certificate is registered as the absolute owner of such
Warrant Certificate for all purposes whatsoever and the Company shall not be
affected by notice to the contrary.
SECTION 2.4 Transfer and Exchange of Warrant Certificates. (a) Transfer
and Exchange of Warrant Certificates. When Warrant Certificates are presented to
the Company with a request to register the transfer of such Warrant Certificates
or to exchange such Warrant Certificates for an equal number of Warrant
Certificates of other authorized denominations, the Company shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Warrant Certificates
surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company, duly executed by the
Holder thereof or his attorney duly authorized in writing; and
(ii) in the case of Warrant Certificates that are Transfer Restricted
Securities, shall be accompanied by the following additional information and
documents:
(1) a certificate from such Holder in substantially the form of
Exhibit B hereto certifying that:
(A) such securities are being delivered for registration in
the name of such Holder without transfer;
(B) such securities are being transferred to the Company;
(C) such securities are being transferred pursuant to an
effective registration statement under the Securities Act; or
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(D) such securities are being transferred (w) to a "qualified
institutional buyer" ("QIB") as defined in Rule 144A under the Securities Act
pursuant to such Rule 144A, (x) in an offshore transaction in accordance with
Rule 904 under the Securities Act, (y) in a transaction meeting the requirements
of Rule 144 under the Securities Act or (z) pursuant to another available
exemption from the registration requirements of the Securities Act; and
(2) in the case of any transfer described under clause
(a)(ii)(1)(D)(x), (y) and (z) of this Section 2.4, evidence reasonably
satisfactory to the Company as to compliance with the restrictions set forth in
the legend in Section 8.1.
(b) Obligations with Respect to Transfers and Exchanges of Warrant
Certificates. (i) To permit registrations of transfers and exchanges, the
Company shall execute Warrant Certificates as required pursuant to the
provisions of this Section 2.4.
(ii) All Warrant Certificates shall be the valid obligations of the
Company, entitled to the same benefits under this Agreement, as the Warrant
Certificates surrendered upon such registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant Certificate, the Company may deem and treat the Person in whose name
such Warrant Certificate is registered as the absolute owner of such Warrant
Certificate and the Company shall not be affected by notice to the contrary.
(iv) No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate.
However, the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates.
(v) Upon any sale or transfer of Warrant Certificates pursuant to an
effective registration statement under the Securities Act, pursuant to Rule 144
under the Securities Act or pursuant to an opinion of counsel reasonably
satisfactory to the Company that no legend is required, the Company shall permit
the Holder thereof to exchange such Warrant Certificates for new Warrant
Certificates not bearing the legend set forth in Section 8.1 and shall rescind
any restriction on the transfer of such new Warrant Certificates.
SECTION 2.5 Replacement Warrant Certificates. If a mutilated Warrant
Certificate is surrendered to the Company or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement Warrant Certificate if
the reasonable requirements of Section 8-405 of the Uniform Commercial Code as
in effect in the State of New York are met. If required by the Company, such
Holder
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shall furnish an indemnity bond sufficient in the judgment of the Company to
protect the Company from any loss which the Company may suffer if a Warrant
Certificate is replaced. The Company may charge the Holder for its expenses in
replacing a Warrant Certificate. Every replacement Warrant Certificate is an
additional obligation of the Company.
SECTION 2.6 Temporary Warrant Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare temporary Warrant
Certificates. Temporary Warrant Certificates shall be substantially in the form
of definitive Warrant Certificates but may have variations that the Company
considers appropriate for temporary Warrant Certificates. Without unreasonable
delay, the Company shall prepare definitive Warrant Certificates and deliver
them in exchange for temporary Warrant Certificates.
SECTION 2.7 Cancellation of Warrant Certificates. (a) In the event the
Company shall purchase or otherwise acquire Warrant Certificates, the same shall
be cancelled.
(b) The Company shall cancel and destroy all Warrant Certificates
surrendered for transfer, exchange, replacement, exercise or cancellation. The
Company may not issue new Warrant Certificates to replace Warrant Certificates
to the extent they evidence Warrants which have been exercised or Warrants which
the Company has purchased or otherwise acquired.
ARTICLE 3.
Exercise Terms
SECTION 3.1 Exercise Price. Each Warrant shall initially entitle the
Holder thereof to purchase one share of Common Stock, provided, however, that if
the Subordinated Notes shall not have been paid in full by June 29, 2001, each
Warrant shall entitle the Holder thereof to purchase one and exactly one-third
shares of Common Stock, in each case for a per share exercise price (the
"Exercise Price") of $0.01, in each case subject to adjustment pursuant to the
terms of this Agreement.
SECTION 3.2 Exercise Periods. (a) Subject to the terms and conditions set
forth herein, the Warrants shall be exercisable at any time or from time to time
on or after the Closing Date.
(b) No Warrant shall be exercisable after the Expiration Date.
SECTION 3.3 Expiration. A Warrant shall terminate and become void as of
the earlier of (i) the close of business on the Expiration Date or (ii) the time
and date such Warrant is exercised. The Company shall give notice not less than
90, and not more than 120, days prior
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to the Expiration Date to the Holders of all then outstanding Warrants to the
effect that the Warrants will terminate and become void as of the close of
business on the Expiration Date. The Warrants shall terminate and become void
after the Expiration Date, notwithstanding the Company's failure to give such
notice.
SECTION 3.4 Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Company of the Warrant Certificates, together with the form of
election to purchase Warrant Shares in the form of Exhibit 1 to the Warrant
Certificate duly filled in and signed by the Holder thereof and (ii) payment to
the Company, of the Exercise Price for the number of Warrant Shares in respect
of which such Warrant is then exercised. Such payment shall be made (i) in cash
or by certified or official bank check payable to the order of the Company or by
wire transfer of funds to an account designated by the Company for such purpose
or (ii) by the surrender (which surrender shall be evidenced by cancellation of
the number of Warrants represented by any Warrant Certificate presented in
connection with a Cashless Exercise) of a Warrant or Warrants (represented by
one or more relevant Warrant Certificates), and without the payment of the
Exercise Price in cash, in exchange for the issuance of such number of shares of
Common Stock equal to the product of (1) the number of shares of Common Stock
for which such Warrant would otherwise then be nominally exercised if payment of
the Exercise Price as of the date of exercise were being made in cash and (2)
the Cashless Exercise Ratio. An exercise of a Warrant in accordance with the
immediately preceding sentence is herein called a "Cashless Exercise". All
provisions of this Agreement shall be applicable with respect to an exercise of
Warrant Certificates pursuant to a Cashless Exercise for less than the full
number of Warrants represented thereby. If, pursuant to the Securities Act, the
Company is not permitted to effect the registration under the Securities Act of
the issuance and sale of the Warrant Shares by the Company to the Holders of the
Warrants upon the exercise of the Warrants, the Holders of the Warrants will be
required, if the Company is not then able to rely on an exemption from the
registration requirements of the Securities Act in connection with the issuance
and sale of the Warrant Shares upon exercise of the Warrants, to effect the
exercise of the Warrants solely pursuant to the Cashless Exercise option.
Subject to Section 3.2, the rights represented by the Warrants shall be
exercisable at the election of the Holders thereof either in full at any time or
from time to time in part and in the event that a Warrant Certificate is
surrendered for exercise in respect of less than all the Warrant Shares
purchasable on such exercise at any time prior to the Expiration Date a new
Warrant Certificate exercisable for the remaining Warrant Shares will be issued.
SECTION 3.5 Issuance of Warrant Shares. Subject to Section 2.5, upon the
surrender of Warrant Certificates and payment of the per share Exercise Price or
pursuant to a Cashless Exercise, as set forth in Section 3.4, the Company shall
issue and cause, if appointed, a transfer agent for the Common Stock ("Transfer
Agent") to countersign and deliver to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise to the Person or
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Persons entitled to receive the same, together with cash as provided in Section
3.6 in respect of any fractional Warrant Shares otherwise issuable upon such
exercise. Such certificate or certificates shall be deemed to have been issued
and any Person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares as of the date of the surrender of
such Warrant Certificates and payment of the per share Exercise Price or
pursuant to a Cashless Exercise, as set forth in Section 3.4.
SECTION 3.6 Fractional Warrant Shares. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
pursuant thereto. If any fraction of a Warrant Share would, except for the
provisions of this Section 3.6, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
Current Market Value for one Warrant Share on the date the Warrant is exercised,
multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.7 Reservation of Warrant Shares. The Company shall at all times
keep reserved out of its authorized shares of Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of all outstanding Warrants.
The registrar for the Common Stock (the "Registrar") shall at all times until
the Expiration Date, or the time at which all Warrants have been exercised or
canceled, reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent. The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests, created by or through the Company, with respect to the
issue thereof. The Company will supply such Transfer Agent with duly executed
stock certificates for such purpose and will itself provide or otherwise make
available any cash which may be payable as provided in Section 3.6. The Company
will furnish to such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article 4 to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares.
SECTION 3.8 Compliance with Law. Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then
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effective or (ii) an exemption from the registration requirements is available
under the Securities Act at the time of such exercise.
ARTICLE 4.
Antidilution Provisions
SECTION 4.1 Changes in Common Stock. In the event that at any time or from
time to time after the date hereof the Company shall (i) pay a dividend or make
a distribution on its Common Stock in shares of its Common Stock or other shares
of capital stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) increase or
decrease the number of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock purchasable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving affect to such adjustment, the Holder of each
Warrant shall be entitled to receive the number of shares of Common Stock upon
exercise that such holder would have owned or have been entitled to receive had
such Warrants been exercised immediately prior to the happening of the events
described above (or, in the case of a dividend or distribution of Common Stock,
immediately prior to the record date therefor), and the Exercise Price for each
Warrant shall be adjusted in inverse proportion. An adjustment made pursuant to
this Section 4.1 shall become effective immediately after the effective date,
retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock, and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.
SECTION 4.2 Cash Dividends and Other Distributions. In case at any time or
from time to time after the date hereof the Company shall distribute to holders
of Common Stock (i) any dividend or other distribution of cash, evidences of its
indebtedness, or any other properties or securities or (ii) any options,
warrants or other rights to subscribe for or purchase any of the foregoing
(other than, in each case set forth in (i) and (ii), (x) any dividend or
distribution described in Section 4.1, or (y) any rights, options, warrants or
securities described in Section 4.3 then the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock purchasable upon
the exercise of such Warrant immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
distribution, and the denominator of which shall be such Current Market Value
per share of Common Stock less the sum of (x) any cash distributed per share of
Common Stock and (y) the fair value (the "Fair Value") (as determined in good
faith by the Board, whose determination shall be evidenced by a Board
resolution, a copy of which will be sent to Holders upon request) of the
portion, if any, of the
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distribution applicable to one share of Common Stock consisting of evidences of
indebtedness, shares of stock, securities, other property, warrants, options or
subscription of purchase rights (notwithstanding the foregoing, if the Fair
Value in the above formula equals or exceeds the Current Market Value per share
of Common Stock in the above formula, then the Current Market Value per share of
Common Stock shall be equal to the fair value per share of the Common Stock on
the record date as determined in good faith by the Board and described in a
Board resolution); and the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to such record date
by the above fraction. Such adjustments shall be made whenever any distribution
is made and shall become effective as of the date of distribution, retroactive
to the record date for any such distribution; provided, however, that the
Company is not required to make an adjustment pursuant to this Section 4.2 if at
the time of such distribution the Company makes the same distribution to Holders
of Warrants as it makes to holders of Common Stock pro rata based on the number
of shares of Common Stock for which such Warrants are exercisable (whether or
not currently exercisable). No adjustment shall be made pursuant to this Section
4.2 which shall have the effect of decreasing the number of shares of Common
Stock purchasable upon exercise of each Warrant or increasing the Exercise
Price.
SECTION 4.3 [Intentionally omitted.]
SECTION 4.4 Combination; Liquidation. (a) Except as provided in Section
4.4(b), in the event of a Combination, the Holders shall have the right to
receive upon exercise of the Warrants such number of shares of Common Stock or
other securities or property which such Holder would have been entitled to
receive upon or as a result of such Combination had such Warrant been exercised
immediately prior to such event. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Company confirming the Holders' rights pursuant to this Section 4.4(a) and
providing for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 4. The provisions of
this Section 4.4(a) shall similarly apply to successive Combinations involving
any Successor Company.
(b) In the event of (i) a Combination in which consideration to holders of
Common Stock in exchange for their shares is payable solely in cash, or (ii) the
dissolution, liquidation or winding-up of the Company, then the Holders of the
Warrants will be entitled to receive distributions on an equal basis with the
holders of Common Stock or other securities issuable upon exercise of the
Warrants, as if the Warrants had been exercised immediately prior to such event,
less the Exercise Price.
In case of any Combination described in this Section 4.4(b), the surviving
or acquiring Person and, in the event of any dissolution, liquidation or
winding-up of the Company, the Company, shall make available promptly the funds,
if any, necessary to pay to the Holders of the
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Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Company shall
make payment to the Holders by delivering a check in such amount as is
appropriate (or, in the case of consideration other than cash, such other
consideration as is appropriate) to such Person or Persons as it may be directed
in writing by the Holders surrendering such Warrants.
SECTION 4.5 Tender Offers; Exchange Offers. In the event that the Company
or any subsidiary of the Company shall purchase shares of Common Stock pursuant
to a tender offer or an exchange offer for a price per share of Common Stock
that is greater than the then Current Market Value per share of Common Stock in
effect at the end of the trading day immediately following the day on which such
tender offer or exchange offer expires, then the Company, or such subsidiary of
the Company, shall offer to purchase Warrants for comparable consideration per
share of Common Stock based on the number of shares of Common Stock which the
Holders of such Warrants would receive upon exercise of such Warrants; provided,
however, if a tender offer is made for only a portion of the outstanding shares
of Common Stock, then such offer shall be made for Warrants in the same pro rata
proportion.
SECTION 4.6 Other Events. If any event occurs as to which the foregoing
provisions of this Article 4 are not strictly applicable or, if strictly
applicable, would not fairly and adequately protect the purchase rights of the
Warrants in accordance with the essential intent and principles of such
provisions, then there shall be made such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary to protect such purchase rights as aforesaid, but in no
event shall any such adjustment have the effect of increasing the Exercise Price
or decreasing the number of shares of Common Stock subject to purchase upon
exercise of this Warrant.
SECTION 4.7 Superseding Adjustment. Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which resulted in the
adjustments pursuant to this Article 4, if any thereof shall not have been
exercised, the number of Warrant Shares purchasable upon the exercise of each
Warrant shall be readjusted as if (a) the only shares of Common Stock issuable
upon exercise of such rights, options, warrants, conversion or exchange
privileges were the shares of Common Stock, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (b) shares of Common Stock actually issued, if any, were issuable for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange privileges whether or not exercised and the Exercise Price shall be
readjusted inversely; provided, however, that no such readjustment shall (except
by reason of an intervening adjustment under Section 4.1) have the effect of
decreasing the number of Warrant Shares purchasable upon the exercise of each
Warrant or increase the Exercise Price by an amount in excess of the amount of
the adjustment initially
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made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.8 Minimum Adjustment. The adjustments required by the preceding
Sections of this Article 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that no adjustment of the
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of Warrants that would otherwise be required shall be made (except in the case
of a subdivision or combination of shares of Common Stock, as provided for in
Section 4.1) unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases by at least 1% the
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of Warrants immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment, together with other adjustments required by
this Article 4 and not previously made, would result in a minimum adjustment.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article 4, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.9 Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, purchasable upon
exercise of Warrants is adjusted, as herein provided, the Chief Financial
Officer of the Company shall prepare a certificate setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which the
Board determined the Fair Value of any evidences of indebtedness, other
securities or property or warrants or other subscription or purchase rights),
and specifying the Exercise Price and the number of shares of Common Stock
purchasable upon exercise of Warrants after giving effect to such adjustment.
The Company shall promptly mail a copy of such certificate to each Holder in
accordance with Section 9.6. The Company shall exhibit such certificate from
time to time, to any Holder desiring an inspection thereof during reasonable
business hours. The Company shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist which may
require any adjustment of the Exercise Price or the number of shares of Common
Stock or other stock or property, purchasable on exercise of the Warrants, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value of any shares of Common Stock.
SECTION 4.10 Notice of Certain Transactions. In the event that the Company
shall propose (a) to pay any dividend payable in securities of any class to the
holders of its Common Stock or to make any other distribution to the holders of
its Common Stock, (b) to offer the holders of its Common Stock rights to
subscribe for or to purchase any securities convertible into shares of Common
Stock or shares of Common Stock or shares of stock of any class or any other
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<PAGE>
securities, rights or options, (c) to effect any capital reorganization,
consolidation or merger, (d) to effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company, or (e) to offer any securities the
return on which is measured in whole or in part by reference to the Common
Stock, or in the event of a tender offer or exchange offer described in Section
4.5, the Company shall within 5 days send to Magnetite and shall within 5 days
send to the Holders (other than Magnetite) a notice of such proposed action or
offer, such notice to be mailed by the Company to the Holders in accordance with
Section 9.6, which shall specify the record date for the purposes of such
dividend, distribution or rights, or the date such issuance or event is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall briefly indicate the effect of such
action on the Common Stock and on the number and kind of any other shares of
stock and on other property, if any, and the number of shares of Common Stock
and other property, if any, purchasable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment which will be required as a
result of such action. Such notice shall be given by the Company at least 10
days prior to the record date for determining holders of the Common Stock for
purposes of such action.
SECTION 4.11 Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock as are stated
in any Warrant Certificates issued prior to the adjustment. The Company,
however, may at any time in its sole discretion make any change in the form of
Warrant Certificate that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of the Warrant Certificate,
and any Warrant Certificate thereafter issued, whether in exchange or
substitution for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.
ARTICLE 5.
Tag-Along Rights
SECTION 5.1 Tag-Along Rights on Transfers. The Company acknowledges that,
except as otherwise provided in this Agreement, the Holders shall have the "tag
along" rights set forth in Section 3 of the Shareholders' Agreement, dated as of
October 31, 1997 (the "THL Shareholders' Agreement"), by and among the Company,
Alan Stillman, Thomas H. Lee Equity Partners, L.P., THL-CCI Limited Partnership
and those Persons listed as Shareholders on the counterpart signature pages
thereto (the "Shareholders"), which Section 3 shall apply to each Holder of any
Warrant or Warrant Share as if such Holder were a "Shareholder" thereunder and
as if such Warrants or Warrant Shares were "Shares" thereunder; provided that
all other defined terms applicable to such "tag along" rights shall have the
meanings ascribed to them under the THL Shareholders' Agreement; and provided,
further that the Holders shall have such "tag along"
15
<PAGE>
rights until consummation of the Company's Initial Public Offering or the
earlier termination of this Agreement in accordance herewith.
ARTICLE 6.
Certain Agreements of the Company
The Company hereby agrees that, until the first to occur of (i) the
consummation of the Company's IPO or (ii) the date on which no Transfer
Restricted Securities remain outstanding:
SECTION 6.1 Reporting and Inspection Covenants. (a) Financial Information
and Compliance Certificates. The Company shall, and shall cause each of its
Subsidiaries to, keep its books of account in accordance with good accounting
practices; the Company shall furnish to each Holder, within 120 days after the
last day of each fiscal year, consolidated balance sheets of the Company and its
Subsidiaries as at such last day of the fiscal year and statements of income and
retained earnings and cash flows for such fiscal year each prepared in
accordance with GAAP and certified by a firm of independent certified public
accountants of recognized national reputation; and, within 45 days after the
close of each of the first three quarters of each fiscal year, consolidated and
consolidating balance sheets, statements of income and retained earnings and
cash flows of the Company and its Subsidiaries as of the last day of and for
such quarter and for the period of the fiscal year ended as of the close of the
particular quarter, all such quarterly statements to be in reasonable detail and
certified by the chief financial or accounting officer of the Company as having
been prepared in accordance with GAAP (subject to year-end adjustments and the
absence of footnotes). The Company will also furnish, within forty-five days
after the end of a calendar month, monthly profit and loss statements of each
existing and new restaurant owned or managed by the Company or any of its
Subsidiaries, internally prepared and certified by the chief financial officer
of the Company. The Company will, with reasonable promptness, furnish such other
data as may be reasonably requested by the Holders, including, without
limitation, copies of all material contracts and agreements. The Company shall
(i) at the Holders' expense, at any time and from time to time (but not
exceeding once in a calendar year) or (ii) after an Event of Default under the
Note Purchase Agreement has occurred and is continuing, at the Company's
expense, at any time and from time to time, permit any Holder by or through any
of its Officers, agents, employees, attorneys or accountants to conduct, upon
reasonable notice, an examination of, and make extracts from, the Company's
books and records.
(b) Inspection of Property; Books and Records; Discussions. The Company
shall, and shall cause each Subsidiary to, keep proper books of records and
accounts in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities; and permit, and cause its
16
<PAGE>
Subsidiaries to permit, upon reasonable notice thereof (i) at the Holders'
expense, at any time and from time to time (but not exceeding once in a calendar
year), or (ii) after an Event of Default under the Note Purchase Agreement has
occurred and is continuing, at the Company's expense, at any time and from time
to time, any Holder by or through any of its Officers, agents, employees,
attorneys or accountants to visit and inspect any of its properties and examine
and make abstracts from any of its books and records and discuss the business,
operations, properties and financial and other condition of the Company and its
Subsidiaries with Officers and employees of the Company and its Subsidiaries and
with its independent certified public accountants.
SECTION 6.2 Nature of Business. Neither the Company nor any Subsidiary
will materially alter the nature of its business.
SECTION 6.3 Transactions with Affiliates. Except as otherwise specifically
set forth in the Note Purchase Agreement, neither the Company nor any Subsidiary
will, directly or indirectly, purchase, acquire or lease any property or assets
from, or sell, transfer or lease any property or assets to, or enter into any
other transaction with, including without limitation any issuance or sale of
stock, rights, options, warrants or securities exchangeable into stock, any
Affiliate, except in the ordinary course of business at prices and on terms and
conditions not less favorable to it than those which would have been obtained in
an arm's-length transaction with a non-affiliated third party.
SECTION 6.4 Issuance of Additional Classes of Stock. The Company shall not
create any additional classes of capital stock (other than the Common Stock)
including preferred stock and any rights, options, warrants or any other
securities the return of which is measured in whole or in part by reference to
the Common Stock unless the Company shall have given the Holders at least 10
Business Days prior notice of such issuance and demonstrated to the reasonable
satisfaction of each Holder, that the requirements of Sections 4.6 and 6.3 have
been met.
SECTION 6.5 Waiver of Preemptive Rights. The Company represents and
warrants that the Shareholders under the THL Shareholders' Agreement have waived
their preemptive rights under Section 4 thereof to acquire from the Company any
Warrants or Warrant Shares issued as a result of the exercise of Warrant by a
Holder hereunder.
ARTICLE 7.
Registration Rights
SECTION 7.1 Registration Rights. (a) The Company acknowledges that, except
as provided below, the Holders shall have the registration rights set forth in
Sections 6, 7 and 8 of the THL Shareholders' Agreement which Sections 6.7 and 8
shall apply to each Holder of any
17
<PAGE>
Warrant or Warrant Share as if such Holder were a "Shareholder" thereunder and
as if such Warrants or Warrant Shares were "Shares" thereunder, provided that
all defined terms therein shall have the meanings ascribed to them in such THL
Shareholders' Agreement, except that "Registrable Securities" shall have the
meaning set forth in this Agreement; and provided, further that such Sections 6,
7 and 8 of the THL Shareholders' Agreement shall apply to the Holders until
termination of this Agreement in accordance herewith. Notwithstanding the
foregoing, the Holders' rights under such Sections 6, 7 and 8 shall be modified
as follows: (i) the Holders shall have no piggyback registration rights in an
Initial Public Offering occurring prior to December 31, 1999, (ii) the Holders
shall have piggyback registration rights in connection with any filing of a
registration statement under the Securities Act described in Section 6(a) of the
THL Shareholders' Agreement occurring after the Initial Public Offering, and in
any Initial Public Offering occurring after December 31, 1999, and (iii) the
Holders shall be treated for purposes of Sections 6, 7 and 8 as if they were
shareholders holding Registrable Securities (i.e. for purposes of cut-backs,
notices, payment of expenses, indemnification, Form S-3 registration and other
matters under such Sections).
(b) For clarity, the Holders shall have no demand registration rights at
any time under Sections 5 of the THL Shareholders' Agreement.
ARTICLE 8.
Transferability
SECTION 8.1 Legend. Except for Warrant Certificates delivered pursuant to
Section 2.4(b)(v) of this Agreement, each Warrant Certificate and Warrant Share
shall bear a legend in substantially the following form (with any appropriate
modification for the Warrant Shares):
"THE WARRANT CERTIFICATES AND THE WARRANT SHARES (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND
SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS. THE HOLDER HEREOF, BY ITS
ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO
THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144
18
<PAGE>
THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT."
SECTION 8.2 Lock-Ups. For so long as the Warrants or the Warrant Shares
are not eligible for resale under Rule 144, the Holders shall not sell such
Warrants or Warrant Shares under the circumstances contemplated by Section
9(b)(i) of the THL Shareholders' Agreement in connection with the Initial Public
Offering. Otherwise, and except as otherwise expressly provided in this
Agreement, there shall be no other restrictions with respect to any sales by the
Holders under Rule 144.
ARTICLE 9.
Miscellaneous
SECTION 9.1 Financial Information. As soon as any Warrant becomes
outstanding, the Company shall promptly deliver to the Holders any annual,
quarterly or other financial statements and such other information as is
provided to any holders of equity or debt securities (excluding holders of
senior bank debt) of the Company in their capacity as holders of such
securities.
SECTION 9.2 Persons Benefitting. Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the Company and the
Holders any right, remedy or claim under or by reason of this Agreement or any
part hereof.
SECTION 9.3 Indemnity. The Company hereby agrees to indemnify and hold
harmless each beneficial owner of a Warrant (whether or not it is, at the time
the indemnity provided for in this Section 9.3 is sought, such a beneficial
owner) against all losses, damages or liabilities which such beneficial owner
suffers as a result of any breach, on the date of any exercise of a Warrant by
such beneficial owner, of the representations, warranties or agreements
contained herein.
SECTION 9.4 Rights of Holders. Except as otherwise specifically required
herein, holders of unexercised Warrants are not entitled (i) to receive
dividends or other distributions, (ii)
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<PAGE>
to receive notice of or vote at any meeting of the stockholders, (iii) to
consent to any action of the stockholders, (iv) to receive notice of any other
proceedings of the Company or (v) to exercise any other rights as stockholders
of the Company.
SECTION 9.5 Amendment. (a) This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company may deem necessary or
desirable; provided, however, that such action shall not affect adversely the
rights of the Holders. Any amendment or supplement to this Agreement that has an
adverse effect on the interests of the Holders shall require the written consent
of the Holders of a majority of the then outstanding Warrants. The consent of
each Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than pursuant to adjustments
provided herein). In determining whether the Holders of the required number of
Warrants have concurred in any direction, waiver or consent, Warrants owned by
the Company or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company shall be disregarded
and deemed not to be outstanding.
(b) Pursuant to the Letter Agreement dated June 29, 1999 (the "Letter
Agreement"), the Holders have become party to the THL Shareholders' Agreement
solely for purposes of Sections 3, 6, 7 and 8 thereof, and the defined terms
used in such sections, as modified by this Agreement. In connection with any
proposed amendment, waiver or modification of such sections, the Holders shall
have the same voting rights as the Shareholders thereunder and shall be bound by
any amendment, waiver or consent to such Sections 3, 6, 7 or 8 (as to the
subject matter existing on the date hereof) approved by the requisite number of
Shareholders as if the Holders were signatories thereto; provided that if the
Shareholders receive any remuneration or compensation in respect of any
amendment, waiver or modification, the Holders shall be entitled to share
therein as if they were Shareholders thereunder.
SECTION 9.6 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be in writing (unless otherwise expressly
provided herein) and shall be deemed to have been duly given or made when
delivered by hand, or by telecopy, receipt acknowledged, or five (5) calendar
days after having been deposited in the mail addressed as follows:
The Company: The New York Restaurant Group, Inc.
1114 First Avenue
New York, New York 10021
Attn: Mr. Mark K. Levine, Executive Vice President
20
<PAGE>
with a copy to: Hutchins, Wheeler & Dittmar, A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
Magnetite: Magnetite Asset Investors L.L.C.
c/o BlackRock Financial Management, Inc.
345 Park Avenue, 29th Floor
New York, NY 10154
Attn: Dennis M. Schaney
with copies to: Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Attn: James J. Connors, II, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attn: John M. Vasily, Esq.
The Company by notice to the other parties hereto may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
SECTION 9.7 Governing Law. The laws of the State of New York shall govern
this Agreement and the Warrant Certificates.
SECTION 9.8 Successors. All agreements of the Company in this Agreement
and the Warrant Certificates shall bind its successors.
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<PAGE>
SECTION 9.9 Multiple Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
together represent the same Agreement. One signed copy is enough to prove this
Agreement.
SECTION 9.10 Table of Contents. The table of contents and headings of the
Articles and Sections of this Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
SECTION 9.11 Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
SECTION 9.12 Termination. Unless otherwise expressly stated herein, this
Agreement shall terminate if no Transfer Restricted Securities are outstanding.
22
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
THE NEW YORK RESTAURANT GROUP, INC.
By:
-----------------------------------------
Name:
Title:
MAGNETITE ASSET INVESTORS L.L.C.
By: BLACKROCK FINANCIAL MANAGEMENT, INC.,
as Managing Member
By:
-----------------------------------------
Name: Dennis M. Schaney
Title: Managing Director
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<PAGE>
EXHIBIT A TO WARRANT AGREEMENT
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS AND THE WARRANT SHARES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH
OTHER APPLICABLE LAWS. THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED
UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT
TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. 1 Certificate for 107,983 Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
THE NEW YORK RESTAURANT GROUP, INC.
THIS CERTIFIES THAT, Magnetite Asset Investors L.L.C., a Delaware limited
liability company, or its registered assigns, is the registered holder of the
number of Warrants set forth above (the "Warrants"). Each Warrant entitles the
holder thereof (the "Holder"), at its option and subject to the provisions
contained herein and in the Warrant Agreement referred to below, to purchase
from The New York Restaurant Group, Inc., a Delaware corporation (the
"Company"), one share of Common Stock, par value of $0.01 per share, of the
Company (the "Common Stock") at the per share exercise price of $0.01 (the
"Exercise Price"), or by Cashless Exercise referred to below. This Warrant
Certificate shall terminate and become void as of the close of business on June
29, 2009 (the "Expiration Date") or upon the exercise hereof as to all the
shares of Common Stock subject hereto. The number of shares purchasable upon
exercise of the
A-1
<PAGE>
Warrants and the Exercise Price per share shall be as provided in and subject to
adjustment from time to time as set forth in Sections 3 and 4 of the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of June 29, 1999 (the "Warrant Agreement"), among the Company
and Magnetite Asset Investors L.L.C., and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the Company
and the Holders of the Warrants. Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Warrant Agreement. A copy of the
Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Company at 1114 First Avenue, New York, New York 10021.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by surrender of this Warrant Certificate with
the form of election to purchase Warrant Shares attached hereto as Exhibit 1
duly executed and with the simultaneous payment of the Exercise Price in cash
(subject to adjustment) to the Company or (ii) by Cashless Exercise. Payment of
the Exercise Price in cash shall be made in cash or by certified or official
bank check payable to the order of the Company or by wire transfer of funds to
an account designated by the Company for such purpose. Payment by Cashless
Exercise shall be made by the surrender of a Warrant or Warrants represented by
one or more Warrant Certificates and without payment of the Exercise Price in
cash, in exchange for the issuance of such number of shares of Common Stock
equal to the product of (1) the number of shares of Common Stock for which such
Warrant would otherwise then be nominally exercised if payment of the Exercise
Price were being made in cash and (2) the Cashless Exercise Ratio.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time or
from time to time on or after the Closing Date. No Warrant shall be exercisable
after the Expiration Date.
In the event the Company enters into a Combination, the Holder hereof will
be entitled to receive upon exercise of the Warrants the shares of Common Stock
or other securities or other property of such surviving entity as such Holder
would have been entitled to receive upon or as the result of such Combination
had the Holder exercised its Warrants immediately prior to such Combination;
provided, however, that in the event that, in connection with such Combination,
consideration to holders of Common Stock in exchange for their shares is payable
solely in cash or in the event of the dissolution, liquidation or winding-up of
the Company, the Holder hereof will be entitled to receive distributions on an
equal basis with the holders of Common Stock or
A-2
<PAGE>
other securities issuable upon exercise of the Warrants, as if the Warrants had
been exercised immediately prior to such events, less the Exercise Price.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.4 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be issued to the
Holder hereof a new Warrant Certificate in respect of the shares of Common Stock
as to which the Warrants shall not have been exercised. This Warrant Certificate
may be exchanged by presenting this Warrant Certificate to the Company properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value for one Warrant Share on
the date the Warrant is exercised, multiplied by such fraction, computed to the
nearest whole cent.
THIS WARRANT CERTIFICATE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID").
THE COMPANY WILL MAKE AVAILABLE TO EACH HOLDER, UPON REASONABLE REQUEST THEREOF
DIRECTED TO THE COMPANY'S CHIEF FINANCIAL OFFICER, MARK LEVINE, AT (212)
838-2061, RELEVANT OID CALCULATIONS WITH RESPECT TO THIS WARRANT CERTIFICATE.
All shares of Common Stock issuable by the Company upon the exercise of
the Warrants shall, upon such issue, be duty and validly issued and fully paid
and non-assessable.
The Holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company as the absolute owner of the Warrant
Certificate for all purposes whatsoever and the Company shall not be affected by
notice to the contrary.
Except as otherwise specifically required in the Warrant Agreement, the
Warrants do not entitle any Holder hereof to any of the rights of a shareholder
of the Company.
THE NEW YORK RESTAURANT GROUP, INC.
By
----------------------------------------
[SEAL]
A-3
<PAGE>
Attest:
--------------------------------
Secretary
DATED:
A-4
<PAGE>
EXHIBIT 1 TO WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
THE NEW YORK RESTAURANT GROUP, INC.
The undersigned hereby irrevocably elects to exercise [ ] Warrants at an
exercise price per Warrant (subject to adjustment) of $.O1 to acquire an equal
number of shares of Common Stock, par value $.01 per share, of The New York
Restaurant Group, Inc., on the terms and conditions specified in the Warrant
Certificate and the Warrant Agreement therein referred to, surrenders this
Warrant Certificate and all right, title and interest therein to The New York
Restaurant Group, Inc., and directs that the shares of Common Stock deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Date:
--------------------------
--------------------------------(1)
(Signature of Owner)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------
- ----------
1. The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national
bank or trust company or by a member firm of any national securities
exchange.
A-5
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A-6
<PAGE>
EXHIBIT B TO WARRANT AGREEMENT
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF WARRANT CERTIFICATES
Re: 107,983 Warrants to Purchase Common Stock (the "Warrants") of THE NEW
YORK RESTAURANT GROUP, INC.
This Warrant Certificate relates to 107,983 Warrants held in definitive
form by ________ (the "Transferor").
The Transferor*:
|_| has requested the Company by written order to exchange or register the
transfer of a Warrant Certificate
|_| In connection with such request and in respect of such Warrant
Certificate, the Transferor does hereby certify that the Transferor is familiar
with the Warrant Agreement relating to the above captioned Warrants and that the
transfer of this Warrant Certificate does not require registration under the
Securities Act of 1933, as amended (the "Securities Act") because:
|_| Such Warrant Certificate is being acquired for the Transferor's own
account without transfer (in satisfaction of Section 4 of the Warrant
Agreement).
|_| Such Warrant Certificate is being transferred (i) to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A or (ii) pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (and, in the case of clause
(ii), based on an opinion of counsel if the Company so requests).
|_| Such Warrant Certificate is being transferred (i) in accordance with
Rule 144 under the Securities Act (and based on an opinion of counsel if the
Company so requests) or (ii) pursuant to an effective registration statement
under the Securities Act.
|_| Such Warrant Certificate is being transferred to an institutional
accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act pursuant to a private placement exemption from the
registration requirements of the Securities Act (together with a certification).
- ----------
* Check applicable box.
B-1
<PAGE>
|_| Such Warrant Certificate is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company so requests).
[INSERT NAME OF TRANSFEROR]
By:
-----------------------
Date:
- ----------
* Check applicable box.
B-2
<PAGE>
EXHIBIT 5.4
Opinion of Counsel for the Company
June 29, 1999
To Magnetite Asset Investors L.L.C.
c/o BlackRock Financial Management, Inc.
345 Park Avenue, 29th Floor
New York, New York 10154
The New York Restaurant Group Inc.
12 1/2% Senior Subordinated Notes due June 29, 2006
Dear Sirs:
We are counsel to The New York Restaurant Group Inc., a Delaware
corporation (the "Company"), and have acted in such capacity in connection with
the issue and sale today by the Company of $10,000,000.00 aggregate principal
amount of its 12 1/2% Senior Subordinated Notes due June 29, 2006 (the "Notes")
pursuant to the Senior Subordinated Note Purchase Agreement (the "Note Purchase
Agreement"), dated June 29, 1999, between the Company and you. Capitalized terms
used in this opinion without definition have the respective meanings specified
in the Note Purchase Agreement.
In so acting, we have participated in the preparation of the Note
Purchase Agreement, the Notes, the Subsidiaries' Guaranty, dated June 29, 1999
(the "Subsidiaries' Guarantee"), the Warrant Agreement, dated June 29, 1999 (the
"Warrant Agreement") and the Warrants issued pursuant to the Warrant Agreement
(the "Warrants" and together with the Note Purchase Agreement, the Notes, the
Subsidiaries' Guarantee and the Warrant
<PAGE>
Agreement, the "Financing Documents"). We have also examined and relied upon the
representations and warranties as to factual matters contained in or made
pursuant to the Note Purchase Agreement and the other Financing Documents and
examined and relied upon the originals, or copies certified or otherwise
identified to our satisfaction, of such records, documents, certificates and
other instruments, and have made such other investigations, as in our judgment
are necessary or appropriate to enable us to render the opinion expressed below.
We are of the following opinion:
1. Incorporation, Standing, etc. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted, to enter into
the Note Purchase Agreement and the other Financing Documents, to issue and sell
the Notes and to carry out the terms of the Note Purchase Agreement, the Notes
and the other Financing Documents.
2. Subsidiaries. Each Subsidiary is a corporation or limited
liability company duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation and has all requisite power and
authority to own and operate its properties and to carry on its business as now
conducted. All the outstanding shares of capital stock or all the membership
interests of each Subsidiary are validly issued, fully paid and nonassessable
and all such shares or membership interests shown in Schedule 3.25 to the Note
Purchase Agreement as owned by the Company or by any other Subsidiary are owned
beneficially and of record by the Company or by such other Subsidiary free and
clear of any Lien, except as otherwise disclosed in Schedule 3.25 to the Note
Purchase Agreement.
3. Litigation. To our knowledge, there is no litigation, proceeding
or investigation pending by or against the Company or any of its Subsidiaries
which questions the validity of the Note Purchase Agreement, the Notes or any
other Financing Document or any action taken or to be taken pursuant to the Note
Purchase Agreement, the Notes or any other Financing Document, or, which, if
adversely determined, would have a material adverse effect on the business,
operations, property or financial or other condition of the Company, considered
individually, or of the Company and its Subsidiaries, considered as a whole.
2
<PAGE>
4. Compliance with Other Instruments, etc. To our knowledge, neither
the Company nor any of its Subsidiaries is in violation of any term of its
certificate or articles of incorporation, partnership agreement, other
constituency agreements, or by-laws, and neither the Company nor any of its
Subsidiaries is in violation of any term of the Loan Agreement, dated as of
September 1, 1998, between the Company and Fleet Bank, N.A. (the "Senior Loan
Agreement") or the Shareholders' Agreement, dated October 31, 1997, between the
Company, Alan Stillman, Thomas H. Lee Equity Partners, L.P. THL-CCI Limited
Partnership and those Persons listed as Shareholders on the counterpart
signature pages thereto (the "THL Shareholders' Agreement"), or any other
agreement in connection with either the Senior Loan Agreement or the
Shareholders' Agreement to which it is a party or by which it is bound. Neither
the execution and delivery nor the performance of the Note Agreement, the Notes
and the other Financing Documents will result in any violation of or be in
conflict with or constitute a default under any such term or result in the
creation of (or impose any obligation on the Company or any of its Subsidiaries
to create) any Lien (except for Permitted Liens) upon any of the properties or
assets of the Company or any of its Subsidiaries pursuant to any such term or
will result in a violation of or be in conflict with or constitute a default
under the Senior Loan Agreement or the THL Shareholders' Agreement.
5. Governmental Consent. No consent, approval or authorization of,
or declaration or filing with, or other act by or in respect of any other person
(including stockholders and creditors of the Company or any of its Subsidiaries)
or any governmental authority on the part of the Company or any of its
Subsidiaries is required in connection with the execution, delivery,
performance, validity and enforceability of the Note Purchase Agreement, the
Notes or any of the other Financing Documents or the valid offer, issue, sale
and delivery of the Notes pursuant to the Note Purchase Agreement.
6. Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company," or a company "controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7. Public Utility Holding Company Act; Federal Power Act. Neither
the company nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, and is not a "public
utility", as such term is defined in the Federal Power Act, as amended.
8. Note Purchase Agreement, the Notes and Other Financing Documents.
The Note Purchase Agreement, the Notes and the other Financing Documents have
been duly authorized by all necessary action on the part of the Company or its
Subsidiaries, as the case
3
<PAGE>
may be, and do not require any shareholder approval. The Note Purchase Agreement
and the other Financing Documents between the Company and you, the Notes and
Warrants purchased by you today have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company,
enforceable against the Company or its Subsidiaries, as the case may be, in
accordance with their respective terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors.
9. Securities Act and Trust Indenture Act. The offer, issue, sale
and delivery of the Notes under the circumstances contemplated by the Note
Purchase Agreement constitute exempted transactions under the registration
provisions of the Securities Act of 1933, as amended, and neither the
registration of the Notes thereunder nor the qualification of an indenture in
respect of the Notes under the Trust Indenture Act of 1939, as amended, is
required in connection with such offer, issue, sale and delivery.
10. Regulations T, X and U. The issue and sale of the Notes do not
violate Regulations T, X or U of the Board of Governors of the Federal Reserve
System.
Very truly yours,
4
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.1(A)
variation from GAAP in March Financial Statements (Company and Subsidiaries):
None.
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.10
Permitted Liens, clause (d) (Company and Subsidiaries):
1. S&W of Miami, L.L.C. ("S&W Miami"), a Subsidiary of the Borrower, funded
the joint Chapter 11 plan of reorganization (the "Plan") of South Pointe
Hospitality, Inc. ("South Point") and 1 Washington Avenue Corporation ("1
Washington") (collectively, the "Debtors"). Upon consummation of the Plan,
S&W Miami acquired 100% of the newly issued shares of common stock of each
of the Debtors, as reorganized, and the existing equity interests in the
Debtors were cancelled. As consideration for S&W Miami's acquisition of
the new common stock, S&W Miami provided funding for distributions under
the Plan in the form of cash and the assumption, by the reorganized
Debtors, of certain existing liabilities. Following consummation of the
Plan, the Debtors are obligated under the agreements described below,
which obligations are secured by substantially all of the assets of the
Debtors.
a. The Ocean Bank Loan Agreement
Pursuant to a Leasehold First Mortgage and Security Agreement, dated as of
April 12, 1994, by and between the Debtors and Ocean Bank (the
"Mortgage"), the Debtors gave Ocean Bank a mortgage in a lease and a
ground lease and purchase option, and on fixtures, subleases, rents and
personal property. The Mortgage secured a claim held by Ocean Bank in the
amount of $1.2 million. Under the Plan, and in full settlement of the
Ocean Bank claims, the reorganized Debtors assumed such obligations to
Ocean Bank (with certain modifications), and S&W Miami and the Borrower
guaranteed such obligations.
b. SBA
Pursuant to a Loan Agreement, dated April 12, 1994, by and between the
Debtors and the United States Small Business Administration (the "SBA"),
the SBA loaned South Pointe $1,000,000. Such loan is secured by a second
lien on a portion of the collateral for the Ocean Bank Mortgage. The SBA
asserted a $970,000 claim against the Debtors. The reorganized Debtors
assumed the SBA loan, and S&W Miami and the Borrower guaranteed such loan.
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
<PAGE>
SCHEDULE 3.13
trade names, fictitious names, d/b/a's of Company and Subsidiaries:
1. The Company and its Subsidiaries use the following trade names and/or
"doing business as" names:
a. "Cite"
b. "Cite Grill"
c. "Maloney & Porcelli"
d. "Mrs. Park's Tavern"
e. "Park Avenue Cafe"
f. "Manhattan Ocean Club"
2. Pursuant to the License Agreement, dated August 16, 1996, between the
Company and St. James Associates, L.P., the Company licensed the right to
use the trademark "Smith & Wollensky" and "Wollensky's Grill" and related
marks in certain geographic areas.
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.16
management agreements and Material Contracts (Company and Subsidiaries):
1. Restaurant Management Agreement, dated January 24, 1993, among Nabil
Chartouni and Fouad Chartouni and The New York Restaurant Group, Inc., as
amended by First Amendment to Restaurant Management Agreement, dated
December 6, 1994, between Post House Investors, L.P. and The New York
Restaurant Group, Inc. and Second Amendment to Restaurant Management
Agreement, dated October 29, 1996, between Post House Investors, L.P. and
The New York Restaurant Group, L.L.C.
2. Restaurant Management Agreement, dated April 18, 1996, between 37 East
50th Street Corp. and Restaurant Group Management Services, L.L.C.
3. Submanagement Agreement dated June 9, 1995, between Doubletree Partners
and Mrs. Parks Management Company, L.L.C.
4. Management Agreement, dated as of January 1, 1996, between Thomas H. Lee
Capital, LLC and The New York Restaurant Group, L.L.C., as amended.
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.17
real property leases (Company and Subsidiaries):
Leases
1. Agreement of Lease, dated as of November 1, 1991, between Beekman Tenants
Corporation and White & Witkowsky, Inc., for space at 575 Park Avenue, New
York, New York, as modified by Letter Agreement, dated November 21, 1991,
between Beekman Tenants Corporation and White & Witkowsky, Inc. and
Assignment and Assumption of Lease, dated September 9, 1992, between White
& Witkowsky, Inc. as assignor, and Atlantic & Pacific Grill Associates,
L.P., as assignee.
2. Agreement of Lease, dated as of August 31, 1983, between Holrod Associates
and Thursday's Supper Pub, Inc., for space at 7 West 58th Street, New
York, New York, as modified by Supplemental Agreement and First Amendment
to Lease, dated as of May 3, 1993, among Holrod Associates, Manhattan
Ocean Club Associates and Thursday's Supper Pub, Inc., Second Amendment to
Lease, dated as of April 1, 1995, between Holrod Associates and Manhattan
Ocean Club Associates and Letter of Consent, dated January 10, 1996,
between Thursday's Supper Pub, Inc. and Holrod Associates.
3. Lease, dated June 21, 1988, between Rockefeller Center North, Inc. and
White & Witkowsky, Inc., for space at 111 West 50th Street, New York, New
York, as modified by Assignment and Assumption of Lease, dated as of June
7, 1990, among La Cite, Inc. (formerly White & Witkowsky, Inc.), as
assignor, La Cite Associates, L.P., as assignee and Rockefeller Center
North, Inc., as landlord, Supplemental Indenture, dated as of January 1,
1991, between Rockefeller Center North, Inc. and La Cite Associates, L.P.
and Supplemental Indenture, dated as of January 1, 1992, between
Rockefeller Center North, Inc. and La Cite Associates, L.P.
4. Lease, dated October 19, 1988, between First 61 Partners and The New York
Restaurant Group, Inc., for 1114 First Avenue, 6th Floor, New York, New
York, as amended by Agreement, dated May 1, 1992, between First 61
Partners and The New York Restaurant Group, Inc. and Assignment and
Assumption of Lease, dated January 10, 1996, between The New York
Restaurant Group, L.L.C., as assignor, and New York RGI Sub, L.L.C., as
assignee.
5. Lease, dated May, 1997, between Marina City Hotel Enterprises, L.L.C. and
S&W Chicago, L.L.C., for space at Marina City, Chicago, Illinois.
<PAGE>
6. Lease With an Option to Purchase dated February 9, 1998 between S&W of Las
Vegas, L.L.C. and The Somphone Limited Partnership for space located at
3767 Las Vegas Boulevard South, Las Vegas, Nevada.
7. Lease between S&W D.C., L.L.C. and 1112 Nineteenth Street Associates for
space located at 1112 Nineteenth Street, N.W., Washington, D.C.
8. Lease between M.O.C. of Miami, L.L.C. and Pennsylvania Plaza Associates
dated April 7, 1999 for space located at 601 Pennsylvania Avenue, N.W.,
North Building, Washington, D.C.
9. Lease between 1 Washington Avenue Corp. and The City of Miami Beach dated
February 8, 1985 and amended June 1, 1997 for space located in Dade
County, Florida.
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.19
materially adverse changes since December 28, 1998 in financial condition or
business (Company and Subsidiaries):
None.
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.25
complete and correct lists of:
(i) Subsidiaries
- --------------------------------------------------------------------------------
Name Jurisdiction Ownership
- --------------------------------------------------------------------------------
The Manhattan Ocean Club Associates, LLC Delaware 100% by Company
- --------------------------------------------------------------------------------
La Cite Associates, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
Atlantic & Pacific Grill Associates, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
Mrs. Park Sub, LLC Delaware 100% by Company
- --------------------------------------------------------------------------------
New York RGI Sub, LLC Delaware 100% by Company
- --------------------------------------------------------------------------------
Restaurant Group Management Service, LLC Delaware 100% by Company
- --------------------------------------------------------------------------------
S&W Chicago, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
S&W of Miami, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
S&W of Las Vegas, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
S&W D.C., L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
MOC D.C., L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
S&W New Orleans, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
MOC of Miami, L.L.C. Delaware 100% by Company
- --------------------------------------------------------------------------------
(ii) Company's Affiliates
1 Washington Avenue Corporation
South Pointe Hospitality, Inc.
<PAGE>
(iii) Company's directors and senior officers
Alan N. Stillman Chief Executive Officer
Director
James Dunn President
Director
Mark K. Levine Chief Financial Officer
Executive Vice President of Finance
Treasurer
Director
Eugene M. Byrne Vice President of Operations
Eugene Zuriff Director of Strategic Planning
Director
James Gerston Director of New Operations
Thomas H. Lee Director
C. Hunter Boll Director
Richard LeFrak Director
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.25(c)
agreements restricting the ability of any Subsidiary to pay dividends out of
profits or make distributions of profits to Company or other Subsidiaries
holding stock in Subsidiary:
None.
<PAGE>
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SCHEDULE 3.26
complete and correct list of all outstanding Indebtedness of Company and
Subsidiaries
1. The Senior Loan
2. In 1995, the IRS agreed with the Company and its Subsidiaries and their
employees that all employees will report all the tips they receive. The
IRS has stated separately that, so long as employees start reporting their
tips accurately, the IRS will not make further assessments on the Company
and its Subsidiaries with respect to FICA relating to under reported tips
for prior periods. However, as of December 30, 1996, employees of the
Company and its Subsidiaries were still under reporting their tips, and
the Company continues to accrue 7.65% of the under reported amount (the
amount of FICA tax the Company and its Subsidiaries would owe on those
amounts). The Company accrued $392,000, in the aggregate, as of December
28, 1998.
3. Obligations assumed by S&W of Miami, L.L.C.:
a. One Washington Avenue Corporation:
i. Dade County 1995 and 1996 property taxes
ii. Muskat Group
iii. Ocean Bank loan described in Schedule 3.10
iv. SBA loan described in Schedule 3.10
b. South Pointe Hospitality, Inc.
i. Florida state taxes
ii. Federal taxes
iii. Miscellaneous obligations to trade creditors
4. Letter of Credit No. PB-284294, dated March 7, 1994, issued by Morgan
Guaranty Trust Company of New York in favor of Beekman Tenants Corporation
for the account of Atlantic & Pacific Grill Associates, L.P., for up to an
aggregate amount of $50,000, as amended.
<PAGE>
EXECUTION COPY
================================================================================
WARRANT AGREEMENT
Dated as of
June 29, 1999
among
THE NEW YORK RESTAURANT GROUP, INC.
and
MAGNETITE ASSET INVESTORS L.L.C.
------------------------------------------
Warrants for
Common Stock of
THE NEW YORK RESTAURANT GROUP, INC.
------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1.
Defined Terms
SECTION 1.1 Definitions.....................................................1
SECTION 1.2 Other Definitions...............................................4
SECTION 1.3 Rules of Construction...........................................5
ARTICLE 2.
Warrant Certificates
SECTION 2.1 Form and Dating of Warrant Certificates.........................5
SECTION 2.2 Execution of Warrant Certificates...............................6
SECTION 2.3 Certificate Register............................................6
SECTION 2.4 Transfer and Exchange of Warrant Certificates...................6
SECTION 2.5 Replacement Warrant Certificates................................7
SECTION 2.6 Temporary Warrant Certificates..................................8
SECTION 2.7 Cancellation of Warrant Certificates............................8
ARTICLE 3.
Exercise Terms
SECTION 3.1 Exercise Price..................................................8
SECTION 3.2 Exercise Periods................................................8
SECTION 3.3 Expiration......................................................8
SECTION 3.4 Manner of Exercise..............................................9
SECTION 3.5 Issuance of Warrant Shares......................................9
SECTION 3.6 Fractional Warrant Shares......................................10
SECTION 3.7 Reservation of Warrant Shares..................................10
SECTION 3.8 Compliance with Law............................................10
ARTICLE 4.
Antidilution Provisions
SECTION 4.1 Changes in Common Stock........................................11
SECTION 4.2 Cash Dividends and Other Distributions.........................11
SECTION 4.3 [Intentionally omitted.].......................................12
SECTION 4.4 Combination; Liquidation.......................................12
SECTION 4.5 Tender Offers: Exchange Offers.................................13
SECTION 4.6 Other Events...................................................13
SECTION 4.7 Superseding Adjustment.........................................13
SECTION 4.8 Minimum Adjustment.............................................14
SECTION 4.9 Notice of Adjustment...........................................14
<PAGE>
Page
----
SECTION 4.10 Notice of Certain Transactions................................14
SECTION 4.11 Adjustment to Warrant Certificate.............................15
ARTICLE 5.
Tag-Along Rights
SECTION 5.1 Tag-Along Rights on Transfers..................................15
ARTICLE 6.
Certain Agreements of the Company
SECTION 6.1 Reporting and Inspection Covenants.............................16
SECTION 6.2 Nature of Business.............................................17
SECTION 6.3 Transactions with Affiliates...................................17
SECTION 6.4 Issuance of Additional Classes of Stock........................17
SECTION 6.5 Waiver of Preemptive Rights....................................17
ARTICLE 7.
Registration Rights
SECTION 7.1 Registration Rights............................................17
ARTICLE 8.
Transferability
SECTION 8.1 Legend.........................................................18
SECTION 8.2 Lock-Ups.......................................................19
ARTICLE 9.
Miscellaneous
SECTION 9.1 Financial Information..........................................19
SECTION 9.2 Persons Benefitting............................................19
SECTION 9.3 Indemnity......................................................19
SECTION 9.4 Rights of Holders..............................................19
SECTION 9.5 Amendment......................................................20
SECTION 9.6 Notices........................................................20
SECTION 9.7 Governing Law..................................................21
SECTION 9.8 Successors.....................................................21
SECTION 9.9 Multiple Originals.............................................22
SECTION 9.10 Table of Contents.............................................22
SECTION 9.11 Severability..................................................22
<PAGE>
Page
----
SECTION 9.12 Termination...................................................22
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B - Certificate to be Delivered Upon Exchange or Registration of
Transfer of Warrant Certificates
<PAGE>
EXHIBIT A TO WARRANT AGREEMENT
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS AND THE WARRANT SHARES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH
OTHER APPLICABLE LAWS. THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED
UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT
TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. 1 Certificate for 107,983 Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
THE NEW YORK RESTAURANT GROUP, INC.
THIS CERTIFIES THAT, Magnetite Asset Investors L.L.C., a Delaware
limited liability company, or its registered assigns, is the registered holder
of the number of Warrants set forth above (the "WARRANTS"). Each Warrant
entitles the holder thereof (the "HOLDER"), at its option and subject to the
provisions contained herein and in the
<PAGE>
Warrant Agreement referred to below, to purchase from The New York Restaurant
Group, Inc., a Delaware corporation (the "COMPANY"), one share of Common Stock,
par value of $0.01 per share, of the Company (the "COMMON STOCK") at the per
share exercise price of $0.01 (the "EXERCISE PRICE"), or by Cashless Exercise
referred to below. This Warrant Certificate shall terminate and become void as
of the close of business on June 29, 2009 (the "EXPIRATION DATE") or upon the
exercise hereof as to all the shares of Common Stock subject hereto. The number
of shares purchasable upon exercise of the
<PAGE>
Warrants and the Exercise Price per share shall be as provided in and subject to
adjustment from time to time as set forth in Sections 3 and 4 of the Warrant
Agreement. (Pursuan to Section 3.1 thereof, if the Subordinated Notes shall not
have been paid in full by June 29, 2001, the number of Warrants evidenced by the
Warrant Certificate shall be 143,977 Warrants, as subject to adjustment from
time to time as set forth in Section 3 and 4 of the Warrant Agreement.)
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of June 29, 1999 (the "WARRANT AGREEMENT"), among the
Company and Magnetite Asset Investors L.L.C., and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the Holder of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Warrant Agreement for a full statement
of the respective rights, limitations of rights, duties and obligations of the
Company and the Holders of the Warrants. Capitalized terms used but not defined
herein shall have the meanings ascribed thereto in the Warrant Agreement. A copy
of the Warrant Agreement may be obtained for inspection by the Holder hereof
upon written request to the Company at 1114 First Avenue, New York, New York
10021.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (I) by surrender of this Warrant Certificate with
the form of election to purchase Warrant Shares attached hereto as Exhibit 1
duly executed and with the simultaneous payment of the Exercise Price in cash
(subject to adjustment) to the Company or (II) by Cashless Exercise. Payment of
the Exercise Price in cash shall be made in cash or by certified or official
bank check payable to the order of the Company or by wire transfer of funds to
an account designated by the Company for such purpose. Payment by Cashless
Exercise shall be made by the surrender of a Warrant or Warrants represented by
one or more Warrant Certificates and without payment of the Exercise Price in
cash, in exchange for the issuance of such number of shares of Common Stock
equal to the product of (1) the number of shares of Common Stock for which such
Warrant would otherwise then be nominally exercised if payment of the Exercise
Price were being made in cash and (2) the Cashless Exercise Ratio.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time or
from time to time on or after the Closing Date. No Warrant shall be exercisable
after the Expiration Date.
In the event the Company enters into a Combination, the Holder hereof
will be entitled to receive upon exercise of the Warrants the shares of Common
Stock or other securities or other property of such surviving entity as such
Holder would have been entitled to receive upon or as the result of such
Combination had the Holder exercised
<PAGE>
its Warrants immediately prior to such Combination; PROVIDED, HOWEVER, that in
the event that, in connection with such Combination, consideration to holders of
Common Stock in exchange for their shares is payable solely in cash or in the
event of the dissolution, liquidation or winding-up of the Company, the Holder
hereof will be entitled to receive distributions on an equal basis with the
holders of Common Stock or other securities issuable upon exercise of the
Warrants, as if the Warrants had been exercised immediately prior to such
events, less the Exercise Price.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.4 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be issued to the
Holder hereof a new Warrant Certificate in respect of the shares of Common Stock
as to which the Warrants shall not have been exercised. This Warrant Certificate
may be exchanged by presenting this Warrant Certificate to the Company properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value for one Warrant Share on
the date the Warrant is exercised, multiplied by such fraction, computed to the
nearest whole cent.
All shares of Common Stock issuable by the Company upon the exercise of
the Warrants shall, upon such issue, be duty and validly issued and fully paid
and non-assessable.
The Holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company as the absolute owner of the Warrant
Certificate for all purposes whatsoever and the Company shall not be affected by
notice to the contrary.
Except as otherwise specifically required in the Warrant Agreement, the
Warrants do not entitle any Holder hereof to any of the rights of a shareholder
of the Company.
THE NEW YORK RESTAURANT GROUP, INC.
By __________________________________
[SEAL]
Attest: ____________________________
Secretary
DATED:
<PAGE>
EXHIBIT 1 TO WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
THE NEW YORK RESTAURANT GROUP, INC.
The undersigned hereby irrevocably elects to exercise [ ] Warrants at
an exercise price per Warrant (subject to adjustment) of $.01 to acquire an
equal number of shares of Common Stock, par value $.01 per share, of The New
York Restaurant Group, Inc., on the terms and conditions specified in the
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein to The New
York Restaurant Group, Inc., and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date: ______________________
(1)
-------------------------------------
(Signature of Owner)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------------
- ----------
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national
bank or trust company or by a member firm of any national securities
exchange.
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
<PAGE>
EXHIBIT B TO WARRANT AGREEMENT
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF WARRANT CERTIFICATES
Re: 107,983 Warrants to Purchase Common Stock (the "WARRANTS") of THE
NEW YORK RESTAURANT GROUP, INC.
This Warrant Certificate relates to 107,983 Warrants held in definitive
form by _________ (the "TRANSFEROR").
The Transferor*:
has requested the Company by written order to exchange or register the
transfer of a Warrant Certificate
In connection with such request and in respect of such Warrant
Certificate, the Transferor does hereby certify that the Transferor is familiar
with the Warrant Agreement relating to the above captioned Warrants and that the
transfer of this Warrant Certificate does not require registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT") because:
Such Warrant Certificate is being acquired for the Transferor's own
account without transfer (in satisfaction of Section 4 of the Warrant
Agreement).
Such Warrant Certificate is being transferred (i) to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A or (ii) pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (and, in the case of clause
(ii), based on an opinion of counsel if the Company so requests).
Such Warrant Certificate is being transferred (i) in accordance with
Rule 144 under the Securities Act (and based on an opinion of counsel if the
Company so requests) or (ii) pursuant to an effective registration statement
under the Securities Act.
Such Warrant Certificate is being transferred to an institutional
accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act pursuant to a private placement exemption from the
registration requirements of the Securities Act (together with a certification).
- ----------
* Check applicable box.
<PAGE>
Such Warrant Certificate is being transferred in reliance on and
in compliance with another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company so requests).
[INSERT NAME OF TRANSFEROR]
By: ___________________________
Date:
<PAGE>
WARRANT AGREEMENT, dated as of June 29, 1999 (this "AGREEMENT"), among
THE NEW YORK RESTAURANT GROUP, INC., a Delaware corporation (the "COMPANY"), and
MAGNETITE ASSET INVESTORS L.L.C., a Delaware limited liability company
("MAGNETITE").
W I T N E S S E T H :
WHEREAS, the Company has agreed to issue to Magnetite, and Magnetite has
agreed to purchase, warrants (the "WARRANTS") from the Company, each Warrant
initially entitling the holder thereof to purchase one share of Common Stock (as
defined below) of the Company representing in the aggregate 1 1/2% of the Common
Stock of the Company or, upon the occurrence of certain events, one and
one-third shares of Common Stock of the Company representing in the aggregate 2%
of the Common Stock of the Company, subject to adjustment as provided herein;
and
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINED TERMS
SECTION 1.1 DEFINITIONS. All terms defined in the Senior Subordinated
Note Purchase Agreement, dated as of June 29, 1999, between the Company and
Magnetite (the "NOTE PURCHASE AGREEMENT") shall have such defined meanings when
used herein unless otherwise defined herein. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means, as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
<PAGE>
"BOARD" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"BUSINESS DAY" a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.
"CASHLESS EXERCISE RATIO" means a fraction, the numerator of which is
the excess of the Current Market Value per share of Common Stock on the date of
exercise over the Exercise Price per share as of the date of exercise and the
denominator of which is the Current Market Value per share of the Common Stock
on the date of exercise.
"CLOSING DATE" means the date of the Note Purchase Agreement.
"COMBINATION" means an event in which the Company consolidates with,
merges with or into, or sells all or substantially all its property and assets
to another Person.
"COMMON STOCK" means the common stock of the Company with $.01 par value
per share issued or issuable upon exercise of the Warrants.
"CURRENT MARKET VALUE" per share of Common Stock or any other security
at any date means (I) if the security is not registered under the Exchange Act,
the value of the security as determined in good faith by the Board not taking
into account the absence of an active trading market or the minority nature of
the investment; or (II) if the security is registered under the Exchange Act,
the average of the daily closing bid prices for each Business Day during the
period commencing 15 Business Days before such date and ending on the date one
day prior to such date, or if the security has been registered under the
Exchange Act for less than 15 consecutive Business Days before such date, then
the average of the daily closing bid prices for all of the Business Days before
such date for which daily closing bid prices are available. The Company shall
pay the reasonable fees and expenses of any investment bank referred to in
Article 4 involved in the determination of Current Market Value.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
<PAGE>
"EXPIRATION DATE" means the tenth anniversary of the Closing Date.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a consistent basis.
"HOLDER" means the duly registered holder of a Warrant under the terms
of this Warrant Agreement.
"INITIAL PUBLIC OFFERING" or "IPO" means the first time a Registration
Statement (other than Registration Statements on Form S-4 or Form S-8) filed
under the Securities Act with the SEC respecting an offering, whether primary or
secondary, of Common Stock (or securities convertible into, or exchangeable for,
Common Stock, or rights to acquire Common Stock or such securities), which is
underwritten on a firmly committed basis, is declared effective and the
securities so registered are issued and sold.
"OFFICER" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"PERSON" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any of the Warrants, Warrant Shares or other
Registrable Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means (A) any Warrant Shares or other
securities issued or issuable upon exercise of any Warrants (which shall be
deemed, for the purposes of this definition, to have been issued to, and to be
held by, the Holders of such Warrants) and (B) any securities issued or issuable
with respect to any such Warrant Shares or other securities by way of stock
dividend or stock split or in connection with a combination of Shares of Common
Stock of the Company, recapitalization, merger, consolidation, reorganization or
otherwise. As to any such Registrable Securities, once issued such Shares of
Common Stock or securities shall cease to be Registrable Securities when (I) a
Registration Statement with respect to the sale of such Registrable Securities
shall have been declared effective and such securities shall have been disposed
of in accordance with such Registration Statement,
<PAGE>
(II) they shall have been or thereafter can be offered and sold by a person that
is not an affiliate of the Company pursuant to Rule 144 without compliance with
the provisions of Rule 144(e)(2), (III) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration under the Securities Act or qualification of
them under state blue sky laws, or (IV) they shall have ceased to be
outstanding.
"REGISTRATION STATEMENT" means a registration statement that is in
compliance with the Securities Act.
"REQUIREMENTS OF LAW" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents or such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBORDINATED NOTES" means the 12 1/2% Senior Subordinated Notes issued
pursuant to the Note Purchase Agreement.
"TRANSFER" means any sale, assignment, gift, bequest, transfer,
distribution, pledge, hypothecation or other encumbrance or disposition.
"TRANSFER RESTRICTED SECURITIES" means the Warrants and the Common Stock
which may be issued to Holders upon exercise of the Warrants, whether or not
such exercise has been effected. Each such security shall cease to be a Transfer
Restricted Security when (I) it has been disposed of pursuant to a registration
statement of the Company filed with the SEC and declared effective by the SEC
that covers the disposition of such Transfer Restricted Security, (II) it has
been distributed pursuant to Rule 144 (or any similar provisions under the
Securities Act then in effect) or (III) it has been otherwise transferred and
may be resold without registration under the Securities Act.
"UNDERLYING SECURITIES" means the Warrant Shares and other securities
issuable or issued upon exercise of the Warrants.
"WARRANT SHARES" means the shares of Common Stock of the Company
<PAGE>
received, or issued and received, as the case may be, upon exercise of the
Warrants.
SECTION 1.2 OTHER DEFINITIONS
Defined in
Term Section
"Agreement"................................. Introductory Paragraph
"Cashless Exercise"......................... 3.4
"Certificate Register"...................... 2.3
"Company"................................... Introductory Paragraph
"Exercise Price"............................ 3.1
"Fair Value"................................ 4.2
"Letter Agreement".......................... 9.5(b)
"Magnetite"................................. Introductory Paragraph
"Note Purchase Agreement"................... 1.1
"QIB"....................................... 2.4(a)
"Registrar"................................. 2.7
"Shareholders".............................. 5.1
"Successor Company"......................... 4.4(a)
"THL Shareholders' Agreement"............... 5.1
"Transfer Agent"............................ 3.5
"Warrants".................................. Introductory Paragraph
"Warrant Certificates"...................... 2.1
SECTION 1.3 RULES OF CONSTRUCTION. Unless the text otherwise required.
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
<PAGE>
ARTICLE 2.
WARRANT CERTIFICATES
SECTION 2.1 FORM AND DATING OF WARRANT CERTIFICATES. The Warrant
Certificates shall be substantially in the form of Exhibit A, the terms of which
are hereby incorporated in and expressly made a part of this Agreement. The
Warrant Certificates may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company) and shall bear the legend required by Section 8.1.
Each Warrant Certificate shall be dated the date of its countersignature.
The Warrants shall be issued initially in definitive form represented by
a Warrant Certificate (such certificate and all other certificates representing
physical delivery of Warrants in definitive form being called "WARRANT
CERTIFICATES"), representing Warrants to purchase 1 1/2% of the Common Stock of
the Company, increasing to 2% of the Common Stock of the Company (as outstanding
on the date hereof) if the Subordinated Notes shall not have been paid in full
by June 29, 2001, which shall be issued and delivered to Magnetite.
SECTION 2.2 EXECUTION OF WARRANT CERTIFICATES. Two Officers shall sign
the Warrant Certificates for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Warrant Certificate and may be in facsimile form.
SECTION 2.3 CERTIFICATE REGISTER. The Company shall keep a register
("CERTIFICATE REGISTER") of the Warrant Certificates and of their transfer and
exchange. The Certificate Register shall show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates. The Company may deem and treat the Person in
whose name a Warrant Certificate is registered as the absolute owner of such
Warrant Certificate for all purposes whatsoever and the Company shall not be
affected by notice to the contrary.
SECTION 2.4 TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES. (a) TRANSFER
AND EXCHANGE OF WARRANT CERTIFICATES. When Warrant Certificates are presented to
the Company with a request to register the transfer of such Warrant Certificates
or to exchange such Warrant Certificates for an equal number of Warrant
Certificates of
<PAGE>
other authorized denominations, the Company shall register the transfer or make
the exchange as requested if its reasonable requirements for such transaction
are met; PROVIDED, HOWEVER, that the Warrant Certificates surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company, duly executed by the
Holder thereof or his attorney duly authorized in writing; and
(ii) in the case of Warrant Certificates that are Transfer Restricted
Securities, shall be accompanied by the following additional information and
documents:
(1) a certificate from such Holder in substantially the form of
Exhibit B hereto certifying that:
(A) such securities are being delivered for registration in the
name of such Holder without transfer;
(B) such securities are being transferred to the Company;
(C) such securities are being transferred pursuant to an
effective registration statement under the Securities Act; or
(D) such securities are being transferred (w) to a "qualified
institutional buyer" ("QIB") as defined in Rule 144A under the Securities Act
pursuant to such Rule 144A, (x) in an offshore transaction in accordance with
Rule 904 under the Securities Act, (y) in a transaction meeting the requirements
of Rule 144 under the Securities Act or (z) pursuant to another available
exemption from the registration requirements of the Securities Act; and
(2) in the case of any transfer described under clause
(a)(ii)(1)(D)(x), (y) and (z) of this Section 2.4, evidence reasonably
satisfactory to the Company as to compliance with the restrictions set forth in
the legend in Section 8.1.
(b) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF WARRANT
CERTIFICATES. (i) To permit registrations of transfers and exchanges, the
Company shall execute Warrant Certificates as required pursuant to the
provisions of this Section 2.4.
(ii) All Warrant Certificates shall be the valid obligations of the
Company, entitled to the same benefits under this Agreement, as the Warrant
Certificates
<PAGE>
surrendered upon such registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant Certificate, the Company may deem and treat the Person in whose name
such Warrant Certificate is registered as the absolute owner of such Warrant
Certificate and the Company shall not be affected by notice to the contrary.
(iv) No service charge shall be made to a Holder for any registration
of transfer or exchange upon surrender of any Warrant Certificate. However, the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Warrant Certificates.
(v) Upon any sale or transfer of Warrant Certificates pursuant to an
effective registration statement under the Securities Act, pursuant to Rule 144
under the Securities Act or pursuant to an opinion of counsel reasonably
satisfactory to the Company that no legend is required, the Company shall permit
the Holder thereof to exchange such Warrant Certificates for new Warrant
Certificates not bearing the legend set forth in Section 8.1 and shall rescind
any restriction on the transfer of such new Warrant Certificates.
SECTION 2.5 REPLACEMENT WARRANT CERTIFICATES. If a mutilated Warrant
Certificate is surrendered to the Company or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement Warrant Certificate if
the reasonable requirements of Section 8-405 of the Uniform Commercial Code as
in effect in the State of New York are met. If required by the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
to protect the Company from any loss which the Company may suffer if a Warrant
Certificate is replaced. The Company may charge the Holder for its expenses in
replacing a Warrant Certificate. Every replacement Warrant Certificate is an
additional obligation of the Company.
SECTION 2.6 TEMPORARY WARRANT CERTIFICATES. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare temporary Warrant
Certificates. Temporary Warrant Certificates shall be substantially in the form
of definitive Warrant Certificates but may have variations that the Company
considers appropriate for temporary Warrant Certificates. Without unreasonable
delay, the Company shall prepare definitive Warrant Certificates and deliver
them in exchange for temporary Warrant Certificates.
SECTION 2.7 CANCELLATION OF WARRANT CERTIFICATES. (a) In the event the
<PAGE>
Company shall purchase or otherwise acquire Warrant Certificates, the same shall
be cancelled.
(b) The Company shall cancel and destroy all Warrant Certificates
surrendered for transfer, exchange, replacement, exercise or cancellation. The
Company may not issue new Warrant Certificates to replace Warrant Certificates
to the extent they evidence Warrants which have been exercised or Warrants which
the Company has purchased or otherwise acquired.
ARTICLE 3.
EXERCISE TERMS
SECTION 3.1 EXERCISE PRICE. Each Warrant shall initially entitle the
Holder thereof to purchase one share of Common Stock, PROVIDED, however, that if
the Subordinated Notes shall not have been paid in full by June 29, 2001, each
Warrant shall entitle the Holder thereof to purchase one and exactly one-third
shares of Common Stock, in each case for a per share exercise price (the
"EXERCISE PRICE") of $0.01, in each case subject to adjustment pursuant to the
terms of this Agreement.
SECTION 3.2 EXERCISE PERIODS. (a) Subject to the terms and conditions
set forth herein, the Warrants shall be exercisable at any time or from time to
time on or after the Closing Date.
(b) No Warrant shall be exercisable after the Expiration Date.
SECTION 3.3 EXPIRATION. A Warrant shall terminate and become void as of
the earlier of (I) the close of business on the Expiration Date or (II) the time
and date such Warrant is exercised. The Company shall give notice not less than
90, and not more than 120, days prior to the Expiration Date to the Holders of
all then outstanding Warrants to the effect that the Warrants will terminate and
become void as of the close of business on the Expiration Date. The Warrants
shall terminate and become void after the Expiration Date, notwithstanding the
Company's failure to give such notice.
SECTION 3.4 MANNER OF EXERCISE. Warrants may be exercised upon (I)
surrender to the Company of the Warrant Certificates, together with the form of
election to purchase Warrant Shares in the form of Exhibit 1 to the Warrant
Certificate duly filled in and signed by the Holder thereof and (II) payment to
the Company, of the Exercise Price for the number of Warrant Shares in respect
of which such Warrant is then exercised. Such payment shall be made (I) in cash
or by certified or official bank
<PAGE>
check payable to the order of the Company or by wire transfer of funds to an
account designated by the Company for such purpose or (II) by the surrender
(which surrender shall be evidenced by cancellation of the number of Warrants
represented by any Warrant Certificate presented in connection with a Cashless
Exercise) of a Warrant or Warrants (represented by one or more relevant Warrant
Certificates), and without the payment of the Exercise Price in cash, in
exchange for the issuance of such number of shares of Common Stock equal to the
product of (1) the number of shares of Common Stock for which such Warrant would
otherwise then be nominally exercised if payment of the Exercise Price as of the
date of exercise were being made in cash and (2) the Cashless Exercise Ratio. An
exercise of a Warrant in accordance with the immediately preceding sentence is
herein called a "CASHLESS EXERCISE". All provisions of this Agreement shall be
applicable with respect to an exercise of Warrant Certificates pursuant to a
Cashless Exercise for less than the full number of Warrants represented thereby.
If, pursuant to the Securities Act, the Company is not permitted to effect the
registration under the Securities Act of the issuance and sale of the Warrant
Shares by the Company to the Holders of the Warrants upon the exercise of the
Warrants, the Holders of the Warrants will be required, if the Company is not
then able to rely on an exemption from the registration requirements of the
Securities Act in connection with the issuance and sale of the Warrant Shares
upon exercise of the Warrants, to effect the exercise of the Warrants solely
pursuant to the Cashless Exercise option. Subject to Section 3.2, the rights
represented by the Warrants shall be exercisable at the election of the Holders
thereof either in full at any time or from time to time in part and in the event
that a Warrant Certificate is surrendered for exercise in respect of less than
all the Warrant Shares purchasable on such exercise at any time prior to the
Expiration Date a new Warrant Certificate exercisable for the remaining Warrant
Shares will be issued.
SECTION 3.5 ISSUANCE OF WARRANT SHARES. Subject to Section 2.5, upon the
surrender of Warrant Certificates and payment of the per share Exercise Price or
pursuant to a Cashless Exercise, as set forth in Section 3.4, the Company shall
issue and cause, if appointed, a transfer agent for the Common Stock ("TRANSFER
AGENT") to countersign and deliver to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise to the Person or Persons entitled to receive
the same, together with cash as provided in Section 3.6 in respect of any
fractional Warrant Shares otherwise issuable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price or pursuant to a
Cashless Exercise, as set forth in Section 3.4.
<PAGE>
SECTION 3.6 FRACTIONAL WARRANT SHARES. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
pursuant thereto. If any fraction of a Warrant Share would, except for the
provisions of this Section 3.6, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
Current Market Value for one Warrant Share on the date the Warrant is exercised,
multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.7 RESERVATION OF WARRANT SHARES. The Company shall at all
times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock (the "REGISTRAR") shall at all
times until the Expiration Date, or the time at which all Warrants have been
exercised or canceled, reserve such number of authorized shares as shall be
required for such purpose. The Company will keep a copy of this Agreement on
file with the Transfer Agent. The Company covenants that all Warrant Shares
which may be issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests, created by or through the Company, with respect to the
issue thereof. The Company will supply such Transfer Agent with duly executed
stock certificates for such purpose and will itself provide or otherwise make
available any cash which may be payable as provided in Section 3.6. The Company
will furnish to such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article 4 to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares.
SECTION 3.8 COMPLIANCE WITH LAW. Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (I) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (II) an
exemption from the registration requirements is available under the Securities
Act at the time of such exercise.
<PAGE>
ARTICLE 4.
ANTIDILUTION PROVISIONS
SECTION 4.1 CHANGES IN COMMON STOCK. In the event that at any time or
from time to time after the date hereof the Company shall (I) pay a dividend or
make a distribution on its Common Stock in shares of its Common Stock or other
shares of capital stock, (II) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, (III) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (IV)
increase or decrease the number of shares of Common Stock outstanding by
reclassification of its Common Stock, then the number of shares of Common Stock
purchasable upon exercise of each Warrant immediately after the happening of
such event shall be adjusted so that, after giving affect to such adjustment,
the Holder of each Warrant shall be entitled to receive the number of shares of
Common Stock upon exercise that such holder would have owned or have been
entitled to receive had such Warrants been exercised immediately prior to the
happening of the events described above (or, in the case of a dividend or
distribution of Common Stock, immediately prior to the record date therefor),
and the Exercise Price for each Warrant shall be adjusted in inverse proportion.
An adjustment made pursuant to this Section 4.1 shall become effective
immediately after the effective date, retroactive to the record date therefor in
the case of a dividend or distribution in shares of Common Stock, and shall
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
SECTION 4.2 CASH DIVIDENDS AND OTHER DISTRIBUTIONS. In case at any time
or from time to time after the date hereof the Company shall distribute to
holders of Common Stock (I) any dividend or other distribution of cash,
evidences of its indebtedness, or any other properties or securities or (II) any
options, warrants or other rights to subscribe for or purchase any of the
foregoing (other than, in each case set forth in (I) and (II), (X) any dividend
or distribution described in Section 4.1, or (Y) any rights, options, warrants
or securities described in Section 4.3 then the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock purchasable upon
the exercise of such Warrant immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
distribution, and the denominator of which shall be such Current Market Value
per share of Common Stock less the sum of (X) any cash distributed per share of
Common Stock and (Y) the fair value (the "FAIR VALUE") (as determined in good
faith by the Board, whose determination shall be evidenced by a Board
resolution, a copy of which will be sent to Holders upon request) of the
portion, if any, of the distribution applicable to one
<PAGE>
share of Common Stock consisting of evidences of indebtedness, shares of stock,
securities, other property, warrants, options or subscription of purchase rights
(notwithstanding the foregoing, if the Fair Value in the above formula equals or
exceeds the Current Market Value per share of Common Stock in the above formula,
then the Current Market Value per share of Common Stock shall be equal to the
fair value per share of the Common Stock on the record date as determined in
good faith by the Board and described in a Board resolution); and the Exercise
Price shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such record date by the above fraction. Such adjustments
shall be made whenever any distribution is made and shall become effective as of
the date of distribution, retroactive to the record date for any such
distribution; PROVIDED, HOWEVER, that the Company is not required to make an
adjustment pursuant to this Section 4.2 if at the time of such distribution the
Company makes the same distribution to Holders of Warrants as it makes to
holders of Common Stock pro rata based on the number of shares of Common Stock
for which such Warrants are exercisable (whether or not currently exercisable).
No adjustment shall be made pursuant to this Section 4.2 which shall have the
effect of decreasing the number of shares of Common Stock purchasable upon
exercise of each Warrant or increasing the Exercise Price.
SECTION 4.3 [Intentionally omitted.]
SECTION 4.4 COMBINATION; LIQUIDATION. (a) Except as provided in Section
4.4(b), in the event of a Combination, the Holders shall have the right to
receive upon exercise of the Warrants such number of shares of Common Stock or
other securities or property which such Holder would have been entitled to
receive upon or as a result of such Combination had such Warrant been exercised
immediately prior to such event. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "SUCCESSOR COMPANY") in such Combination will enter into an agreement with
the Company confirming the Holders' rights pursuant to this Section 4.4(a) and
providing for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 4. The provisions of
this Section 4.4(a) shall similarly apply to successive Combinations involving
any Successor Company.
(b) In the event of (I) a Combination in which consideration to holders
of Common Stock in exchange for their shares is payable solely in cash, or (II)
the dissolution, liquidation or winding-up of the Company, then the Holders of
the Warrants will be entitled to receive distributions on an equal basis with
the holders of Common Stock or other securities issuable upon exercise of the
Warrants, as if the Warrants had been exercised immediately prior to such event,
less the Exercise Price.
In case of any Combination described in this Section 4.4(b), the
surviving or
<PAGE>
acquiring Person and, in the event of any dissolution, liquidation or winding-up
of the Company, the Company, shall make available promptly the funds, if any,
necessary to pay to the Holders of the Warrants the amounts to which they are
entitled as described above. After such funds and the surrendered Warrant
Certificates are received, the Company shall make payment to the Holders by
delivering a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants.
SECTION 4.5 TENDER OFFERS: EXCHANGE OFFERS. In the event that the
Company or any subsidiary of the Company shall purchase shares of Common Stock
pursuant to a tender offer or an exchange offer for a price per share of Common
Stock that is greater than the then Current Market Value per share of Common
Stock in effect at the end of the trading day immediately following the day on
which such tender offer or exchange offer expires, then the Company, or such
subsidiary of the Company, shall offer to purchase Warrants for comparable
consideration per share of Common Stock based on the number of shares of Common
Stock which the Holders of such Warrants would receive upon exercise of such
Warrants; PROVIDED, HOWEVER, if a tender offer is made for only a portion of the
outstanding shares of Common Stock, then such offer shall be made for Warrants
in the same pro rata proportion.
SECTION 4.6 OTHER EVENTS. If any event occurs as to which the foregoing
provisions of this Article 4 are not strictly applicable or, if strictly
applicable, would not fairly and adequately protect the purchase rights of the
Warrants in accordance with the essential intent and principles of such
provisions, then there shall be made such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary to protect such purchase rights as aforesaid, but in no
event shall any such adjustment have the effect of increasing the Exercise Price
or decreasing the number of shares of Common Stock subject to purchase upon
exercise of this Warrant.
SECTION 4.7 SUPERSEDING ADJUSTMENT. Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which resulted in the
adjustments pursuant to this Article 4, if any thereof shall not have been
exercised, the number of Warrant Shares purchasable upon the exercise of each
Warrant shall be readjusted as if (A) the only shares of Common Stock issuable
upon exercise of such rights, options, warrants, conversion or exchange
privileges were the shares of Common Stock, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (B) shares of Common Stock actually issued, if any, were issuable for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options,
<PAGE>
warrants or conversion or exchange privileges whether or not exercised and the
Exercise Price shall be readjusted inversely; PROVIDED, HOWEVER, that no such
readjustment shall (except by reason of an intervening adjustment under Section
4.1) have the effect of decreasing the number of Warrant Shares purchasable upon
the exercise of each Warrant or increase the Exercise Price by an amount in
excess of the amount of the adjustment initially made in respect of the
issuance, sale or grant of such rights, options, warrants or conversion or
exchange privileges.
SECTION 4.8 MINIMUM ADJUSTMENT. The adjustments required by the
preceding Sections of this Article 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock purchasable upon
exercise of Warrants that would otherwise be required shall be made (except in
the case of a subdivision or combination of shares of Common Stock, as provided
for in Section 4.1) unless and until such adjustment either by itself or with
other adjustments not previously made increases or decreases by at least 1% the
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of Warrants immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment, together with other adjustments required by
this Article 4 and not previously made, would result in a minimum adjustment.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article 4, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.9 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, purchasable upon
exercise of Warrants is adjusted, as herein provided, the Chief Financial
Officer of the Company shall prepare a certificate setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which the
Board determined the Fair Value of any evidences of indebtedness, other
securities or property or warrants or other subscription or purchase rights),
and specifying the Exercise Price and the number of shares of Common Stock
purchasable upon exercise of Warrants after giving effect to such adjustment.
The Company shall promptly mail a copy of such certificate to each Holder in
accordance with Section 9.6. The Company shall exhibit such certificate from
time to time, to any Holder desiring an inspection thereof during reasonable
business hours. The Company shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist which may
require any adjustment of the Exercise Price or the number of shares of Common
Stock or other stock or property, purchasable on exercise of the Warrants, or
with respect to the nature or extent of any
<PAGE>
such adjustment when made, or with respect to the method employed in making such
adjustment or the validity or value of any shares of Common Stock.
SECTION 4.10 NOTICE OF CERTAIN TRANSACTIONS. In the event that the
Company shall propose (A) to pay any dividend payable in securities of any class
to the holders of its Common Stock or to make any other distribution to the
holders of its Common Stock, (B) to offer the holders of its Common Stock rights
to subscribe for or to purchase any securities convertible into shares of Common
Stock or shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (C) to effect any capital reorganization,
consolidation or merger, (D) to effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company, or (E) to offer any securities the
return on which is measured in whole or in part by reference to the Common
Stock, or in the event of a tender offer or exchange offer described in Section
4.5, the Company shall within 5 days send to Magnetite and shall within 5 days
send to the Holders (other than Magnetite) a notice of such proposed action or
offer, such notice to be mailed by the Company to the Holders in accordance with
Section 9.6, which shall specify the record date for the purposes of such
dividend, distribution or rights, or the date such issuance or event is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall briefly indicate the effect of such
action on the Common Stock and on the number and kind of any other shares of
stock and on other property, if any, and the number of shares of Common Stock
and other property, if any, purchasable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment which will be required as a
result of such action. Such notice shall be given by the Company at least 10
days prior to the record date for determining holders of the Common Stock for
purposes of such action.
SECTION 4.11 ADJUSTMENT TO WARRANT CERTIFICATE. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock as are stated
in any Warrant Certificates issued prior to the adjustment. The Company,
however, may at any time in its sole discretion make any change in the form of
Warrant Certificate that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of the Warrant Certificate,
and any Warrant Certificate thereafter issued, whether in exchange or
substitution for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.
ARTICLE 5.
TAG-ALONG RIGHTS
<PAGE>
SECTION 5.1 TAG-ALONG RIGHTS ON TRANSFERS. The Company acknowledges
that, except as otherwise provided in this Agreement, the Holders shall have the
"tag along" rights set forth in Section 3 of the Shareholders' Agreement, dated
as of October 31, 1997 (the "THL SHAREHOLDERS' AGREEMENT"), by and among the
Company, Alan Stillman, Thomas H. Lee Equity Partners, L.P., THL-CCI Limited
Partnership and those Persons listed as Shareholders on the counterpart
signature pages thereto (the "SHAREHOLDERS"), which Section 3 shall apply to
each Holder of any Warrant or Warrant Share as if such Holder were a
"Shareholder" thereunder and as if such Warrants or Warrant Shares were "Shares"
thereunder; PROVIDED that all other defined terms applicable to such "tag along"
rights shall have the meanings ascribed to them under the THL Shareholders'
Agreement; and PROVIDED, FURTHER that the Holders shall have such "tag along"
rights until consummation of the Company's Initial Public Offering or the
earlier termination of this Agreement in accordance herewith.
ARTICLE 6.
CERTAIN AGREEMENTS OF THE COMPANY
The Company hereby agrees that, until the first to occur of (I) the
consummation of the Company's IPO or (II) the date on which no Transfer
Restricted Securities remain outstanding:
SECTION 6.1 REPORTING AND INSPECTION COVENANTS. (a) FINANCIAL
INFORMATION AND COMPLIANCE CERTIFICATES. The Company shall, and shall cause each
of its Subsidiaries to, keep its books of account in accordance with good
accounting practices; the Company shall furnish to each Holder, within 120 days
after the last day of each fiscal year, consolidated balance sheets of the
Company and its Subsidiaries as at such last day of the fiscal year and
statements of income and retained earnings and cash flows for such fiscal year
each prepared in accordance with GAAP and certified by a firm of independent
certified public accountants of recognized national reputation; and, within 45
days after the close of each of the first three quarters of each fiscal year,
consolidated and consolidating balance sheets, statements of income and retained
earnings and cash flows of the Company and its Subsidiaries as of the last day
of and for such quarter and for the period of the fiscal year ended as of the
close of the particular quarter, all such quarterly statements to be in
reasonable detail and certified by the chief financial or accounting officer of
the Company as having been prepared in accordance with GAAP (subject to year-end
adjustments and the absence of footnotes). The Company will also furnish, within
forty-five days after the end of a calendar month, monthly profit and loss
statements of each existing and new restaurant owned or managed by the Company
or any of its Subsidiaries, internally prepared and
<PAGE>
certified by the chief financial officer of the Company. The Company will, with
reasonable promptness, furnish such other data as may be reasonably requested by
the Holders, including, without limitation, copies of all material contracts and
agreements. The Company shall (I) at the Holders' expense, at any time and from
time to time (but not exceeding once in a calendar year) or (II) after an Event
of Default under the Note Purchase Agreement has occurred and is continuing, at
the Company's expense, at any time and from time to time, permit any Holder by
or through any of its Officers, agents, employees, attorneys or accountants to
conduct, upon reasonable notice, an examination of, and make extracts from, the
Company's books and records.
(b) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The Company
shall, and shall cause each Subsidiary to, keep proper books of records and
accounts in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities; and permit, and cause its Subsidiaries to
permit, upon reasonable notice thereof (I) at the Holders' expense, at any time
and from time to time (but not exceeding once in a calendar year), or (II) after
an Event of Default under the Note Purchase Agreement has occurred and is
continuing, at the Company's expense, at any time and from time to time, any
Holder by or through any of its Officers, agents, employees, attorneys or
accountants to visit and inspect any of its properties and examine and make
abstracts from any of its books and records and discuss the business,
operations, properties and financial and other condition of the Company and its
Subsidiaries with Officers and employees of the Company and its Subsidiaries and
with its independent certified public accountants.
SECTION 6.2 NATURE OF BUSINESS. Neither the Company nor any Subsidiary
will materially alter the nature of its business.
SECTION 6.3 TRANSACTIONS WITH AFFILIATES. Except as otherwise
specifically set forth in the Note Purchase Agreement, neither the Company nor
any Subsidiary will, directly or indirectly, purchase, acquire or lease any
property or assets from, or sell, transfer or lease any property or assets to,
or enter into any other transaction with, including without limitation any
issuance or sale of stock, rights, options, warrants or securities exchangeable
into stock, any Affiliate, except in the ordinary course of business at prices
and on terms and conditions not less favorable to it than those which would have
been obtained in an arm's-length transaction with a non-affiliated third party.
SECTION 6.4 ISSUANCE OF ADDITIONAL CLASSES OF STOCK. The Company shall
not create any additional classes of capital stock (other than the Common Stock)
including preferred stock and any rights, options, warrants or any other
securities the
<PAGE>
return of which is measured in whole or in part by reference to the Common Stock
unless the Company shall have given the Holders at least 10 Business Days prior
notice of such issuance and demonstrated to the reasonable satisfaction of each
Holder, that the requirements of Sections 4.6 and 6.3 have been met.
SECTION 6.5 WAIVER OF PREEMPTIVE RIGHTS. The Company represents and
warrants that the Shareholders under the THL Shareholders' Agreement have waived
their preemptive rights under Section 4 thereof to acquire from the Company any
Warrants or Warrant Shares issued as a result of the exercise of Warrant by a
Holder hereunder.
ARTICLE 7.
REGISTRATION RIGHTS
SECTION 7.1 REGISTRATION RIGHTS. (a) The Company acknowledges that,
except as provided below, the Holders shall have the registration rights set
forth in Sections 6, 7 and 8 of the THL Shareholders' Agreement which Sections
6.7 and 8 shall apply to each Holder of any Warrant or Warrant Share as if such
Holder were a "Shareholder" thereunder and as if such Warrants or Warrant Shares
were "Shares" thereunder, PROVIDED that all defined terms therein shall have the
meanings ascribed to them in such THL Shareholders' Agreement, except that
"Registrable Securities" shall have the meaning set forth in this Agreement; and
PROVIDED, FURTHER that such Sections 6, 7 and 8 of the THL Shareholders'
Agreement shall apply to the Holders until termination of this Agreement in
accordance herewith. Notwithstanding the foregoing, the Holders' rights under
such Sections 6, 7 and 8 shall be modified as follows: (I) the Holders shall
have no piggyback registration rights in an Initial Public Offering occurring
prior to December 31, 1999, (II) the Holders shall have piggyback registration
rights in connection with any filing of a registration statement under the
Securities Act described in Section 6(a) of the THL Shareholders' Agreement
occurring after the Initial Public Offering, and in any Initial Public Offering
occurring after December 31, 1999, and (III) the Holders shall be treated for
purposes of Sections 6, 7 and 8 as if they were shareholders holding Registrable
Securities (i.e. for purposes of cut-backs, notices, payment of expenses,
indemnification, Form S-3 registration and other matters under such Sections).
(b) For clarity, the Holders shall have no demand registration rights at
any time under Sections 5 of the THL Shareholders' Agreement.
<PAGE>
ARTICLE 8.
TRANSFERABILITY
SECTION 8.1 LEGEND. Except for Warrant Certificates delivered pursuant
to Section 2.4(b)(v) of this Agreement, each Warrant Certificate and Warrant
Share shall bear a legend in substantially the following form (with any
appropriate modification for the Warrant Shares):
"THE WARRANT CERTIFICATES AND THE WARRANT SHARES (THE "SECURITIES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND
SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS. THE HOLDER HEREOF, BY ITS
ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO
THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); (C) TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D)
PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT."
SECTION 8.2 LOCK-UPS. For so long as the Warrants or the Warrant Shares
are not eligible for resale under Rule 144, the Holders shall not sell such
Warrants or Warrant Shares under the circumstances contemplated by Section
9(b)(i) of the THL Shareholders' Agreement in connection with the Initial Public
Offering. Otherwise, and except as otherwise expressly provided in this
Agreement, there shall be no other restrictions with respect to any sales by the
Holders under Rule 144.
<PAGE>
ARTICLE 9.
MISCELLANEOUS
SECTION 9.1 FINANCIAL INFORMATION. As soon as any Warrant becomes
outstanding, the Company shall promptly deliver to the Holders any annual,
quarterly or other financial statements and such other information as is
provided to any holders of equity or debt securities (excluding holders of
senior bank debt) of the Company in their capacity as holders of such
securities.
SECTION 9.2 PERSONS BENEFITTING. Nothing in this Agreement is intended
or shall be construed to confer upon any Person other than the Company and the
Holders any right, remedy or claim under or by reason of this Agreement or any
part hereof.
SECTION 9.3 INDEMNITY. The Company hereby agrees to indemnify and hold
harmless each beneficial owner of a Warrant (whether or not it is, at the time
the indemnity provided for in this Section 9.3 is sought, such a beneficial
owner) against all losses, damages or liabilities which such beneficial owner
suffers as a result of any breach, on the date of any exercise of a Warrant by
such beneficial owner, of the representations, warranties or agreements
contained herein.
SECTION 9.4 RIGHTS OF HOLDERS. Except as otherwise specifically required
herein, holders of unexercised Warrants are not entitled (I) to receive
dividends or other distributions, (II) to receive notice of or vote at any
meeting of the stockholders, (III) to consent to any action of the stockholders,
(IV) to receive notice of any other proceedings of the Company or (V) to
exercise any other rights as stockholders of the Company.
SECTION 9.5 AMENDMENT. (a) This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company may deem necessary or
desirable; PROVIDED, HOWEVER, that such action shall not affect adversely the
rights of the Holders. Any amendment or supplement to this Agreement that has an
adverse effect on the interests of the Holders shall require the written consent
of the Holders of a majority of the then outstanding Warrants. The consent of
each Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than pursuant to adjustments
provided herein). In determining whether the Holders of the
<PAGE>
required number of Warrants have concurred in any direction, waiver or consent,
Warrants owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company shall be disregarded and deemed not to be outstanding.
(b) Pursuant to the Letter Agreement dated June 28, 1999 (the "LETTER
AGREEMENT"), the Holders have become party to the THL Shareholders' Agreement
solely for purposes of Sections 3, 6, 7 and 8 thereof, and the defined terms
used in such sections, as modified by this Agreement. In connection with any
proposed amendment, waiver or modification of such sections, the Holders shall
have the same voting rights as the Shareholders thereunder and shall be bound by
any amendment, waiver or consent to such Sections 3, 6, 7 or 8 (as to the
subject matter existing on the date hereof) approved by the requisite number of
Shareholders as if the Holders were signatories thereto; PROVIDED that if the
Shareholders receive any remuneration or compensation in respect of any
amendment, waiver or modification, the Holders shall be entitled to share
therein as if they were Shareholders thereunder.
SECTION 9.6 NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be in writing (unless otherwise expressly
provided herein) and shall be deemed to have been duly given or made when
delivered by hand, or by telecopy, receipt acknowledged, or five (5) calendar
days after having been deposited in the mail addressed as follows:
The Company: The New York Restaurant Group, Inc.
1114 First Avenue
New York, New York 10021
Attn: Mr. Mark K. Levine, Executive Vice President
with a copy to: Hutchins, Wheeler & Dittmar, A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
Magnetite: Magnetite Asset Investors L.L.C.
c/o BlackRock Financial Management, Inc.
345 Park Avenue, 29th Floor
New York, NY 10154
Attn: Dennis M. Schaney
<PAGE>
with copies to: Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Attn: James J. Connors, II, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attn: John M. Vasily, Esq.
The Company by notice to the other parties hereto may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 9.7 GOVERNING LAW. The laws of the State of New York shall
govern this Agreement and the Warrant Certificates.
SECTION 9.8 SUCCESSORS. All agreements of the Company in this Agreement
and the Warrant Certificates shall bind its successors.
SECTION 9.9 MULTIPLE ORIGINALS. The parties may sign any number of
copies of this Agreement. Each signed copy shall be an original, but all of them
together represent the same Agreement. One signed copy is enough to prove this
Agreement.
SECTION 9.10 TABLE OF CONTENTS. The table of contents and headings of
the Articles and Sections of this Agreement have been inserted for convenience
of reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
SECTION 9.11 SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or
<PAGE>
in part in any jurisdiction, then such invalidity or unenforceability shall
affect in that jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Agreement in any
jurisdiction.
SECTION 9.12 TERMINATION. Unless otherwise expressly stated herein, this
Agreement shall terminate if no Transfer Restricted Securities are outstanding.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
THE NEW YORK RESTAURANT GROUP, INC.
By:
Name:
Title:
MAGNETITE ASSET INVESTORS L.L.C.
By: BLACKROCK FINANCIAL MANAGEMENT, INC.,
as Managing Member
By:
Name: Dennis M. Schaney
Title: Managing Director
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of January 1, 1996, by and among New York Restaurant Group, L.L.C., a
New York limited liability company (the "Company') and certain holders of the
Company's Common Shares on whose behalf signature pages hereof have been
executed (the "Other Holders"), Thomas H. Lee Equity Partners Limited
Partnership, a Delaware limited partnership (THLE), THL-CCI Limited Partners, a
Massachusetts limited partnership ("THL-CCI", together with THLE, the "Lee
Holders"), and the management employees of the Company and certain affiliates of
Alan N. Stillman listed on Schedule A attached hereto (the "Management
Holders"). THLE and THL-CCI art collectively referred to as "Lee Group."
This Agreement is made pursuant to the Note Purchase Agreement dated as of
September 29, 1995, by and among the Company and the Lee Holders of even date
herewith (the "Purchase Agreement"). In order to induce the Lee Holders to enter
into the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the Closing under and as defined in the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
"Best efforts" with respect to the Company shall mean the reasonable
good faith efforts of the Company.
"Business Day" means any day except a Saturday, a Sunday or other
day on which commercial banks in New York, New York are required or authorized
by law to be closed.
"Commission" means the Securities and Exchange Commission and any
successor agency of the United States federal government administering the
Securities Act or the Exchange Act.
"Common Shares" means the membership interests in the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules, regulations and interpretations thereunder.
"Holder" means any Person owning Registrable Shares.
"Notes" means the convertible debt issued by the Company pursuant to
the Purchase Agreement.
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"Person" means a corporation, an association, a partnership, a
trust, an organization, a business, an individual, or a government or political
agency or other entity.
A "Public Offering" shall mean the completion of a sale of Common
Shares pursuant to a registration statement which has become effective under the
Securities Act, excluding registration statements on Form S-4, S-8 or similar
limited purpose forms.
"Registrable Securities" means (i) the Common Shares, held by the
Management Holders on the date hereof, any Common Shares acquired by the Lee
Holders upon conversion of the Notes issued pursuant to the Purchase Agreement
(or through conversion of any shares of Preferred Shares of the Company issued
in exchange for such Notes), Common Shares held by the Other Holders, and any
other Common Shares of the Company acquired by any of the foregoing from time to
time and (ii) any capital stock or other securities of the Company into which
the securities referred to in (i) above shall have been changed or any capital
stock or other securities of the Company issued in exchange for, or in a
distribution with respect to, the securities referred to in (i) above.
Securities will cease to be Registrable Securities when (a) they have been
registered under the Securities Act, the registration statement in connection
therewith has been declared effective, and they have been disposed of pursuant
to such effective registration statement, (b) they are distributed to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) they have been otherwise transferred and new certificates
or other evidences of ownership for them (not bearing a legend to the effect
that such securities have not been registered under the Securities Act and may
not be sold or transferred in the absence of registration or an exemption
therefrom under the Securities Act, and not subject to any stop transfer order
or other restriction or transfer) have been delivered by or on behalf of the
Company.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules, regulations and interpretations thereunder.
Terms used as defined terms but not defined herein are as defined in
the Purchase Agreement.
2. Condition Precedent
The rights granted to Holders pursuant to Sections 3, 4 and 5 of
this Agreement will become effective upon the Company changing its status from a
Delaware limited liability company to a business corporation.
3. Lee Demand Registration
(a) Request for Registration. Subject to Section 6, at any time
after the earlier of (i) a Public Offering or (ii) the fifth anniversary hereof,
one or more Lee Holders may make a written request to the Company for
registration with the Commission under and in
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accordance with the provisions of the Securities Act of all or part of their
Registrable Securities (a "Lee Demand Registration"); provided, however, that
the Company need only effect two Lee Demand Registrations. Such request shall
specify the aggregate number of the Registrable Securities proposed to be sold
and shall also specify the intended method of disposition thereof. Within ten
(10) days after receipt of such request, the Company shall give written notice
(the "Notice") of such registration request to all other Lee Holders, the
Management Holders and the Other Holders stating that the Company will include
in such registration all Registrable Securities held by the Lee Holders, the
Management Holders and the Other Holders as to which the Company has received
written requests for inclusion therein within twenty (20) Business Days after
the giving of the Notice. Each Notice shall also specify the number of
Registrable Securities requested to be registered and the intended method of
disposition thereof. Within five (5) Business Days after the expiration of such
twenty (20) business Days, the Company will notify all the Lee Holders, the
Management Holders and the Other Holders to be included in such registration of
the other Lee holders; the Management Holders and the Other Holders and the
number of Registrable Securities requested to be included therein.
(b) Participation by Other Parties. No Person shall be permitted to
offer any securities under any Lee Demand Registration unless such Person is (i)
the Company, a Lee Holder, a Management Holder or an Other Holder or is entitled
to exercise "piggyback" registration rights pursuant to contractual commitments
with the Company and (ii) the Holders participating in such Lee Demand
Registration and their underwriters, if any, in their sole discretion, determine
that such Lee Demand Registration can accommodate such additional participation.
(c) Effective Registration and Expenses. A registration will not
count as a Lee Demand Registration until it has become effective. No Lee Demand
Registration may be requested at a time when a registration is effective with
respect to the securities proposed to be included in such Lee Demand
Registration. Subject to Section 9, the Company shall pay all Registration
Expenses (as defined in Section 9 below) in connection with a registration made
pursuant to this Section 3, whether or not such registration becomes effective
or Registrable Securities are sold thereunder.
(d) Priority on Lee Demand Registrations. In the case of an
underwritten offering effected in connection with a Lee Demand Registration, if
the managing underwriter or underwriters of such offering delivers a written
opinion to the Holders seeking to register Registrable Securities in such
offering, that in its or their opinion, the number of Registrable Securities
requested to be included in such offering exceeds the number which can be sold
in such offering by virtue of the fact that such excess is reasonably likely
materially and adversely to affect the success or offering price of such
offering, the Company shall include in such registration only such Registrable
Securities as equal the total number which, in the opinion of such holders or
such managing underwriter or underwriters, as the case may be, can be sold
without any such material adverse effect, as follows: first, pro rata among the
Lee
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Holders on the basis of the amount of Registrable Securities requested to be
included in such registration, second, the Company, third, pro rata among the
Management Holders and the Other Holders on the basis of the amount of
Registrable Securities requested to be included in such registration, and
fourth, those securities which have been requested to be included in such
registration by any other Persons.
(e) Selection of Underwriters. If any Lee Demand Registration is an
underwritten offering, the Lee Holders will select and obtain the investment
banker or bankers and managing underwriter or underwriters of nationally
recognized standing that will administer the offering, such investment banker or
bankers and managing underwriter or underwriters to be reasonably satisfactory
to the Company.
4. Management Group Demand Registration
Subject to Section 6, one or more Management Holders may make a
written request to the Company for registration with the Commission under and in
accordance with the provisions of the Securities Act of all or part of their
Registrable Securities having an estimated fair market value of $20,000,000 in
the aggregate (a "Management Demand Registration"); provided, however, that the
Company need only effect two Management Demand Registrations. Such request shall
specify the aggregate number of the Registrable Securities proposed to be sold
and shall also specify the intended method of disposition thereof. Within ten
(10) days after receipt of such request, the Company shall give Notice of such
registration request to all other Management Holders, Lee Holders, and the Other
Holders, stating that the Company will include in such registration all
Registrable Securities held by the Management Holders, the Lee Holders, and the
Other Holders as to which the Company has received written requests for
inclusion therein within twenty (20) Business Days after the giving of the
Notice. Each Notice shall also specify the number of Registrable Securities
requested to be registered and the intended method of disposition thereof.
Within five (5) Business Days after the expiration of such twenty (20) Business
Days, the Company will notify all the Management Holders, the Lee Holders, and
the Other Holders to be included in such registration of the other Management
Holders, Lee Holders. and the Other Holders and the number of Registrable
Securities requested to be included therein.
(b) Participation by Other Parties. No Person shall be permitted to
offer any securities under any Management Demand Registration unless such Person
is the Company, a Management Holder, an Other Holder, or a Lee Holder, or is
entitled to exercise "piggyback" registration rights pursuant to contractual
commitments with the Company and the Holders participating in such Management
Demand Registration and their underwriters, if any, in their sole discretion
that such Management Demand Registration can accommodate such additional
participation.
(c) Effective Registration and Expenses. A registration will not
count as a Management Demand Registration until it has become effective. No
Management Demand
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Registration may be requested at a time when a registration is effective with
respect to the securities proposed to be included in such Management Demand
Registration. Subject to Section 9, the Company shall pay all Registration
Expenses (as defined in Section 9 below) in connection with a registration made
pursuant to this Section 4, whether or not such registration becomes effective
or Registrable Securities are sold thereunder.
(d) Priority on Management Demand Registrations. In the case of an
underwritten offering effected in connection with a Management Demand
Registration, the managing underwriter or underwriters of such offering deliver
a written opinion to the holders of Registrable Securities. that in its or their
opinion the number of Registrable Securities requested to be included in such
offering exceeds the number which can be sold in such offering by virtue of the
fact that such excess is reasonably likely materially and adversely to affect
the success or offering price of such offering, the Company shall include in
such registration only such the Registrable Securities as equal the total number
which, in the opinion of such holders or such managing underwriter or
underwriters, as they case may be, can be sold without any such material adverse
effect, as follows: first, pro rata among the Management Holders on the basis of
the amount of Registrable Securities requested to be included in such
registration, second, the Company, third, pro rata among the Lee Holders and the
Other Holders on the basis of the amount of Registrable Securities requested to
be included in such registration, and fourth, those securities which have been
requested to be included in such registration by any other Persons.
(e) Selection of Underwriters. If any Management Demand Registration is
an underwritten offering, the Management Holders will select and obtain the
investment bankers or bankers and managing underwriters or underwriters of
nationally recognized standing that will administer the offering, such
investment banker or banker or bankers and managing underwriter or underwriters
to be reasonably satisfactory to the Company.
5. Piggyback Registration
(a) Right to Piggyback. If at any time the Company proposes to file
a registration statement under the Securities Act for any Common Shares or any
options, warrants, units, convertibles, rights or other securities related or
linked to any Common Shares (except with respect to registration statements on
Form S-4 or S-8, or any other form not available for registering the Registrable
Securities for sale to the public), with respect to an offering for its own
account or for the account of another Person (other than the holders of
Registrable Securities in their capacity as such) of any class of security (a
"Proposed Registration"), then the Company shall in each case give written
notice of such proposed filing to the Holders at least forty-five (45) days
before the anticipated filing date, and shall, subject to Section 5(b), include
in such registration statement such amount of Registrable Securities as each
Holder may request within twenty (20) days of the receipt of such notice. The
Company shall register such Registrable Securities on the same terms and subject
to the same conditions applicable to the registration in the Proposed
Registration of equity securities to be sold by the Company or the Person
selling under such Proposed Registration. The Company shall use its
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best efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Holders of Registrable Securities requesting
to be included to the registration for such offering to include such securities
in such offering on the same terms and conditions as the securities of the
Company included therein.
(b) Priority on Piggyback Registrations. If in connection with a
Proposed Registration the managing underwriter or underwriters of such offering
delivers a written opinion to the Holders of Securities that the number of
Registrable Securities which they and any other Persons intend to include in
such offering exceeds the number which can be sold in such offering or is
reasonably likely materially and adversely to affect the success or offering
price of such offering, then the amount of securities to be offered for the
accounts of holders shall be reduced as follows: first, the Securities requested
to be included in such registration by other Persons, pro rata in accordance
with the number of such securities held by such Persons requested to be included
in such registration; second, the Registrable Securities of the Holders who have
made requests to be included in such registration. pro rata (in accordance with
the number of Registrable Securities requested to be included in such
registration: and third, the securities which the Company proposes to sell.
(c) Selection of Underwriters. If any Proposed Registration pursuant
to this Section 5 is an underwritten offering (other than an underwritten
offering being conducted pursuant to the exercise of a Lee Demand Registration
or a Management Demand Registration pursuant to Section 3 or 4 hereof), the
Company will select a managing underwriter or underwriters to administer the
offering, which managing underwriter or underwriters will be of nationally
recognized standing.
6. Restrictions on Public Sale by Holders of Registrable Securities
(a) To the extent not inconsistent with applicable law, each Holder
agrees not to effect any public sale or distribution of securities of the
Company, including a sale pursuant to Rule 144 under the Securities Act, during
the seven (7) days prior to, and during the one hundred eighty (180)-day period
beginning on, the effective date of a registration statement filed by the
Company or, in the case of an underwritten public distribution, the commencement
thereof (except as part of such registration), if and to the extent requested
(i) by the Company or the Holders holding a majority of the Registrable
Securities to be registered in such offering, in the case of a non-underwritten
public offering or (ii) by the managing underwriter or underwriters, in the case
of an underwritten public offering.
(b) If the Company, in its good faith judgment, determines that any
registration of Registrable Securities should not be made or continued because
it would materially interfere with any material financing, acquisition or other
transaction then under active negotiation by the Company (a "Valid Business
Reason"), the Company may postpone filing a registration statement relating to a
Lee Demand Registration, a Management Demand Registration or any other
registration in which Holders have requested to have Registrable Securities
included until
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such Valid Business Reason no longer exists, but in no event for more than 120
days, and in no event more than once in any 18 month period. The Company shall
give written notice to the Holders who have Registrable Securities registered of
its determination to postpone or withdraw a registration statement and of the
fact that the Valid Business Reason for such postponement or withdrawal no
longer exists, in each case, promptly after the occurrence thereof.
7. Restriction on Public Sale by the Company
The Company agrees (i) not to effect any public sale or distribution
of its equity securities other than (A) a sale or distribution of such
securities in connection with a merger or consolidation by the Company or any of
its Subsidiaries or the acquisition by the Company or any of its Subsidiaries of
the capital stock or substantially all of the assets of any other Person, or (B)
in connection with an employee stock option or other benefit plan, during the
seven days prior to, and during the 180-day period beginning on, (1) the
effective date of any registration statement in which the Holders are
participating pursuant to a Lee Demand Registration or a Management Demand
Registration (except as part of such registration) (the "Holdback Period"),
except (x) where holders of a majority of the Registrable Securities to be
included in such registration statement by the Lee Holders, in the case of a Lee
Demand Registration, or where holders of a majority of the Registrable
Securities to be included in such registration statement by the Management
Holders, in the case of a Management Demand Registration, consent or (y) where
Holders are participating in such registration pursuant to Section 5 in such
registration statement, or (2) the commencement of an underwritten public
distribution of Registrable Securities where the managing underwriter so
reasonably requests; and (ii) that any agreement entered into after the date of
this Agreement pursuant to which the Company issues or agrees to issue any
privately placed securities shall contain a provision under which holders of
such securities agree not to effect any public sale or distribution of any such
securities during such Holdback Period, including a sale pursuant to Rule 144
under the Securities Act (except as part of such registration, if permitted);
provided, however, that the provisions of this Section 7 shall not prevent the
conversion or exchange of any securities pursuant to their terms into or for
other securities.
8. Registration Procedures
Subject to Section 6, whenever the Holders request that any such
securities be registered pursuant to Sections 3, 4 or 5 of this Agreement and
the Company shall use its best efforts to effect the registration and in
connection with any such request the Company shall, as expeditiously as
possible:
(a) in connection with a request pursuant to Section 3 or 4, prepare
and file with the Commission within 60 days, and use its best efforts to prepare
and so file within 45 days after receipt of a request to file a registration
statement, on any form for which the Company then qualifies or which counsel for
the Company shall deem appropriate and which form shall
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be available for the sale of the Registrable Securities in accordance with the
intended method of distribution thereof, and in connection with any registration
statement filed for Registrable Securities hereunder, use its best efforts to
cause such registration statement to become effective; provided that if such
registration statement does not become effective, then any Lee Demand
Registration or Management Demand Registration prompting such undertaking by the
Company shall be deemed to be rescinded and retracted and shall not be counted
as, or deemed or considered to be or to have been, a Lee Demand Registration or
Management Demand Registration, as the case may be, for any purpose. In
connection with the preparation and filing of each registration statement
registering Registrable Securities under this Agreement, the Company will give
the Holders on whose behalf such Registrable Securities are to be so registered
and their underwriter, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and, upon reasonable advance notice and
at reasonable times, will give each of them such access to its hooks and records
(except for such records which the Company determine in good faith to be
confidential and such opportunities to discuss the business of the Company with
its officers, its counsel and the independent public accountants who have
certified its financial statements, as shall be reasonably necessary, in the
opinion of such holders or such underwriters or their respective counsel, in
order to conduct a reasonable and diligent investigation within the meaning of
the Securities Act. The Company shall make such changes to each registration
statement, prospectus, amendment, supplement or any other document to be filed
with respect to a registration under this Agreement as the Holders registering
Registrable Securities in such registration and their counsel shall reasonably
request:
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
for a period of not less than 120 days or such shorter period which will
terminate when all Registrable Securities covered by such registration statement
have been sold, and comply with the provisions of the Securities Act applicable
to it with respect to the disposition of all securities covered by such
registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus. The Company shall not be
deemed to have used its best efforts to keep a registration statement effective
during the applicable period if it intentionally makes any action that would
result in Holders selling the Registrable Securities covered thereby not being
able to sell such Registrable Securities during that period unless such action
is required under applicable law:
(c) furnish to each Holder included in such registration statement
and the managing underwriter or underwriters, if any, without charge, at least
one signed copy of the registration statement and any post-effective amendment
thereto and such number of conformed copies thereof and such number of copies of
the prospectus (including any preliminary prospectus) and any amendments or
supplements thereto, and any documents
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incorporated by reference therein, as such Holder or managing underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities being sold by such holder (it being understood that the Company
Consents to the use in accordance with applicable law and the Agreement of the
prospectus and any amendment or supplement thereto by each Holder covered by the
registration statement and the managing underwriter or underwriters (or any
other underwriter or dealer who is required to deliver the prospectus), if any,
in connection with the offering and sale of the Registrable Securities covered
by the prospectus or any amendment or supplement thereto);
(d) notify any Holder on whose behalf Registrable Securities are
being registered under this Agreement of any stop order issued or threatened by
the Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered and make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
(e) enter into a written agreement with the managing underwriter or
underwriters selected in the manner herein provided in such form and containing
such representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions, including, without limitation, provisions relating
to indemnification and contribution. The Holders on whose behalf Registrable
Securities are to be distributed by such underwriters shall be parties to any
such underwriting agreement, and the Company shall make to and for the benefit
of the Holders the representations and warranties and the other agreements made
by the Company to and for the benefit of such underwriters that are of the type
customarily, provided to institutional investors in secondary offerings;
(f) if requested by the managing underwriter or underwriters or any
Holder covered by the registration statement, promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters or such holder requests to be included
therein, including, without limitation, with respect to the number of
Registrable Securities being sold by such Holder to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of the underwritten offering of
the Registrable Securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment as soon as
possible after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
(g) on or prior to the date on which the registration statement is
declared effective, use its best efforts to register or qualify, and cooperate
with the Holders included in such registration statement, the underwriter or
underwriters, if any, and their counsel in connection with the registration or
qualification of, the Registrable Securities covered by the registration
statement for offer and sale under the securities or blue sky laws of each
state and other jurisdiction of the United Stares as any such Holder or
underwriter requests in writing,
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to use its best efforts to keep each such registration or qualification
effective, including through new filings, or amendments or renewals, during the
period such registration statement is required to be kept effective and to do
any and all acts or things necessary or advisable to enable the disposition in
all such jurisdictions of the Registrable Securities covered by the applicable
registration statement, provided, however, that the Company will not be required
(i) to qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection (g), (ii) to subject
itself to taxation in any such jurisdiction or (iii) to consent to general
service of process in any such jurisdiction;
(h) use its best efforts to cause the Registrable Securities
included in such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers or the underwriter or underwriters, if any, thereof to
consummate the disposition of such Registrable Securities;
(i) cooperate with the Holders selling Registerable Securities
covered by the registration statement and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing securities to be
sold under the registration statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or such Holders may reasonably request;
(j) immediately notify each Holder on whose behalf Registrable
Securities have been registered pursuant to this Agreement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement (as then in effect) contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and, as
promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(k) use its best efforts to cause all such Registrable Securities
included in such registration statement to be listed by the date of the first
sale of Registrable Securities pursuant to such registration statement on each
securities exchange on which securities issued by the Company are then listed or
proposed to be listed, if any;
(l) make available for inspection. during normal business hours, by
any Holder on whose behalf Registrable Securities are being registered under
this Agreement, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant, or other agent
retained by any such Holder or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents, and
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properties of the Company and its Subsidiaries (collectively, the "Records") as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors, and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement. Records which the Company determines, in good
faith, to be confidential shall not be disclosed by the Inspectors unless the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or is otherwise required by law or regulation.
The Holder on whose behalf Registrable Securities are being registered under
this Agreement agrees that they will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice, to the
extent practicable, to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential;
(m) furnish, at the request of any Holder selling Registerable
Securities in such offering, on any date that any Registrable Security is
delivered to the underwriters for sale pursuant to such registration: (i) an
opinion dated such date from counsel representing the Company for the purposes
of such registration, addressed to the underwriters and to such Holder, stating
that such registration statement has become effective under the Securities Act
and that covers such other matters with respect to the registration as are
customarily covered in opinions of issuers' counsel delivered to underwriters in
connection with underwritten public offerings of securities (including with
respect to such registration statement and the prospectus included therein), and
(ii) a letter dated such date from the independent public accountants retained
by the Company, addressed to such seller, stating that they are independent
public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements of the Company included in
the registration statement or the prospectus, or any amendment thereof or
supplement thereto, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information with
respect to events subsequent to the date of such financial statements) with
respect to the registration (including with respect to such registration
statement and the prospectus included therein) in respect of which such letter
is being given as are customarily covered in accountant's letters delivered to
underwriters in connection with underwritten public offerings of securities;
(n) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, to make available to the Holders on
whose behalf Registrable Securities have been registered an earnings statement
covering a period of twelve months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or other comparable provisions), and to take all such other actions
as the Holders holding a majority of the Registrable Securities being sold by
Lee Holders. in the case of a Lee Demand Registration, or the holders of a
majority of the Registrable Securities being sold by Management Holders, in the
case of a Management Demand Registration, or the
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underwriters retained by such holders, if any, may reasonably request an order
to expedite or facilitate the disposition of such Registrable Securities;
(o) keep all Holders on whose behalf Registrable Securities have
been registered advised as to the initiating of proceedings for such
registration and qualification and as to the completion hereof, and will advise
any such Holder, upon request, of the progress of such proceedings; and
(p) in connection with any registration of Registrable Securities
under this Agreement, the Company will provide a transfer agent and registrar
for the Registrable Securities not later than the effective date of such
registration statement.
Each holder for which registration is being effected pursuant hereto
shall use its best efforts to cooperate with the Company, and the Company may
require each seller of Registrable Securities as to which any registration is
being effected to furnish to the Company such information regarding the
distribution of such securities as the Company may from time to time reasonably
request in writing. Each Holder agrees by acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 8(j) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 8(j) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 8(b) hereof shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 8(j) hereof to and including the date when each seller of Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 8(j) hereof.
9. Registration Expenses
All costs and expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration,
qualification and filing fees, transfer taxes, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), rating agency fees, printing expenses, messenger and delivery
expenses, fees of transfer agents and registrars, internal expenses of the
Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing of the securities to be
registered in accordance with Section 8(k), fees of the National Association of
Securities Dealers, Inc., costs of insurance, including securities acts
liability insurance (if the
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Company elects to obtain such insurance), the fees and disbursements of counsel
for the Company and all independent certified public accountants (including the
expenses of any annual audit, special audit, or "cold comfort" letters required
by or incident to such performance), the fees and expenses of any special
experts retained by the Company in connection with such registration and fees
and expenses of other Persons retained by the Company, the reasonable and
customary fees and expenses of any underwriter (but not including any
underwriting discounts or commissions attributable to the sale of Registrable
Securities by the holders of such Registrable Securities) (all such expenses
being herein called Registration Expenses"), will be borne by the Company. All
other expenses shall be the sole responsibility of the Holders.
10. Indemnification
(a) Indemnification by Company. The Company agrees to indemnify and
to save and hold harmless each Holder and any underwriter for such Holder, the
officers, directors and partners, and each person who controls such Holder or
any such underwriter (within the meaning of the Securities Act or the Exchange
Act) from and against any and all losses, claims, damages, liabilities, and
expenses (including reasonable attorneys fees and expenses and reasonable costs
of investigation) to which the Holder or underwriter or any such other person
may be subject, under the Securities Act or otherwise, arising out of or based
on any untrue or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
in any amendment or supplement thereto or in any preliminary prospectus or any
other document incident to the registration of Registrable Securities under the
Securities Act or the qualification of the Registrable Securities under any
state securities laws, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of or
based upon any violation or alleged violation by the Company of the Securities
Act, the Exchange Act or any other federal or state securities laws, rules or
regulations applicable to the Company and relating to action or inaction by the
Company in connection with any such registration or qualification, except
insofar as the same arise out of reliance upon any untrue statement or omission
furnished in writing to the Company by such Holder (or, if it is an underwritten
offering, an underwriter selected by such Holders), expressly for use therein;
provided that the Company shall not be required to indemnify any Holder for
damages caused by such Holder's continuing to use a prospectus with respect to
which such Holder has received a notice pursuant to Section 8(j) hereof and has
not received a notice of the amendment or supplementation of such prospectus, as
contemplated in Section 8(j). In connection with an underwritten offering, the
Company will, pursuant to a separate agreement, agree to indemnify the
underwriters thereof, their officers, directors and partners and partners of
partners, and each person who controls (within the meaning of the Securities
Act) such underwriters (collectively, "Securities Professionals") to the same
extent as provided above.
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<PAGE>
(b) Indemnification by Holder of Registrable Securities. In
connection with any registration statement in which a Holder is participating,
each such Holder will furnish to the Company in writing such information and
affidavits with respect to such Holder as the Company reasonably requests for
use in connection with any such registration statement or prospectus and agrees
to indemnify, to the extent permitted by law, each of the Company's directors
and officers, and each Person who controls the Company (within the meaning of
the Securities Act) and, if it is an underwritten offering, the underwriters,
against any losses, claims, damages, liabilities, and expenses arising out of or
based on any untrue statement of a material fact or any omission of a material
fact required to be stared in the registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is made in reliance upon and in conformity with
information with respect to such Holder furnished in writing to the Company by
such Holder specifically for use in such registration statement or prospectus or
amendment thereof or supplement thereto; provided, however, that the liability
of any such Holder under this Section 10 (including, without limitation, Section
10(d) below) shall be limited to the proportion of any such losses, claims,
damages, liabilities and expenses which is equal to the proportion that the
public offering price of securities sold by such Holder under such registration
statement bears to the total public offering price of all securities sold
thereunder, and shall in no event exceed the net proceeds of the sale of
Registrable Securities being sold pursuant to said registration statement or
prospectus by such Holder; and provided further that no such Holder shall be
required to indemnify the Company for damages caused by any Person other than
such holder, including the Company, continuing to use a prospectus (prior to its
amendment or supplementation) more than three days after the Company has
received a notice by such Holder of any such untrue statement or omission
contained in such prospectus.
(c) Conduct of Indemnification Proceeding. If any action, suit,
investigation or proceeding (including any governmental investigation) is
brought or asserted against any selling Holder (or its officers, directors,
partners, partners of partners or agents) or any person controlling any such
Holder in respect of which indemnity may be sought from the Company, the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Holder, to represent such Holder and its officers,
directors, partners, partners of partners, agents and controlling persons in
connection with investigating, defending or preparing to defend any such action,
suit, investigation or proceeding, and shall pay all reasonable expenses in
connection therewith. Such Holder or such other person shall have the right to
employ separate counsel in any such action and either direct its own defense or
participate in the Company's defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Holder or such other person, unless (i)
the Company has agreed to pay such fees and expenses or (ii) the named parties
to any such actions, suit, investigation or proceeding (including any impleaded
parties) include both such Holder or such other person, and such Holder or such
other person shall have reasonably concluded that there may be one or more legal
defenses available to such Holder or such other person which are different from
or additional to those available to the Company or (iii) the Company shall not
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have provided its counsel to take charge of such defense, then in any of such
events referred to in clauses (i), (ii) or (iii), if such Holder or such other
person notifies the Company in writing that it elects to employ separate counsel
at the expense of the Company. the Company shall not have the right to assume
the defense of such action or proceeding on behalf of such Holder or such other
person, it being understood, however, that the Company shall not, in connection
with any one such action, suit, investigation or proceeding or separate but
substantially similar or relaxed actions, suits, investigations or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for the
Holders and such other persons, which firm shall be designated in writing by a
majority of such Holders. The Company shall nor be liable for any settlement of
any such action suit, investigation or proceeding effected without the Company's
written consent (but such consent shall not be unreasonably withheld), but if
any action, suit, investigation or proceeding is settled with the Company's
consent, or if there be a final judgment for the plaintiff in any such action,
suit, investigation or proceeding, the Company agrees to indemnify and hold
harmless such Holder and such other person from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
The Company will not consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such action, claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 10 is unavailable to an indemnified party under this Section 10 in
respect of any losses, claims, damages, liabilities, expenses or judgments
referred to herein, then each such indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities,
expenses and judgments (i) as between the Company and such Holders on the one
hand and the Securities Professionals on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Company and such
Holders on the one hand and the Securities Professionals on the other from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only such
relative benefits, but also the relative fault of the Company and such Holders
on the one hand and of the Securities Professionals on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or judgments as well as any other relevant equitable
considerations and (ii) as between the Company on the one hand and each such
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each such Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and such Holders on the one hand
and the Securities Professionals on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and such Holders bear to the total underwriting discounts and commissions
received by the Securities Professionals, in each case as set forth on the table
on
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<PAGE>
the cover page of the prospectus. The relative fault of the Company, of each
such Holder and of the Securities Professionals shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and such Holders agree that it would not be
just and equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation (even if such Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding sentences. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, expenses or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 10(d), no Securities Professional shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of such Holder were offered to the public exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
11. Certain Limitations in Connection with Future Grants of Registration
Rights
(a) From and after the date of this Agreement, the Company shall not
enter into any agreement with any holder or prospective holder of any securities
of the Company providing for the granting to such holder of demand registration
rights unless such agreement includes provisions to the effect that,
notwithstanding Section 3 hereof, if any Holder requests inclusion of its
Registrable Securities in such registration, each such Holder's Registrable
Securities will be given priority over the securities sought to be registered by
the holders of such demand registration rights (in proportion to their relative
holdings of Registrable Securities) if marketing factors require a limitation on
the number of securities to be included in such registration statement.
(b) From and after the date of this Agreement, the Company shall not
enter into any agreement with any holder or prospective holder of any securities
providing for the granting to such holder of incidental or piggyback
registration rights unless such agreement includes provisions to the effect
that, in the case of a registered underwritten public offering of the Common
Shares to which Section 3, 4 or 5 hereof applies. such agreement gives the
following priority to the Holders if marketing factors require a limitation on
the number of securities of the Company to be included in such offering;
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<PAGE>
(i) Holders shall have the right to include in each
registration to which Section 3, 4 or 5 hereof applies all Registrable
Securities they desire to include whether or not the Company or any other holder
of the Company's securities has requested or is planning a registration of
securities; and
(ii) Holders shall have the right to include in each
registration to which Section 5 hereof applies all Registrable Securities they
desire to include before inclusion of other securities of the Company.
12. Miscellaneous
(a) Rule 144. The Company covenants that, at all times after it has
filed a registration statement pursuant to the requirements of the Securities
Act relating to any class of securities of the Company, it will file any reports
required to be filed by it under the Securities Act and the Exchange Act and
that it will take such further action as any holder of Registrable Securities
may reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 that has become
effective under the Securities Act, as such Rule may be amended from time to
time, or any similar rules or regulations hereafter adopted by the Commission.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
(b) Representations and Warranties of the Company. The Company
represents and warrants to each Purchaser as follows: the execution, delivery
and performance of this Agreement by the Company have been duly authorized by
all requisite limited liability company action and will not violate any
provision of law, any order of any court or other agency of government, the
Certificate of Formation or the Limited Liability Company Agreement of the
Company, or any provision of any indenture. agreement or other instrument to
which it or any of its properties or answers is bound, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company. This Agreement
has been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms.
(c) Specific Performance. The parties agree that irreparable damage
will result in the event that this Agreement is not specifically enforced, and
the parties agree that any damage available at law for a breach of this
Agreement would not be an adequate remedy. Therefore, the provisions hereof and
the obligations of the parties hereunder shall be enforceable in a court of
equity, or other tribunal with jurisdiction, by a decree of specific
performance, and appropriate injunctive relief may be applied for and granted in
connection therewith. Such remedies and all other remedies provided for in this
Agreement shall,
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however, be cumulative and not exclusive and shall be in addition to any other
remedies which a party may have under this Agreement or otherwise.
(d) Remedies. The rights and remedies of each Holder hereunder shall
be independent of the rights and remedies of any other Holder except as
otherwise expressly provided herein. Without limiting the foregoing, if the
Company or any other person has any rights, claims or defenses against any
Holder, such rights, claims or defenses shall not apply with respect to any
other Holder, except as otherwise expressly provided herein. The taking of any
action or the failure to take any action by any holder of this Agreement shall
not, and shall not be deemed to, constitute the taking of any action or the
failure to take any action by any other Holder, except as expressly set forth in
this Agreement.
(e) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, restated, modified, or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
holders of a majority of the each of the Lee Holders then entitled to the
benefits of this Agreement.
(f) Notices. Any notice, request, instruction, or other document to
be given hereunder by any party to another shall be in writing, shall be
delivered personally or by overnight courier service or sent by certified mail,
postage prepaid and return receipt requested, or by facsimile transmission
(receipt confirmed) to the Company at 1114 First Avenue, 6th floor, New York,
New York 10021, Attention: President (facsimile transmission number: (212)
355-0120), and to each Lee Holder at the address set forth on its signature page
to the Purchase Agreement (or to such other address as any subsequent holder of
Registrable Securities or any other parry to whom notice is to be given may
provide in a written notice to the other parties), and (except when delivered
personally) shall be deemed received three days after such notice is sent. A
copy of any notice sent to a Lee Holder shall also be delivered to Hutchins,
Wheeler & Ditmar, A Professional Corporation, 101 Federal Street, Boston, MA
02110 (facsimile transmission number: (617) 951-1295), Attention: Jeffrey S.
Wieand, and a copy of any notice sent to the Company shall also be delivered to
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York, 10004 (facsimile transmission number: (212) 859-4000) Attention: Stephen
Fraidin, P.C.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
permitted by the next two sentences of this Section 10(g). The Company may not
assign any of its obligations, duties or rights under this Agreement except with
the written consent of a majority in interest of the Holders. In addition to any
assignment by operation of law, each holder of Registrable Securities may
assign, in whole or in part, any or all of its rights (and/or obligations) under
this Agreement to any Person to whom Registrable Securities may be transferred
pursuant to Section 6.2 of the Limited Liability Company Agreement of the
Company or to whom
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<PAGE>
Convertible Notes of the Company may be transferred pursuant to Section 13.12 of
the Purchase Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Severability. In the event that any one or more of the
provisions contained herein, or any application of any provision contained
herein, shall be held invalid, illegal, or unenforceable in any jurisdiction,
the validity, legality, and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby and any such invalidity, illegality or unenforceability in
any jurisdiction shall not invalidate or render such provision unenforceable in
any other jurisdiction.
(k) Entire Agreement; Supersession of Prior Agreements. This
Agreement, together with the Purchase Agreement and the other agreements
contemplated thereby, are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, together with the Purchase Agreement and the other agreements
contemplated therein, supersede all prior agreements and understandings among
the parties with respect to such subject matter.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees and expenses in addition to any other available
remedy.
(m) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, applicable to
contracts made and to be performed wholly within that State without regard to
principles of conflicts of law.
[The rest of this page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parries have executed this Registration Rights
Agreement under seal as of the date first written above.
NEW YORK RESTAURANT GROUP. ON BEHALF OF, AND PURSUANT
L.L.C. TO POWERS OF ATTORNEY
By: LA CITE, INC.., its Manager DELEGATED BY, THE MANAGEMENT
HOLDERS LISTED ON SCHEDULE A
HERETO:
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
-------------------------- --------------------------
Name: Name:
Title:
ON BEHALF OF, AND PURSUANT TO
POWERS OF ATTORNEY DELEGATED
BY, THE OTHER HOLDERS
THOMAS H. LEE EQUITY
PARTNERS, L.P. /s/ [ILLEGIBLE]
By: THE EQUITY ADVISORS LIMITED ------------------------------
PARTNERSHIP
By: THE EQUITY TRUST
By:
--------------------------
THL-CCI LIMITED PARTNERSHIP
By: THL INVESTMENT MANAGEMENT GROUP
By:
--------------------------
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<PAGE>
IN WITNESS WHEREOF, the parries have executed this Registration Rights
Agreement under seal as of the date first written above.
NEW YORK RESTAURANT GROUP. ON BEHALF OF, AND PURSUANT
L.L.C. TO POWERS OF ATTORNEY
By: LA CITE, INC.., its Manager DELEGATED BY, THE MANAGEMENT
HOLDERS LISTED ON SCHEDULE A
HERETO:
By: By:
-------------------------- --------------------------
Name: Name:
Title:
ON BEHALF OF, AND PURSUANT TO
POWERS OF ATTORNEY DELEGATED
BY, THE OTHER HOLDERS
THOMAS H. LEE EQUITY
PARTNERS, L.P.
By: THE EQUITY ADVISORS LIMITED ------------------------------
PARTNERSHIP
By: THE EQUITY TRUST
By: /s/ [ILLEGIBLE]
--------------------------
THL-CCI LIMITED PARTNERSHIP
By: THL INVESTMENT MANAGEMENT GROUP
By: /s/ [ILLEGIBLE]
--------------------------
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<PAGE>
Registration Rights Agreement
Schedule A
Management Holder
- -----------------
Thursday's Supper Pub, Inc.
White & Witkowsky, Inc.
The New York Restaurant Group, Inc.
La Cite, Inc.
Alan N. Stillman
Eugene Byrne
Mark Levine
James Dunn
<PAGE>
Exhibit 10.19
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, effective as of the first day of January,
1998, by and between The New York Restaurant Group, Inc., a Delaware corporation
(the "Company"), and Alan N. Stillman, an individual residing at 322 East 57th
Street, New York, NY 10032 (the "Executive").
WHEREAS, the Company desires to engage the services of the Executive as
its President arid Chief Executive Officer;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available to the Company, and that the
Executive is willing and able to render such services on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as its
President and Chief Executive Officer and the Executive hereby accepts such
employment under and subject to the terms and conditions hereinafter set forth.
Section 2. Term. Unless sooner terminated as provided in Section 8, the
term of employment under this Agreement shall begin on the date hereof and shall
conclude on the fifth anniversary of the effective date hereof (the "Term").
<PAGE>
Section 3. Duties. The Executive shall serve as President and Chief
Executive Officer, and he shall perform additional duties as the Board of
Directors of the Corporation may assign to him from time to time. The Executive
hereby agrees to devote his time and best efforts to the faithful performance of
such duties and to the promotion and forwarding of the business and affairs of
the Company for the Term.
Section 4. Salary Compensation. In consideration of the services rendered
by the Executive under this Agreement, the Company shall pay the Executive a
base salary (the "Base Salary") at the rate of Six Hundred Fifty Thousand
Dollars ($650,000) per calendar year, plus annual cost of living increases. The
Base Salary shall be paid in such installments and at such times as the Company
pays its regularly salaried key executive employees.
Section 5. Bonus Compensation. The Executive shall be entitled to receive
such incentive or performance bonuses as the Board of Directors of the Company
may determine from time to time but in no event shall the Executive receive less
than 30% of the total annual bonuses paid by the Company to its employees.
Section 6. Fringe Benefits. As a key executive employee of the Company,
the Executive shall receive, at the expense of the Company, an automobile, a
driver, an office, an assistant and tax advice and assistance in filing his tax
returns, in each case consistent with such benefits received by the Executive
prior to the date hereof and shall be eligible to participate in all employee
fringe benefit programs as are made available from time to time to the Company's
key executive employees.
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<PAGE>
Section 7. Benefits. In addition to the compensation detailed in Section 4
and 5 of this Agreement, the Executive shall be entitled to the following
additional benefits:
Section 7.01. Paid Vacation. The Executive shall be entitled to forty (40)
business days paid vacation per calendar year. Such vacation shall extend for
such periods and shall be taken at such intervals as shall be appropriate and
consistent with the proper performance of the Executive's duties hereunder and
consistent with the Company's vacation policy.
Section 7.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental, disability and life insurance
protection to the same extent that it makes such protection available to its
other key executive employees.
Section 7.03. Reimbursement of Expenses. The Company shall reimburse the
Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 8. Termination. This Agreement shall be terminated at the end of
the Term, or earlier as follows:
Section 8.01. Death. This Agreement shall terminate upon the death of the
Executive, except that the compensation provided in Section 4 shall continue as
provided in Section 9.03.
Section 8.02. Permanent Disability. In the event of any physical or mental
disability of the Executive rendering the Executive unable to perform his or her
duties hereunder for a period of at least one hundred twenty (120) consecutive
days and the further determination that the
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<PAGE>
disability is permanent with regard to the Executive's ability to return to work
in his or full capacity, this Agreement shall terminate automatically, except
that the compensation provided in Section 4 shall continue as provided in
Section 9.03. Any determination of disability shall be made by the Board in
consultation with a qualified physician or physicians selected by the Board and
reasonably acceptable to the Executive.
Section 8.03. By The Company For Cause. The employment of the Executive
may be terminated by the Company for Cause (as defined below) at any time
effective upon written notice to the Executive. The Company shall provide the
Executive with at least ten (10) business days' prior written notice of a Board
meeting at which a termination for Cause will be considered and the Executive
will have an opportunity to attend and participate in that meeting. For purposes
hereof, the term "Cause" shall mean that the Board has determined that any one
or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall have
pleaded guilty or nolo contendere to, any felony or a crime
involving moral turpitude;
(b) The Executive shall have repeatedly failed or refused to perform
his duties hereunder and such failure or refusal shall have
continued for a period of ten (10) days following written notice
from the Board, it being understood that the Company's failure to
achieve its business plan or projections shall not itself be
considered a failure or refusal to perform duties;
(c) the Executive shall have intentionally committed any fraud,
embezzlement, misappropriation of funds, breach of fiduciary duty or
other act of dishonesty against the Company which has a material
adverse effect on the Company; or
(d) the Executive shall have (i) failed to perform his duties
hereunder in a manner that is reasonably satisfactory to the Board,
(ii) refused to carry out the duties assigned to him by the Board,
or (iii) breached any one or more of the material provisions of this
Agreement, which failure, refusal or breach shall have
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<PAGE>
continued for a period of at least ten (10) days after notice from
the Company describing such failure, refusal or breach in reasonable
detail.
Section 8.04. By the Company Without Cause. The Company may not terminate
the Executive's employment without Cause prior to January 1, 2000, and
thereafter the Company may terminate the employment of the Executive effective
upon written notice to the Executive. In the event the Company violates this
Agreement and terminates the Executive's employment without cause prior to
January 1, 2000, it shall be liable for monetary damages, in addition to the
severance benefits provided in Section 9.02.
Section 8.05. By the Executive With Good Reason. The Executive may
terminate this Agreement at any time effective upon written notice to the
Company for Good Reason (as defined below). For purposes hereof, the term "Good
Reason" shall mean that any one or more of the following has occurred:
(a) The Company shall have breached in any material respect any of
the obligations owed to the Executive hereunder, which breach shall
continue without cause for a period of at least ten (10) days after
written notice from the Executive describing such breach in
reasonable detail;
(b) The Company shall have removed the Executive as its President or
Chief Executive Officer, or shall have materially diminished the
authority and responsibility which the Executive has on the date
hereof, which diminution shall continue without cure for a period of
at least ten (10) days after written notice from the Executive
describing such diminution in reasonable detail; or
(c) The Company shall have required that the Executive relocate his
principal place of employment outside of New York City.
Section 8.06. By the Executive Voluntarily without Good Reason. The
Executive may terminate this Agreement at any time without Good Reason effective
upon at least fifteen (15) business days' prior written notice to the Company.
- 5 -
<PAGE>
Section 9. Termination Payments and Benefits.
Section 9.01. Voluntary Termination without Good Reason; Termination For
Cause. Upon any termination of this Agreement: (1) voluntarily by the Executive
without Good Reason, or (2) by the Company for Cause, all payments, salary and
other benefits hereunder shall cease at the effective date of termination except
as specifically provided in this Section 9.
Section 9.02. Termination without Cause; Termination for Good Reason. In
the event that this Agreement is terminated by the Company without Cause, or the
Executive terminates this Agreement for Good Reason, the Executive shall receive
as a termination settlement (together with any severance benefit payable under
Section 9.03, the "Termination Payment") the following amount: (i) if
termination occurs on or before December 31, 2000, the Termination Payment shall
be an amount equal to the monthly Base Salary as in effect at the effective date
of termination, payable each month through December 31, 2002; and (ii) if
termination occurs after December 31, 2000, the Termination Payment shall be an
amount equal to the monthly Base Salary as in effect at the effective date of
termination times the greater of (x) the number of months remaining in the
initial five (5) year term or (y) twelve (12) months, which benefit shall be
paid in equal monthly installments. In addition to the Termination Payment, the
Executive shall continue to receive the insurance benefits referenced in Section
7 for the period that he receives the Termination Payment.
Section 9.03. Termination Upon Death or Disability. In the event the
Executive is terminated as a result of the death or disability of the Executive,
the Executive shall receive as
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<PAGE>
Termination Payment an amount equal to the Base Salary as in effect at the
effective date of termination, payable each month through December 31, 2002.
Section 9.04. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to agree on
such a statement, the Company may make public statements as are necessary to
comply with the law.
Section 9.05. No Other Benefits. Except as referenced in this Agreement,
the Executive shall not be entitled to any compensation, severance or other
benefits from the Company upon the termination of this Agreement for any reason
whatsoever.
Section 10. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 11. Severable Provisions. The provisions of this Agreement are
severable and the invalidity of any one or more provisions shall not affect the
validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it
- 7 -
<PAGE>
enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
Section 12. Notices. All notices hereunder, to be effective, shall be in
writing and shall be delivered by hand or mailed by certified mail, postage and
fees prepaid, as follows:
If to the Company: The New York Restaurant Group, Inc.
1114 First Avenue
New York, New York 10021
Attn: President
Copy to: James Westra, Esq.
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Alan Stillman
322 East 57th Street
New York, NY 10022
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 12.
Section 13. Miscellaneous.
Section 13.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 13.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
oilier entity or by the transfer of all or substantially all of the assets of
the Company to any other person, corporation, firm or
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<PAGE>
entity. The provisions of this Agreement shall be binding on and shall inure to
the benefit of any such successor in interest to the Company. Neither this
Agreement nor any of the rights, duties or obligations of the Executive shall be
assignable by the Executive, nor shall any of the payments required or permitted
to be made to the Executive by this Agreement be encumbered, transferred or in
any way anticipated.
Section 13.03. Captions. Captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
Section 13.04. Governing Law. This Agreement shall be construed under and
enforced in accordance with the laws of The State of New York.
[The Rest of This Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as a sealed instrument as of the day and year first above written.
THE NEW YORK RESTAURANT GROUP,
INC.
By: /s/ Mark Lee
---------------------------------
Executive Vice President
EXECUTIVE
By: /s/ Alan N. Stillman
---------------------------------
Name: Alan N. Stillman
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<PAGE>
Exhibit 10.20
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of January 1, 1996, among The New York
Restaurant Group, L.L.C., a Delaware limited liability company ("NYRG"), Mr.
Alan N. Stillman ("Stillman"), and Thomas H. Lee Company, a Massachusetts sole
partnership, Thomas H. Lee Equity Partners, L.P., a Delaware limited
partnership, and THL-CCI Limited Partnership, a Massachusetts limited
partnership (collectively, "Lee").
1. STILLMAN.
1.1. Stillman agrees that, subject to Section 1.2 hereof, during the
Non-Competition Period (defined below), Stillman will not, directly or
indirectly, own, finance, manage or operate any Prohibited Business (defined
below); PROVIDED, HOWEVER, that nothing in this Agreement will prevent Stillman
from fulfilling all obligations of Stillman or his Affiliates (defined below) as
of the date hereof to St. James Associates, L.P. and Smith & Wollensky
restaurant.
1.2. Stillman agrees that, during the Offer Period (defined below),
if Stillman wishes to participate in any Opportunity (defined below) presented
to Stillman, Stillman shall offer such Opportunity in writing (the "Stillman
Notice") to NYRG for review by the Advisory Committee of NYRG. The Advisory
Committee shall consider such Opportunity, and the Lee designees on the Advisory
Committee (the "Lee Designees") shall determine, by notice in writing to
Stillman within 30 days after receipt of the Stillman Notice, whether to
recommend that NYRG pursue or reject such Opportunity. If the Lee Designees
shall recommend that NYRG reject such Opportunity, Stillman shall be free,
notwithstanding Section 1.1 hereof, to pursue such Opportunity on his own
behalf. If the Lee Designees shall recommend that NYRG pursue such Opportunity,
then Stillman shall not pursue such Opportunity on his own behalf and Stillman
shall cause the Manager of NYRG to determine in its discretion (subject to any
applicable provisions of the Note Purchase Agreement or the Members' Agreement)
whether or not NYRG should pursue such Opportunity.
2. LEE. Lee agrees that, during the Offer Period, if Lee or any of its
Affiliates wishes to participate in any Opportunity presented to any of them
(other than an Opportunity relating to Restaurants Unlimited), Lee shall offer
to NYRG in writing (the "Lee Notice") the opportunity to participate in such
Opportunity. The Manager of NYRG shall determine, by notice in writing to Lee
within 30 days after receipt of the Lee Notice, whether NYRG wishes to
participate in such Opportunity. If NYRG does not wish to participate in such
Opportunity, Lee and its Affiliates shall be free to pursue such Opportunity. If
NYRG wishes to participate in such Opportunity, NYRG shall have the
<PAGE>
right to participate therein on terms which are commercially reasonable taking
into account the size of the transaction and the resources of NYRG.
3. Definitions.
(i) "Affiliate" means any entity or individual directly or
indirectly controlling, controlled by or under common control with the entity of
which it is an affiliate.
(ii) "Closing Date" means the date of closing of the Note Purchase
Agreement.
(iii) "Members' Agreement" means the Members' Agreement, dated as
the date hereof, among NYRG and the other parties thereto.
(iv) "Non-Competition Period" means the period beginning on the
Closing Date and ending on the earlier of (x) the fourth anniversary of the
Closing Date and (y) the first anniversary of the date of termination of
Stillman's employment for any reason (or, in the event such termination occurs
prior to the first anniversary of the Closing Date, then, the second anniversary
of the date of such termination); provided, however, that if there is a material
breach of this Agreement by Lee at any time prior to the end of the Non-Compete
Period as set forth herein and such breach is not cured within 20 days after
written notice thereof from Stillman, then the Non-Competition Period with
respect to Stillman shall terminate.
(v) "Note Purchase Agreement" means the Note Purchase Agreement,
dated as of September 29, 1995, among NYRG, THL-CCI Limited Partnership and
Thomas H. Lee Equity Partners, L.P.
(vi) "Offer Period" means the period beginning on the Closing Date
and ending on the earlier of (x) the fourth anniversary of the Closing Date and
(y) the date of termination of Stillman's employment for any reason; provided,
however, that if there is a material breach of this Agreement by Lee or Stillman
at any time prior to the end of the Offer Period as set forth herein and such
breach is not cured within 20 days after written notice thereof from the
non-breaching party, then the Offer Period with respect to the non-breaching
party shall terminate.
(vii) "Opportunity" means any opportunity presented to Stillman or
to Lee (or their respective Affiliates), as the case may be (the "Recipient"),
by any third party, with respect to the Recipient's directly or indirectly
owning, financing, managing or operating any "high-end, white table cloth"
restaurant during the Offer Period, and
2
<PAGE>
pursuant to which the Recipient would have an interest, directly or indirectly,
in 10% or more of the net revenues of such restaurant.
(viii) "Prohibited Business" means any "high-end, white table cloth"
restaurant located in a Restricted Area (such as The Manhattan Ocean Club, Park
Avenue Cafe, La Cite, Smith & Wollensky, The Post House and Mrs. Parks Tavern).
(ix) "Restricted Area" means any city (or, in the case of New York
City, any borough) in which NYRG or its subsidiaries at such time own, operate
or manage (or, on the Closing Date, have binding commitments to lease premises
to operate) and "high-end, white table cloth" restaurants.
4. Exception. Nothing in this Agreement shall restrict Stillman and his
Affiliates or Lee and its Affiliates from owning up to 5% of the equity interest
in any Prohibited Business.
5. Remedies. The parties agree that any breach of the terms of this
Agreement would result in irreparable injury and damage to the other (the
"Non-Breaching Party"), for which such party would have no adequate remedy at
law; the parties therefore also agree that in the event of any such breach or
threat thereof, the Non-Breaching Party shall be entitled to an immediate
injunction and restraining order to prevent such breach and/or threatened breach
and/or continued breach by the other party, without having to prove damages, in
addition to any other remedies to which the Non-Breaching Party may be entitled
at law or in equity.
6. Amendment; Waiver. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver is agreed to in
writing and signed by the parties hereto. No waiver by any party hereto at any
time of any breach by any other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
7. Entire Agreement. This Agreement sets forth the entire understanding of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, between them as to such subject matter.
8. Severability. If any provision of this Agreement, or any application
thereof to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.
3
<PAGE>
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to the
principles of conflict of laws.
10. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
THE NEW YORK RESTAURANT GROUP, L.L.C.
By: La Cite, Inc.,
its Manager
By: /s/ Alan N. Stillman
----------------------------------------
Name:
Title:
THE THOMAS H. LEE COMPANY
By:
----------------------------------------
Name:
Title:
THOMAS H. LEE EQUITY PARTNERS, L.P.
By: THL Equity Advisors Limited Partnership,
its General Partner
By: THL Equity Trust, its General Partner
By:
----------------------------------------
Name:
Title:
5
<PAGE>
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp., its
General Partner
By:
----------------------------------------
Name:
Title:
/s/ Alan N. Stillman
--------------------------------------------
ALAN N. STILLMAN
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
THE NEW YORK RESTAURANT GROUP, L.L.C.
By: La Cite, Inc.,
its Manager
By:
----------------------------------------
Name:
Title:
THE THOMAS H. LEE COMPANY
By: /s/ C. Hunter
----------------------------------------
Name:
Title:
THOMAS H. LEE EQUITY PARTNERS. L.P.
By: THL Equity Advisors Limited Partnership,
its General Partner
By: THL Equity Trust, its General Partner
By: /s/ C. Hunter
----------------------------------------
Name:
Title:
5
<PAGE>
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp., its
General Partner
By: /s/ C. Hunter
----------------------------------------
Name:
Title:
--------------------------------------------
ALAN N. STILLMAN
6
<PAGE>
Exhibit 10.21
NEW YORK RESTAURANT GROUP, L.L.C.
1995 OPTION PLAN
1. PURPOSE OF THE PLAN.
This option plan (the "Plan") is intended to grant an opportunity to
participate in the equity securities of New York Restaurant Group, L.L.C., a New
York limited liability company (the "Company") to members of senior management
of the Company, to induce qualified management personnel to enter and remain in
the employ of the Company and otherwise to provide an additional incentive for
optionees to promote the success of its business.
2. UNITS SUBJECT TO THE PLAN.
(a) The total number of Units representing interests of the Company
("Units") for which options may be granted under the Plan shall not exceed Units
constituting 8% of the equity interests of the Company, subject to adjustment as
provided in Section 12 hereof.
(b) If an option granted hereunder shall expire or terminate for any reason
without having been exercised in full, the unpurchased Units subject thereto
shall not thereafter be available for subsequent option grants under the Plan.
(c) Units issuable upon the exercise of an option granted under the Plan
shall be subject to such restrictions on transfer, repurchase rights or other
restrictions (i) as set forth in the Members Agreement dated as of January 1,
1996 among the Company and the members named therein, (ii) as shall be
determined by the Managers of the Company, and (iii) as set forth in the option
agreement referenced below.
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Manager of the Company. The
decision of the Manager as to all questions of interpretation and application of
the Plan shall be final, binding and conclusive on all persons. The Manager may,
in its sole discretion, grant options to purchase Units and issue Units upon the
exercise of such options as provided in the Plan. The Manager shall have
authority, subject to the express provisions of the Plan, to construe the
respective option agreements and the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
the respective option agreements, which may but need not be identical, and to
make all other determinations in the judgment of the Manager necessary or
desirable for the administration of the Plan. The Manager may correct any defect
or supply any omission or reconcile any inconsistency in the Plan or in any
option agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and shall be the sole and final judge of such
expediency. No Manager shall be liable for any action or determination made in
good faith.
4. TYPE OF OPTIONS.
<PAGE>
Options granted pursuant to the Plan shall be authorized by action of the
Manager of the Company and shall be designated as non-qualified options which
are not intended to meet the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
5. ELIGIBILITY.
Non-qualified options may be granted to the officers and key employees of
the Company or any "subsidiary corporation" as defined in Section 424 of the
Code and the Treasury Regulations promulgated thereunder.
In determining the eligibility of an individual to be granted an option, as
well as in determining the number of Units to be optioned to any individual, the
Manager shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Manager deems relevant.
6. OPTION AGREEMENT.
Each option shall be evidenced by an option agreement (the "Agreement") duly
executed on behalf of the Company and by the optionee to whom such option is
granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Manager. No option shall be granted within the meaning of the Plan and no
purported grant of any option shall be effective until the Agreement shall have
been duly executed on behalf of the Company and the optionee.
7. OPTION PRICE.
The option price of Units for non-qualified options granted as of the date
of the Closing of the Company's sale of up to $10,000,000 in aggregate principal
amount of 6% Convertible Exchangeable Notes shall be $10.00 per Unit and any
options granted hereunder at any time thereafter shall be the fair market value
of the Units, as determined by the Manager.
8. MANNER OF PAYMENT; MANNER OF VESTING.
(a) Options granted under the Plan may provide for the payment of the
purchase price upon exercise by delivery of cash or a certified or bank
cashiers check or checks payable to the order of the Company in an amount
equal to the exercise price of such options.
(b) To the extent that the right to purchase Units under an option has
accrued and is in effect, options shall be exercised in full at one time or in
part from time to time, only pursuant to a written notice, signed by the person
or persons in whom the option is vested, to the Company, stating the number of
Units with respect to which the option has vested, accompanied by payment in
full for such Units as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable Units shall be made at the
principal office of
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<PAGE>
the Company to the person or persons in whom the option has vested at such time,
during ordinary business hours, within thirty (30) days from the date of receipt
of the notice by the Company, as shall be designated in such notice, or at such
time, place and manner as may be agreed upon by the Company and the person or
persons in whom the option has vested.
9. VESTING OF OPTIONS.
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, vest based upon a vesting schedule which is dependent upon
performance criteria all as set forth in the Agreement.
10. TERM OF OPTIONS.
(a) TERM.
Each option shall expire not more than ten (10) years and six (6)
months from the date of the granting thereof, but shall be subject to earlier
termination as provided in subsection (b) below.
(b) TERMINATION OF EMPLOYMENT.
An option granted to an employee optionee who ceases to be an employee of
the Company or any of its subsidiaries, at any time, for any reason or for no
reason, shall be exercisable only to the extent that the right to purchase Units
under such option has accrued and is in effect on the date such optionee ceases
to be an employee of the Company or any of its subsidiaries. The unvested
portion of any option shall terminate immediately upon the optionee ceasing to
be an employee of the Company or any of its subsidiaries.
11. OPTIONS NOT TRANSFERABLE.
The right of any optionee to exercise any option granted to him or her shall
not be assignable or transferable by such optionee otherwise than by will or the
laws of descent and distribution, and any such option shall be exercisable
during the lifetime of such optionee only by him or her.
12. RECAPITALIZATIONS, REORGANIZATIONS AND THE LIKE.
In the event of any change in the outstanding Units (including a change in
the value of the Units pursuant to a change into or exchange for a different
number or kind of shares or Units or other securities of the Company or of
another corporation) by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of units, or
dividends payable in capital stock or other property, appropriate adjustment
shall be made in the number and kind of Units as to which outstanding options or
portions thereof, then outstanding, shall be subject. In accordance herewith,
the proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding options shall be made
without change in the price applicable to the unexercised portion of such
options and with a corresponding adjustment in the option price per Unit.
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<PAGE>
In addition, unless otherwise determined by the Manager in its sole
discretion, in the case of any Change in Control (as defined in the Agreement)
of the Company, (i) the purchaser(s) of the Company's assets or stock may,
in his, her or its discretion, deliver to the optionee, with respect to each
Unit covered by the unexercised portion of the Option held by the optionee, the
same kind and amount of consideration that is delivered to the Members of the
Company as a result of such sale, conveyance or Change in Control, or (ii) the
Manager may, in its sole determination, with respect to each Unit covered by the
unexercised portion of the Option pay to such optionee in cash or in kind, which
consideration in both cases shall be equal in value to the value of those Units
or other consideration the optionee would have received had the option been
fully vested and exercised in full and no disposition of the Units acquired upon
such exercise been made prior to such sale, conveyance or Change in Control,
less the option price therefor. Upon receipt of such consideration by the
optionee, his or her option shall immediately terminate and be of no further
force and effect. The value of the securities the optionee would have received
if the option had been exercised shall be determined in good faith by the
Manager of the Company. In addition, in the case of any such Change in Control
or sale or conveyance of all or substantially all of the property and assets of
the Company, the Manager may, in its sole discretion, accelerate the vesting of
any option granted hereunder.
Except in connection with a conversion to a corporation, upon dissolution or
liquidation of the Company, all options shall terminate, but the Options shall
become fully vested (other than unvested options described in paragraph (b) of
SCHEDULE 1 to the Agreement) thirty (30) days prior to such dissolution or
liquidation and each optionee shall have the right, exercisable for a period of
at least thirty (30) days prior to such dissolution or liquidation, to purchase
Units pursuant to the option to the extent such option has vested and is then
outstanding.
No fraction of a Unit shall be purchasable or deliverable upon the exercise
of any option, but in the event any adjustment hereunder of the number of Units
covered by the option shall cause such number to include a fraction of a Unit,
such fraction shall be adjusted to the nearest smaller whole number of Units.
13. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option granted under the Plan shall
confer upon any option holder any right with respect to the continuation of his
or her employment by the Company (or any of its subsidiaries) or interfere in
any way with the right of the Company (or its subsidiaries), subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
option holder from the rate in existence at the time of the grant of an option.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Manager at the time.
14. WITHHOLDING.
The Company's obligation to deliver Units upon the exercise of the
non-qualified option granted under the Plan shall be subject to the option
holder's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements. The Company and
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<PAGE>
employee may agree to withhold Units purchased upon the exercise of an option to
satisfy the above-mentioned withholding requirements.
15. RESTRICTIONS ON ISSUE OF COMMON SHARES.
(a) Notwithstanding the provisions of Section 8 herein, the Company may
delay the issuance of Units covered by the exercise of an option and the
delivery of a certificate for such Units until one of the following conditions
shall be satisfied:
(i) The Units with respect to which such option has been
exercised are at the time of the issue of such Units effectively registered or
qualified under applicable federal and state securities laws now in force or as
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such Units are
exempt from registration and qualification under applicable federal and state
securities acts now in force or as hereafter amended.
(b) It is intended that all purchases of Units pursuant to exercised options
shall be effective, and the Company shall use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that the
Company shall be under no obligation to qualify Units or to cause a registration
statement or a post-effective amendment to any registration statement to be
prepared for the purpose of covering the issue of Units pursuant to the exercise
of any option, except as otherwise agreed to by the Company in writing.
16. PURCHASE FOR INVESTMENT.
Unless the Units to be issued upon purchase of Units pursuant to the
exercise of an option granted under the Plan have been effectively registered
under the Securities Act of 1933, as amended, as now in force or hereafter
amended, the Company shall be under no obligation to issue any Units covered by
any option unless the person who purchases Units in connection therewith, in
whole or in part, shall give a written representation and undertaking to the
Company which is satisfactory in form and scope to counsel for the Company and
upon which, in the opinion of such counsel, the Company may reasonably rely,
that he or she is acquiring the Units issued pursuant to such option for his or
her own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such Units in violation of applicable
federal and state securities laws, and that he or she will make no transfer of
the same except in compliance with any rules and regulations in force at the
time of such transfer under the Securities Act of 1933, as amended, or any other
applicable law, as hereafter amended, and that if Units are issued without such
registration, a legend to this effect may be endorsed upon the securities so
issued.
17. LOANS.
The Company may make loans to optionees to permit them to purchase Units
pursuant to options. If loans are made, the requirements of all applicable
federal and state laws regarding
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<PAGE>
such loans must be met.
18. MODIFICATION OF OUTSTANDING OPTIONS.
The Manager may authorize the amendment of any outstanding option with the
consent of the optionee when and subject to such conditions as are deemed to be
in the best interests of the Company and in accordance with the purposes of the
Plan and so long as such amendment does not violate any contractual obligations
of the Company, provided that an option granted to Alan N. Stillman may not be
amended without the unanimous consent of the members of the Advisory Committee
of the Company.
19. APPROVAL OF MEMBERS.
The Plan shall be subject to approval by the vote of Members holding at
least a majority of the voting securities of the Company voting in person or by
proxy at a duly held Members' meeting, or by written consent of a majority of
the Members, within twelve (12) months after the adoption of the Plan by the
Manager and shall take effect as of the date of adoption by the Manager upon
such approval. The Manager may grant options under the Plan prior to such
approval, but any such option shall become effective as of the date of grant
only upon such approval and, accordingly, no such option may be exercised prior
to such approval.
20. TERMINATION AND AMENDMENT OF PLAN.
Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years and six (6) months from the date upon which the Plan was duly adopted
by the Manager of the Company. The Manager may at any time terminate the Plan or
make such modification or amendment thereof as it deems advisable so long as
such modification or amendment does not conflict with contractual obligations of
the Company; provided, however, that except as provided in Section 12, the
Manager may not, without the approval of the Members of the Company obtained in
the manner stated in Section 19, increase the maximum number of Units for which
options may be granted. Termination or any modification or amendment of the Plan
shall not, without the consent of an optionee, adversely affect his or her
rights under an option theretofore granted to him or her.
21. RESERVATION OF UNITS.
The Company shall at all times during the term of the Plan reserve and keep
available such number of Units representing interests in the Company as will be
sufficient to satisfy the requirements of the Plan and shall pay all fees and
expenses necessarily incurred by the Company in connection therewith.
22. LIMITATION OF RIGHTS IN THE UNITS.
An optionee shall not be deemed for any purpose to be a unitholder of the
Company with respect to any of the options except to the extent that Units
issued in connection with the exercise of an option shall have been purchased
with respect thereto and, in addition, a certificate shall
-6-
<PAGE>
have been issued theretofore and delivered to the optionee.
23. NOTICES.
Any communication or notice required or permitted to be given under the Plan
shall be in writing and shall be deemed duly given if hand-delivered or mailed
by registered or certified mail, postage prepaid, return receipt requested, as
follows:
(a) If to the Company:
New York Restaurant Group, L.L.C.
1114 First Avenue
6th Floor
New York, New York 10021
Attn: President
(b) If to an Optionee:
To the most recent address furnished in writing to the
Company by the Optionee,
unless and until notice of another or different address shall be given as
provided herein.
Adopted by the Manager: Date of ________
Approved by the Members: Date of ________
A true record.
ATTEST: ________
-7-
<PAGE>
Exhibit 10.22
THE NEW YORK RESTAURANT GROUP, INC.
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This stock option plan (the "Plan") is intended to provide incentives:
(a) to the officers and other employees of The New York Restaurant Group, Inc.
(the "Company") and any present or future subsidiaries of the Company by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") ("ISO"
or "ISOs"); and (b) to officers, employees, consultants and directors of the
Company and any present or future subsidiaries by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options"). As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively, as those terms are
defined in Section 424 of the Code and the Treasury Regulations promulgated
thereunder (the "Regulations").
2. STOCK SUBJECT TO THE PLAN.
(a) The total number of shares of the authorized but unissued or
treasury shares of the common stock, $.01 par value, of the Company ("Common
Stock") for which options may be granted under the Plan shall not exceed
[__________(_____)] shares, subject to adjustment as provided in Section 11
hereof.
(b) To the extent that any stock option shall lapse, terminate, expire
or otherwise be canceled without the issuance of shares of Common Stock, the
shares of Common Stock covered by such option(s) shall again be available for
the granting of stock options.
(c) Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Committee (as defined in Section 3 below).
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a committee (the "Committee")
<PAGE>
consisting of two or more members of the Company's Board of Directors. The Board
of Directors may from time to time appoint a member or members of the Committee
in substitution for or in addition to the member or members then in office and
may fill vacancies on the Committee however caused. The Committee shall choose
one of its members as Chairman and shall hold meetings at such times and places
as it shall deem advisable. A majority of the members of the Committee shall
constitute a quorum and any action may be taken by a majority of those present
and voting at any meeting. Any action may also be taken without the necessity of
a meeting by a written instrument signed by a majority of the Committee. The
decision of the Committee as to all questions of interpretation and application
of the Plan shall be final, binding and conclusive on all persons. The Committee
shall have the authority to adopt, amend and rescind such rules and regulations
as, in its opinion, may be advisable in the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement granted hereunder in the
manner and to the extent it shall deem expedient to carry the Plan into effect
and shall be the sole and final judge of such expediency. No Committee member
shall be liable for any action or determination made in good faith. Prior to the
date of the registration of an equity security of the Company under Section 12
of the Exchange Act, the Plan may be administered by the Board of Directors and
in such event all references in this Plan to the Committee shall be deemed to
mean the Board of Directors.
(b) Subject to the terms of the Plan, the Committee shall have the
authority to (i) determine the employees of the Company and its subsidiaries
(from among the class of employees eligible under Section 4 to receive ISOs) to
whom ISOs may be granted, and to determine (from the class of individuals
eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified
Options may be granted; (ii) determine the time or times at which options may be
granted; (iii) determine the option price of shares subject to each option which
price shall not be less than the minimum price specified in Section 6; (iv)
determine whether each option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to Section 9) the time or times when each option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to options and the nature of such restrictions; and (vii) determine the
size of any Options under the Plan, taking into account the position or office
of the optionee with the Company, the job performance of the optionee and such
other factors as the Committee may deem relevant in the good faith exercise of
its independent business judgment.
4. ELIGIBILITY.
Options designated as ISOs may be granted only to officers and other
employees of the Company or any subsidiary. Non-Qualified Options may be granted
to any officer,
<PAGE>
employee, consultant or director of the Company or of any of its subsidiaries.
In determining the eligibility of an individual to be granted an option,
as well as in determining the number of shares to be optioned to any individual,
the Committee shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.
No option designated as an ISO shall be granted to any employee of the
Company or any subsidiary if such employee owns, immediately prior to the grant
of an option, stock representing more than 10% of the voting power or more than
10% of the value of all classes of stock of the Company or a parent or a
subsidiary, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 6 hereof
shall apply.
5. OPTION AGREEMENT.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as ISOs shall meet all of the
conditions for ISOs as defined in Section 422 of the Code. The date of grant of
an option shall be as determined by the Committee. More than one option may be
granted to an individual.
6. OPTION PRICE.
The option price or prices of shares of the Company's Common Stock for
options designated as Non-Qualified Options shall be as determined by the
Committee, but in no event shall the option price be less than the minimum legal
consideration required therefor under the laws of the State of Delaware or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized. The option price or prices of shares of the Company's Common Stock
for ISOs shall be the fair market value of such
<PAGE>
Common Stock at the time the option is granted as determined by the Committee in
accordance with the Regulations promulgated under Section 422 of the Code. If
such shares are then listed on any national securities exchange, the fair market
value shall be the mean between the high and low sales prices, if any, on such
exchange on the business day immediately preceding the date of the grant of the
option or, if none, shall be determined by taking a weighted average of the
means between the highest and lowest sales prices on the nearest date before and
the nearest date after the date of grant in accordance with Treasury Regulations
Section 25.2512-2. If the shares are not then listed on any such exchange, the
fair market value of such shares shall be the mean between the high and low
sales prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation System National Market System ("NASDAQ/NMS") for the
business day immediately preceding the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales on the nearest date before and the nearest date after
the date of grant in accordance with Treasury Regulations Section 25.2512-2. If
the shares are not then either listed on any such exchange or quoted in
NASDAQ/NMS, the fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported in the National
Daily Quotation Service for the business day immediately preceding the date of
the grant of the option, or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2. If the fair market value cannot be
determined under the preceding three sentences, it shall be determined in good
faith by the Committee.
7. MANNER OF PAYMENT; MANNER OF EXERCISE.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, or (iii)
any combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only under such circumstances and on such terms as may from
time to time be established by the Committee. The fair market value of any
shares of the Company's Common Stock which may be delivered upon exercise of an
option shall be determined by the Committee in accordance with Section 6 hereof.
With the consent of the Committee, payment may also be made by delivery of a
properly executed exercise notice to the Company, together with a copy of
irrevocable instruments to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the exercise price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
<PAGE>
(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after ten business days from the
date of receipt of the notice by the Company, as shall be designated in such
notice, or at such time, place and manner as may be agreed upon by the Company
and the person or persons exercising the option.
8. EXERCISE OF OPTIONS.
Subject to the provisions of paragraphs 9 through 11, each option
granted under the Plan shall be exercisable as follows:
(a) VESTING. The option shall either be fully exercisable on the date of
grant or shall become exercisable thereafter in such installments as the
Committee may specify.
(b) FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
option, unless otherwise specified by the Committee.
(c) PARTIAL EXERCISE. Each option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable.
(d) ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment or any option; provided that
the Committee shall not, without the consent of an optionee, accelerate the
exercise date of any installment of any option granted to any employee as an ISO
if such acceleration would violate the annual vesting limitation contained in
Section 422(d) of the Code.
9. TERM OF OPTIONS; EXERCISABILITY.
(a) TERM. Each option shall expire not more than ten (10) years from the
date of the granting thereof, but shall be subject to earlier termination as may
be provided in the Agreement.
<PAGE>
(b) EXERCISABILITY. Except as otherwise provided in the Agreement, an
option granted to an employee optionee who ceases to be an employee of the
Company or one of its subsidiaries shall be exercisable only to the extent that
the right to purchase shares under such option has accrued and is in effect on
the date such optionee ceases to be an employee of the Company or one of its
subsidiaries.
10. OPTIONS NOT TRANSFERABLE.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, or (solely with respect to
Non-Qualified Options) pursuant to a qualified domestic relations order, as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder, and any such option shall be exercisable during the
lifetime of such optionee only by him. Any option granted under the Plan shall
be null and void and without effect upon the bankruptcy of the optionee to whom
the option is granted, or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, divorce, except as provided above with respect to Non-Qualified
Options, trustee process or similar process, whether legal or equitable, upon
such option.
11. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to options granted to him or her hereunder shall
be adjusted as hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company relating to such
option:
(a) STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Committee or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding options, either (i) make
appropriate provision for the continuation of such options by substituting on an
equitable basis for the shares then subject to such options the consideration
payable with respect to the outstanding shares of Common
<PAGE>
Stock in connection with the Acquisition; or (ii) upon written notice to the
optionees, provide that all options must be exercised, to the extent then
exercisable, within a specified number of days of the date of such notice, at
the end of which period the options shall terminate; or (iii) terminate all
options in exchange for a cash payment equal to the excess of the fair market
value of the shares subject to such options (to the extent then exercisable)
over the exercise price thereof.
(c) RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph (b) above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an option shall be entitled to receive
for the purchase price paid upon such exercise the securities he would have
received if he had exercised his option prior to such recapitalization or
reorganization.
(d) MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs (a), (b) or (c) with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments.
(e) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, each option will terminate immediately prior to
the consummation of such proposed action or at such other time and subject to
such other conditions as shall be determined by the Committee.
(f) ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(g) FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
(h) ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) above, the class and aggregate number of shares
set forth in
<PAGE>
Section 2 hereof that are subject to options which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect the events described in such subparagraphs. The Committee or the
Successor Board shall determine the specific adjustments to be made under this
paragraph 11 and, subject to Section 3, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of an option made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs (a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.
12. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his employment by the Company (or any subsidiary) or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Committee at the
time.
13. WITHHOLDING.
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local income, excise and
employment tax withholding requirements. The Company and employee may agree to
withhold shares of Common Stock purchased upon exercise of an option to satisfy
the above-mentioned withholding requirements. With the approval of the
Committee, which it shall have sole discretion to grant, and on such terms and
conditions as the Committee may impose, the option holder may satisfy the
foregoing condition by electing to have the Company withhold from delivery
shares having a value equal to the amount of tax to be withheld. The Committee
shall also have the right to require that shares be withheld from delivery to
satisfy such condition.
<PAGE>
14. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 7, the Company may delay
the issuance of shares covered by the exercise of an option and the delivery of
a certificate for such shares until one of the following conditions shall be
satisfied:
(i) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force or as
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be effective, and
the Company shall use its best efforts to bring about compliance with the above
conditions within a reasonable time, except that the Company shall be under no
obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
15. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT
REGISTRATION.
Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of
<PAGE>
1933 or other applicable statutes any shares with respect to which an option
shall have been exercised, or to qualify any such shares for exemption from the
Securities Act of 1933 or other applicable statutes, then the Company may take
such action and may require from each optionee such information in writing for
use in any registration statement, supplementary registration statement,
prospectus, preliminary prospectus or offering circular as is reasonably
necessary for such purpose and may require reasonable indemnity to the Company
and its officers and directors and controlling persons from such holder against
all losses, claims, damages and liabilities arising from such use of the
information so furnished and caused by any untrue statement of any material fact
therein or caused by the omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made.
16. LOANS.
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.
17. MODIFICATION OF OUTSTANDING OPTIONS.
The Committee may authorize the amendment of any outstanding option with
the consent of the optionee when and subject to such conditions as are deemed to
be in the best interests of the Company and in accordance with the purposes of
this Plan.
18. APPROVAL OF SHAREHOLDERS.
The Plan shall be subject to approval by the vote of shareholders
holding at least a majority of the voting stock of the Company voting in person
or by proxy at a duly held shareholders' meeting, or by written consent of
shareholders holding at least a majority of the voting stock of the Company,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.
19. TERMINATION AND AMENDMENT.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years
<PAGE>
from the date upon which the Plan was duly adopted by the Board of Directors of
the Company. The Board of Directors may at any time terminate the Plan or make
such modification or amendment thereof as it deems advisable; provided, however,
that except as provided in this Section 19, the Board of Directors may not,
without the approval of the shareholders of the Company obtained in the manner
stated in Section 18, increase the maximum number of shares for which options
may be granted or change the designation of the class of persons eligible to
receive options under the Plan, or make any other change in the Plan which
requires shareholder approval under applicable law or regulations, including any
approval requirement which is a prerequisite for exemptive relief under Section
16 of the Exchange Act. The Committee may grant options to persons subject to
Section 16(b) of the Exchange Act after an amendment to the Plan by the Board of
Directors requiring shareholder approval under Section 19, but any such option
shall become effective as of the date of grant only upon such approval and,
accordingly, no such option may be exercisable prior to such approval. The
Committee may terminate, amend or modify any outstanding option without the
consent of the option holder, provided, however, that, except as provided in
Section 11, without the consent of the optionee, the Committee shall not change
the number of shares subject to an option, nor the exercise price thereof, nor
extend the term of such option.
20. COMPLIANCE WITH RULE 16B-3.
It is intended that the provisions of the Plan and any option granted
hereunder to a person subject to the reporting requirements of Section 16(a) of
the Exchange Act shall comply in all respects with the terms and conditions of
Rule 16b-3 under the Exchange Act, or any successor provisions, to the extent
the Company has any equity security registered pursuant to Section 12 of the
Exchange Act. Any agreement granting options shall contain such provisions as
are necessary or appropriate to assure such compliance. To the extent that any
provision hereof is found not to be in compliance with such Rule, such provision
shall be deemed to be modified so as to be in compliance with such Rule, or if
such modification is not possible, shall be deemed to be null and void, as it
relates to a recipient subject to Section 16(a) of the Exchange Act.
21. RESERVATION OF STOCK.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
<PAGE>
22. LIMITATION OF RIGHTS IN THE OPTION SHARES.
An optionee shall not be deemed for any purpose to be a shareholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
23. NOTICES.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.
Approved by the Directors:____________________
Approved by the Stockholders:____________________
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
The New York Restaurant Group, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG LLP
New York, New York
July 23, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
The New York Restaurant Group, L.L.C.
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form S-1 of our report dated February 28, 1997 on the
statements of operations, owner's equity and cash flows of The New York
Restaurant Group, L.L.C. and Subsidiaries for the year ended December 30, 1996
which appear in such Prospectus. We also consent to the reference to our firm
under the caption "experts" in such Prospectus.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
July 26, 1999
<TABLE> <S> <C>
<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1998
<PERIOD-START> DEC-30-1997
<PERIOD-END> DEC-28-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 996
<ALLOWANCES> 0
<INVENTORY> 2,446
<CURRENT-ASSETS> 4,446
<PP&E> 38,810
<DEPRECIATION> 6,635
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21,115
0
<COMMON> 46
<OTHER-SE> 9,450
<TOTAL-LIABILITY-AND-EQUITY> 58,376
<SALES> 42,521
<TOTAL-REVENUES> 45,489
<CGS> 12,188
<TOTAL-COSTS> 46,715
<OTHER-EXPENSES> 310
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 453
<INCOME-PRETAX> (1,873)
<INCOME-TAX> 572
<INCOME-CONTINUING> (2,445)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,445)
<EPS-BASIC> (0.85)
<EPS-DILUTED> (0.85)
</TABLE>
